Here we have two workouts, the first of which asks us to assess the risk weighted assets or RWA for ABC bank. And then we're gonna use the risk weighted asset figure we've calculated to in workout two out the minimum amount of each type of capital the bank is required to hold.

So starting with workout one, we see we have a list of companies, and these are presumably companies that the bank has made loans to. Given that these are assets on the bank's balance sheet, we have the value of each asset, so the value of the loans.

Then we've got a risk rating and a weight for purposes of calculating the risk weighted asset amount. Now you should notice that those assets with a higher risk rating, in other words, safer from the bank's perspective, they have got a lower weight, whereas the riskier assets, the ones with a lower rating, they have got a higher weight. So the riskier bank's assets, the more risk weighted assets the bank will have. So let's calculate the risk weighted assets, and all we need to do is multiply the value of each asset by its weight.

So if we do it for one of the assets, and then just copy that down, and presuming that these are the only assets this bank has on its balance sheet, the total risk weighted assets, if we get a sum function that's $642 million.

Now this $642 million is significant in that it's going to determine how much capital the bank needs to hold. And that brings us on to work out to workout two. In workout two, we are told that the minimum capital requirements for CET1 is 10.5% of risk weighted assets. Tier one minimum is 12%, and total capital minimum is 15%. So we need to go pick up our risk weighted asset figure, and I'm going to lock onto that and then multiply that with the various percentages. And if we copy our formula down, we've got the minimum capital requirements for each type of capital. So in conclusion, the riskier bank's assets, the higher the risk weighted asset figure will be and the more capital the bank will have to hold against those assets.