Michael Bank currently has a portfolio made up of the following assets: a) $1,000,000 secured loan, b) $10,000,000 central government loan, c) $8,000,000 commercial LOC, d) $6,000,000 consumer loan, and e) $8,800,000 standby LOC. Calculate the amount of regulatory capital required to meet a capital adequacy ratio of 10% by employing the internal risk weighting and credit conversion factor for various assets and off-balance- sheet items as listed below. Illustrate the calculation clearly by showing the value and risk bucket group for each asset individually after conversion (if required) (15 marks): Risk Weights 0% 1. 2. 20% Risk Bucket Loans Domestic Central Govt. Public Entities, Foreign Governments (OECD), Banking Secured Lending. Commercial and consumer loans 3. 50% 14. 100% ccf Type Standby LOC, Guarantees Equivalent risk bucket Commercial and consumer loans 1. 100% . LT Loan Commitments 50% Commercial and consumer loans 3. Commercial LOC 20% Secured Lending 2 4. 0-15% Financial Derivatives (depends on type & maturity) ST Loan Commitments Public Entities, Foreign Governments (OECD), Banking Commercial and consumer loans 5. 0%