Risk-Weighted Assets


DEFINITION of 'Risk-Weighted Assets'

In terms of the minimum amount of capital that is required within banks and other institutions, based on a percentage of the assets, weighted by risk.


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BREAKING DOWN 'Risk-Weighted Assets'

The idea of risk-weighted assets is a move away from having a static requirement for capital. Instead, it is based on the riskiness of a bank's assets. For example, loans that are secured by a letter of credit would be weighted riskier than a mortgage loan that is secured with collateral.

  1. Capital

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  3. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  4. Risk Management

    The process of identification, analysis and either acceptance ...
  5. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a ...
  6. Asset

    1. A resource with economic value that an individual, corporation ...
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  1. What is the minimum capital adequacy ratio that must be attained under Basel III?

    Under Basel III, the minimum capital adequacy ratio that banks must maintain is 8%. The capital adequacy ratio measures a ... Read Full Answer >>
  2. How are risk weighted assets used to calculate the solvency ratio in regulatory capital ...

    Risk-weighted assets are the denominator in the calculation to determine the solvency ratio under the provisions of the Basel ... Read Full Answer >>
  3. Why should investors care about risk weighted assets of a bank?

    Investors should care about risk-weighted assets because they show how much of a bank's assets are susceptible to market ... Read Full Answer >>
  4. What are some of the well-known no-load funds?

    The capital adequacy ratio promotes stability and efficiency of worldwide financial systems and banks. The capital to risk-weighted ... Read Full Answer >>
  5. How do I calculate the capital to risk weight assets ratio for a bank in Excel?

    Calculate a bank's capital to risk-weighted assets ratio in Microsoft Excel once you determine its tier 1 and tier 2 capital ... Read Full Answer >>
  6. How can I calculate the tier 1 capital ratio?

    Tier 1 capital, under the Basel Accord, measures a bank's core capital. The tier 1 capital ratio measures a bank's financial ... Read Full Answer >>

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