Ques19:

Coogee bank has $20 million in assets, with risk-adjusted assets of $10 million. Tier 1 capital is $500,000 and Tier II capital is $400,000. If the bank issues $100,000 in common stock and uses it to issue mortgage loans (risk-weight 50%), what is the new total capital ratio?

Select one:

a. The new total capital ratio is 4.98%

b. The new total capital ratio is 6%

c. The new total capital ratio is 5.97%

d. The new total capital ratio is 9.95%

e. The new total capital ratio is 10%