QUESTION 22

At the beginning of first quarter 2020, the bank buys anavailable-for-sale security for $150. At the end of the first quarter the price is $170. The bank sells the security at $180 at the end of the second quarter 2020.

During the second quarter 2020 (i.e. between the beginning and the end of the second quarter) the bank shareholders' equity ______________, the retained profit ___________________ and the capital reserve _____________________..

	A.	increased by $10; increased by $30; increased by $20
	B.	increased by $10; increased by $30; decreased by $20
	C.	decreased by $10; decreased by $30; increased by $20
	D.	did not change; increased by $30; decreased by $30
	E.	increased by $30; increased by $10; increased by $20

QUESTION 23

Which of the following statements is NOT correct?

	A.	The countercyclical buffer can be different in different countries.
	B.	Regulatory capital that is used for minimum requirements can be used for the conservation and the countercyclical buffers.
	C.	A bank cannot meet the countercyclical buffer if the conservation buffer has not been met.
	D.	The conservation buffer is always 2.5% of RWA, regardless of the state of the economy and the country.
	E.	The punishment for breaching the buffers is not as severe as the punishment for breaching the minimum capital requirements.