What is the combined economic capital for the bank?

The standalone economic capital estimates for the three uncorrelated business units of a bank are $100, $200 and $150 respectively .

What is the combined economic capital for the bank?
A . 269
B . 72500
C . 21
D . 450

Answer: A

Explanation:

Since the business units are uncorrelated, we can get the combined EC as equal to the square root of the sum of the squares of the individual EC estimates. Therefore Choice ‘a’ is the correct answer. [=SQRT(100^2+200^2+150^2)]