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Question 1: a. Distinguish between regulatory capital and balance sheet capital and illustrate how each of themis measured. b. Identify whether the Basel Accord is

Question 1:

a. Distinguish between regulatory capital and balance sheet capital and illustrate how each of themis measured.

b. Identify whether the Basel Accord is based on regulatory capital or balance sheet capital andillustrate how this has changed over time.

c. Explain the difference between Common Equity Tier 1, Additional Capital Tier 1 and Tier 2regulatory capital. Which type of regulatory capital do regulators prefer and why?

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