Suppose that the assets of a bank consist of $$100$ million of loans to BBB$-$rated

corporations. The PD for the corporations is estimated as $5\%.$ The average maturity is

three years and the LGD is $65\%.$ What is the total risk$-$weighted assets for credit risk

under the Basel II IRB approach? How much Tier $1$ and Tier $2$ capital is required? How

does this compare with the capital required under the Basel II standardized approach

and under Basel I?