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ABC Bank has total checkable deposits of $100 million in its account. Its capital, including common stocks, retained earnings, preferred stocks and subordinated debt is
ABC Bank has total checkable deposits of $100 million in its account. Its capital, including common stocks, retained earnings, preferred stocks and subordinated debt is $10 million. The ratio of reserves requirement by the central bank is 8%. The bank invests in commercial loans with total loans value of $70 million. Assume ABC does not invest in any other assets. Does ABCs capital comply with Basel III capital accords? Y
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