answer:C
Required Capital=[DRAWN+(UNDRAWN*LEF)]*CF
Where:Credit commitment=COM=USD 1 billion
Drawn amount=Drawn=35%*COM=0.35*USD 1 billion=USD 350 million
Undrawn amount=UnDrawn=COM–Drawn=65%*COM=USD 650 million
Loan equivalent factor=LEF=0.4 Capital factor(capital charge)=CF=3.0%
Therefore the initial required economic capital is calculated as follows:
Required Capital=[350+(650*0.4)]*0.03=USD 18.3 million,and the required capital if the change is implemented would be:[350+(650*0.85)]*0.03=USD 27.075 million.
Hence the additional required economic capital would be 27.075–18.3=USD 8.775 million