Question: EXAMPLE: Capital position Mega Bank's RWA for 20X7 and 20X8 were $4, 700,000 and $5,175,000, respectively. An analysis of bank's capital for the two years

EXAMPLE: Capital position Mega Bank's RWA for 20X7 and 20X8 were $4, 700,000 and $5,175,000, respectively. An analysis of bank's capital for the two years reveals the following information. Amount ('OOO) Capital Type 20X7 20X8 Common Equity Tier 1 $200 $190 Subordinated debt, no maturity, no dividends/interest $85 $95 Subordinated debt, maturity 5+ years $110 $120 1. Determine the Common Equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio for both years. 2. Comment on capital adequacy for Mega Bank

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