Groundlearn / Glossary / Leverage ratio
Leverage ratio
A FRM term, defined in plain English with the distinction examiners test.
What it means
Capital divided by total exposure, without risk weighting — a backstop to the risk-weighted requirement.
The exam angle
Exists because risk weights can be gamed and because a model that says an exposure is riskless has been wrong before.
Where it appears in the syllabus
- Current Issues in Financial MarketsFRM Part II · exam weight 10% · This cycle's readings — AI in finance, climate risk, digital assets, bank stress.
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Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
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