BFM Numericals Solved · Part 4: Risk and capital

Chapter 14: Capital adequacy, buffers and leverage

How much capital a bank holds against its risk-weighted assets, the buffers on top, what happens when it dips into them, and the unweighted check behind it all.

Buyers of the e-book, or of the print copy, which includes it, read the whole chapter. Everyone can read the free sample, pages 1 to 24 of the e-book.

In this chapter

• 14.1Total RWAp. 287
• 14.2The three ratiosp. 287
• 14.3CET1 comes firstp. 288
• 14.4Buffers on topp. 288
• 14.5When a bank dips into its bufferp. 289
• 14.6Capital for growthp. 290
• 14.7The leverage ratiop. 291
• Four 30-second routesp. 292
• Which formula? A map of the chapterp. 293
• Exam traps and conventionsp. 294
• Practice: 30 questions in three roundsp. 295
• Answers, with every wrong option explainedp. 298
• Make it stickp. 301
• Chapter 14 on one pagep. 302

Corrections and updates

None for this chapter so far. Every correction to the book, and any rule that changes after its date, is listed on the errata page.