Hello everyone,

Currently Im trying to solve a question about Risk weighted assets.

When I do 12,5*EAD*LGD*(WCDR-PD)*MA I get 12,5*15,9mln*0,55*(0,562-0,054)*1 = 55,53 million.

Can someone explain where I went wrong?

Kind regards,

Luc

Hello everyone,

Currently Im trying to solve a question about Risk weighted assets.

When I do 12,5*EAD*LGD*(WCDR-PD)*MA I get 12,5*15,9mln*0,55*(0,562-0,054)*1 = 55,53 million.

Can someone explain where I went wrong?

Kind regards,

Luc

You gotta calculate: LGD = 1 - Recovery ~rate = 1 - 0.55 = 0.45 ~(45\%)

12.5 \times EAD \times LGD \times (WCDR - PD) \times MA

= 12.5 \times 15.9 ~million \times 0.45 \times (0.562 - 0.054) \times 1

= 45.43 ~million

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okay thanks, that was a really stupid mistake.

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