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What are Risk-Weighted Assets?
International banking regulations set forth in the Basel Accords require that institutions maintain a certain amount of capital relative to the amount of risk-weighted assets (RWA) they have.
Conservative investments such a treasury notes have a risk weighting of zero, while corporate bonds have a weighting of .20, and so forth.
The exact weighting system is laid out in Basel agreements. The system is designed to reveal a bank’s level of exposure to potential losses, and the capital requirements are there to balance out the risks and to protect the global economy from a meltdown in the financial system.
The previously existing systems for regulating reserve requirements for banks did not adequately take the relative risks of different assets and liabilities into account. Today’s required Capital Asset Ratio and Capital to Risk Weighted Assets Ratio are the banking system’s best efforts to adequately account for the various levels of risk present and to maintain an adequate buffer.
Should I buy gold coins?
The value of gold coins is twofold: the price of the gold in the coin, and the numismatic value of the coin
Can I Leave My 401(k) With My Former Employer?
Generally a plan will allow you to leave your assets in there indefinitely, but this is probably not ideal for you
Which is Better for Me: a Roth or Traditional IRA?
The choice between a Roth IRA and a Traditional IRA depends on available discretionary income and financial situation
Who Can Put Money into an IRA?
Generally speaking, as long as you or your spouse is earning taxable income, you can contribute money to an IRA
How Does Social Security Work?
Social Security uses mandatory payroll taxes to grow trust funds that are used to pay income to retirees (qualified ppl)
Am I Eligible for Social Security Benefits?
In general, Social Security Benefits will only be paid in cases where individuals paid into the system
What is the Price/Earnings to Growth Ratio (PEG Ratio)?
The Price/Earnings to Growth Ratio (PEG Ratio) is used to determine a company’s value relative to its expected growth
What is Dividend Growth Rate?
Dividend growth rate is the annual increase in the scale of dividend payments to stockholders. Good dividend growth...
Whats is Commercial Paper?
Commercial Paper is an unsecured short-term loan that a highly rated corporation can issue to finance short-term...
What Does it Mean to have a "Duty of Best Execution"?
To have a “duty of best execution” means that a broker or entity fulfilling a trade request has to do so at the best...