Which of the Following Statements About Regulatory Capital Is False

question 3

Multiple Choice

Which of the following statements about regulatory capital is false?

• A) Tier 1 capital includes paid-up ordinary shares, retained earnings, non-cumulative irredeemable preference shares and general reserves.
• B) Tier 2 capital includes general provision for doubtful debts, revaluation reserves of premises, mandatory convertible notes and approved perpetual subordinated debt.
• C) Tier 1 capital is core capital, including paid-up ordinary shares, non-cumulative irredeemable preference shares and general reserves.
• D) Tier 2 capital includes general reserves for doubtful debts, asset revaluation reserves of premises, other preference shares, mandatory convertible notes, cumulative redeemable preference shares and perpetual subordinated debt.

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Definitions:

Profit-Maximizing Level

The point at which a business achieves the highest profit, with costs minimized and revenue maximized.

Total Revenue

The total amount of money received by a company for goods sold or services provided during a certain time period.

Total Cost

The overall amount of money spent on production, which includes both fixed and variable expenses.

Market Price

The prevailing market rate at which a service or asset is offered for purchase or sale.