What Are Risk-Weighted Assets?
Risk-weighted assets are those held by a bank or other financial properties that are weighted according to their risk level. This system of determining the riskiness of the assets is used by the Federal Reserve Board in the United States to determine how much capital a bank must have on hand at any time to prevent a financial failure. A bank must contain capital that measures out to a predetermined percentage of its risk-weighted assets. Each asset is assigned a risk weight that is based on the amount of risk involved.
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