CFA Practice Question

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CFA Practice Question

A bank is considered to be very safe if it has a large amount of:

I. risk-weighted assets
II. Tier-1 capital
III. Tier-2 capital
Correct Answer: None of them is correct.

It is the ratio that matters. The minimum capital adequacy ratios are critical is to make sure that banks have enough cushion to absorb a reasonable amount of losses before they become insolvent and consequently lose depositorsí funds.

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