Question
What does the Capital Adequacy Ratio (CAR), also known
as the Capital-to-Risk Weighted Assets Ratio (CRAR), indicate about a bank?Solution
The capital adequacy ratio (CAR) is an indicator of how well a bank can meet its obligations. Also known as the capital-to-risk weighted assets ratio (CRAR), the ratio compares capital to risk-weighted assets and is watched by regulators to determine a bank's risk of failure.
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