Tier 1 and tier 2 capital requirements differ from tier 3 capital requirements in that tier 1 and tier 2 are associated with: A. exchange-risk charges. B. interest-rate risk charges. C. market-risk charges. D. credit-risk charges.
Tier 1 and tier 2 capital must first be applied to credit-risk charge amounts. Tier 1 and tier 2 capital can be used for market-risk charges only above those required by credit-risk charges. Tier 3 capital can only be used for market-risk charges.
