Question
Hello, need help with the following questions. I upvote only if you provide me with an explanation and correct answers. 1. What is the difference
Hello, need help with the following questions. I upvote only if you provide me with an explanation and correct answers.
1. What is the difference between Tier 1 and Tier 2 Capital?
a. Tier 1 capital is comprised of Common Equity but Tier 2 is only Preferred stock equity.
b. Tier 1 capital is common shareholder's equity minus loan loss reserves and Tier 2 is everything else, including bond debt.
c. Tier 1 capital is common shareholder's equity minus loan loss reserves and Tier 2 is preferred stock and value of owned real estate, up to 4% of total capital
d. Tier 1 capital is common shareholder's equity minus loan loss reserves and Tier 2 is preferred stock and value of owned real estate. Tier 1 + Tier 2 must be at least 8% of total capitalization.
2. The value of a Bank's risky assets are discounted, based on categorizies defined by their ___________ riskiness. {Fill in the Blank Q - no choices given}
3. A Bank has $42 million in common equity tier 1 capital and a risk-adjusted weighted value of $736 million. What is its CAR?
4. A bank has $42 million in common shareholder equity and loan exposure of $697 million. What is the bank's Minimim Leverage Ratio?
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