- CFA Exams
- CFA Level I Exam
- Study Session 5. Financial Reporting and Analysis (1)
- Reading 16. Analysis of Financial Institutions
- Subject 2. Analyzing a Bank: The CAMELS approach

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**CFA Practice Question**

Suppose a bank has $5 million in tier-1 capital and $3 million in tier-two capital. It has loans that have been weighted and calculated as $40 million.The capital adequacy ratio of the bank ABC is ______.

A. 10%

B. 15%

C. 20%

**Explanation:**capital adequacy ratio = ($5 million + 3 million) / $40 million = 20%

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