Question

Tier II (supplementary) capital includes which of the following? (I) Allowance for loan and lease losses, up to 1.25% of risk-weighted assets (II) Subordinated debt not maturing within 5 years (max amount = 50% of Tier 1 capital), (III) Common stock and retained earnings (IV) Nontransaction deposits

Answer 1

Answer:

Tier II (supplementary) capital includes:

(I) Allowance for loan and lease losses, up to 1.25% of risk-weighted assets

(II) Subordinated debt not maturing within 5 years (max amount = 50% of Tier 1 capital)

Explanation:

Tier 2 capital, or supplementary capital, includes a number of important and legitimate constituents of a bank's capital requirement.