Mountbatten Bank is reporting its risk-adjusted return on capital (RAROC) for the year 2020. Its...

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Accounting

Mountbatten Bank is reporting its risk-adjusted return on capital (RAROC) for the year 2020. Its capital has dropped by $5 billion year-on-year to $45 billion. Its pre-provision profit after tax has gone down from $4 billion to $3 billion. Its Expected Loss (EL) has remained unchanged at $1 billion. What is the closest estimate of change in the banks RAROC between 2019 and 2020?

RAROC decreased by 1.6%.

RAROC increased by 20.0%.

RAROC decreased by 20.0%.

RAROC increased by 1.6%.

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