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All the statements with respect to bank capital under Basel II are correct EXCEPT: A. Tier 1 capital is equal to shareholders’ equity (common stock outstanding, nonredeemable and noncumulative outstanding preferred stocks), plus after tax retained earnings. B. cumulative preferred stock is a component of Tier 2 capital. C. short-term subordinated debt (Tier 3 capital) can only be used to meet capital requirements related to operational risk. D. Tier 1 capital can be used without limitations to meet capital requirements of bank risks. |