Explanation:
Economic capital refers to the amount of capital that a bank, based on its own internal models and risk assessments, determines it needs to maintain to cover potential losses over a certain time horizon at a given confidence level. This is distinct from:
Economic capital represents the bank's internal view of the capital needed to support its risk-taking activities.
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The minimum level of capital a bank needs to maintain, according to its own estimates, models, and risk assessments, is best described as its:
A
Equity capital.
B
Financial capital.
C
Economic capital.
D
Regulatory capital.