Gert Fonn, CFA, extracted the following information on the regulatory capital and total assets for JJK inc, a U.S. commercial bank he is considering as an investment. Fonn weights cash at 0%, performing loans at 100% and non-performing loans at 150% when calculating risk-weighted assets, and only considers investing in institutions with a tier 1 capital ratio over 15%. However, he is concerned that JJK has classified $85m of non-performing loans as performing loans.

Select one:

a. JJKs current tier 1 capital ratio meets Fonns criteria, but would not if the $85m of non-performing loans were reclassied

b. JJKs current tier 1 capital ratio meets Fonns criteria even if the $85m of non- performing loans were reclassied

c. JJKs current tier 1 capital ratio does not meet Fonns criteria

d. Not enough information presented to check the bank performance against the critera