5. a) b) c) State the core objectives of the Basel Capital Accord, which first started to come into force in 1992. [8 marks] Define Tier 1 capital and capital adequacy ratio. [8 marks] Given Bank A reports the following items on its balance sheet, calculate the risk- weighted assets, Tier 1 capital and Tier 1 capital ratio. Risk weighted amounted (US$ bn) 116.6 Balance Sheet Items Equity capital Financial standby letter of credit Cash Securities Loans and leases Commercial letter of credit Disclosed reserves Goodwill Subordinated term debt 85.2 180.6 260.5 560.4 6.5 12.2 11.3 4.3 [8 marks) [Total: 24 marks)