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Explanation:
In the context of Basel III, Tier 1 equity capital consists of common equity, retained earnings, and a limited amount of minority interest and unrealized gains and losses less goodwill and other intangibles. So, in this case:
Tier 1 equity capital = 100 + 80 + 20 − 5 = $195
Things to Remember
Q.4290 Assume that a bank has common equity of $100 million, retained earnings of $80 million, minority interest and unreleased gains and losses of $20 million, and goodwill and other intangibles of $5 million. What is the value of Tier 1 equity capital in the context of the Basel III accord?
A
$190 million
B
$195 million
C
$205 million
D
$100 million
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