The Banking Law 2004 Act 673prescribes that a universal bank in Ghana must at all times have a Capital Adequacy Ratio of 10%.

A. Explain Capital Adequacy Ratio, its importance to the regulator and derive a formula for determining it.

B. What will be the effect of the purchase of a new building property by a bank for its offices, if total deposits remain unchanged? Assume that Total Liability is made up of deposits only.

C. Suggest ways to ensure that a bank which has reported a lower Capital Adequacy ratio than prescribed by the Banking Lawcan normalize its position with the Regulator.

D. Outline the options available for Bank of Ghana if a Bank persistently breaches Capital Adequacy measures over a long period.