Tier-1 capital: Refers to the best performing tier of bank assets. Consists mainly of shareholders equity and retained earnings. Provides complete safety net so that bank with a Tier-1 capital ratio above 8.5% cannot fail. Chose 1 option from below: Only III is correct. Only II is correct. Only I is correct. I and II are correct. II and III are correct. Thanks!
Tier-1 capital: Refers to the best performing tier of bank assets. Consists mainly of shareholders equity and retained earnings. Provides complete safety net so that bank with a Tier-1 capital ratio above 8.5% cannot fail. Chose 1 option from below: Only III is correct. Only II is correct. Only I is correct. I and II are correct. II and III are correct. Thanks!
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Tier-1 capital:
- Refers to the best performing tier of bank assets.
- Consists mainly of shareholders equity and
retained earnings . - Provides complete safety net so that bank with a Tier-1 capital ratio above 8.5% cannot fail.
Chose 1 option from below:
Only III is correct.
Only II is correct.
Only I is correct.
I and II are correct.
II and III are correct.
Thanks!
Expert Solution
Step 1
Tier 1 capital is the main capital held in reserves of the bank and will be used for funding of business activities for the bank clients. This is the strongest form of capital being used by the bank.
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