To Be Considered Well-Capitalized, a Bank's Minimum Tier 1 Capital

question 27

Multiple Choice

To be considered well-capitalized, a bank's minimum Tier 1 capital, total capital, and leverage capital must be:

• A) 4%, 8%, and 3%, respectively.
• B) 8%, 5%, and 3%, respectively.
• C) 10%, 10%, and 10%, respectively.
• D) 6%, 10%, and 5%, respectively.
• E) 3%, 4%, and 8%, respectively.

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Definitions:

Defined Contribution Plan

A retirement plan where the employer, employee, or both contribute to an individual's account, and the retirement benefits depend on the account's investment performance.

Risk-free Return

The theoretical return on an investment with zero risk of financial loss, often represented by the yield on government securities.

Defined Contribution Plan

A retirement plan where both the employee and employer contribute to an account, with the final benefit dependent on account performance.

Risk-free Return

The theoretical return on an investment with no risk of financial loss, typically less than the return on riskier investments.