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The ratio of a bank's available capital to its risk-weighted credit exposure is termed as

1. Loan to deposit ratio
2. Capital adequacy ratio
3. Credit Loss Ratio
4. Statutory Liquidity Ratio

Correct answer: Capital adequacy ratio

Solution

Capital adequacy ratio measures a bank's capital relative to its risk-weighted credit exposure. It indicates the bank's ability to absorb losses and maintain solvency. Therefore, the correct term is Capital adequacy ratio.

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