
Explanation:
Under the Basel I framework, banks are required to hold a minimum Total capital of 8% of risk-weighted assets (RWA), with at least half of this being Tier 1 capital (i.e., Tier 1 capital > 4% of RWA). Total capital is simply the sum of Tier 1 capital and Tier 2 capital.
Therefore:
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Q.4220 Based on the Basel I framework, which of the following expressions is incorrect?
A
Tier 1 capital > 4%(RWA)
B
Total capital > 8%(RWA)
C
Tier 1 capital + Tier 2 capital = Total capital
D
Tier 1 capital + Tier 2 capital > Total capital
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