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Star Bank has the following asset portfolio, with values stated in millions of d...
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Star Bank has the following asset portfolio, with values stated in millions of dollars and Basel III standardised credit risk weights. The bank has zero off-balance-sheet business.
ASSETS
|
VALUE
($million)
|
CREDIT
RISK WEIGHT
|
|---|---|---|
Cash
|
$100
|
0%
|
Municipal Bonds
|
$150
|
20%
|
Residential Mortgages
|
$250
|
35%
|
Commercial Loans
|
$500
|
100%
|
Junk Bonds
|
$100
|
150%
|
Total Assets
|
$1,100
|
|
Star Bank has $57 million in Common Equity Tier 1 (CET1) capital. What is the bank's CET1 risk-based capital ratio (assuming there is no market risk or operational risk)?