Question

Q. Consider the following statements in reference to Tier 1 Capital:

Which of the statements given above is/are correct?

• A. 1 only
• B. 2 only
• C. Both 1 and 2
• D. Neither 1 nor 2

Answer 1

The correct option is B 2 only

Explanation:

• Statement 1 is incorrect. Tier 1 capital is a bank's core capital and includes disclosed reserves that appear on the bank's financial statements and equity capital.
• Statement 2 is correct. This money is the funds a bank uses to function on a regular basis and forms the basis of a financial institution's strength.