Question

    Which of the following is not a part of the Tier 1

    Capital of a bank?
    A Core equity Correct Answer Incorrect Answer
    B Capital conservation Buffer Correct Answer Incorrect Answer
    C Disclosed reserves Correct Answer Incorrect Answer
    D Undisclosed reserves Correct Answer Incorrect Answer
    E All are part of Tier I capital Correct Answer Incorrect Answer

    Solution

    Tier 2 Capital : represents “supplementary capital” such as undisclosed reserves, revaluation reserves, general loan-loss reserves, hybrid (debt/equity) capital instruments, and subordinated debt of the financial institution. Tier 2 Capital is generally less reliable or secure than Tier 1 capital, and therefore must be considered separately when evaluating the riskiness of a bank

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