Consider an FI with the following off-balance-sheet items: A two-year loan commitment with a face value of $120 million, a standby letter of credit with a face value of $20 million and trade-related letters of credit with a face value of $70 million.

1). What is the total credit equivalent amount?

2). All counterparties have a credit rating of BBB. What is the capital amount of the FI needs to hold against these exposures assuming CAR of 10.5%?

Answer rating: 100% (QA)

Step 1 Credit equivalent amount is the tot... View the full answer