CRA Regulatory Capital Requirements 2

Question 1

Under Basel III, what is the minimum Common Equity Tier 1 (CET1) capital ratio required of banks?

Accepted Answer

4.5%

Answer

2.0%

Answer

6.0%

Answer

8.0%

Question 2

Which Basel III buffer is designed to absorb losses during periods of excessive credit growth?

Accepted Answer

Countercyclical capital buffer

Answer

Capital conservation buffer

Answer

Systemic risk buffer

Answer

Stress capital buffer

Question 3

What does the Supplementary Leverage Ratio (SLR) measure?

Accepted Answer

Tier 1 capital relative to total leverage exposure

Answer

Tier 1 capital relative to risk-weighted assets

Answer

CET1 capital relative to off-balance-sheet items

Answer

Total capital relative to average total assets

Question 4

A bank's Tier 1 capital is $10 billion and its risk-weighted assets are $125 billion. What is its Tier 1 capital ratio?

Accepted Answer

8.0%

Answer

6.0%

Answer

7.5%

Answer

12.5%

Question 5

Which of the following instruments qualifies as Additional Tier 1 (AT1) capital under Basel III?

Accepted Answer

Contingent convertible bonds (CoCos)

Answer

Retained earnings

Answer

Common equity shares

Answer

Subordinated term debt maturing in 5 years

Question 6

Under the standardized approach, a residential mortgage loan with an LTV of 60% receives a risk weight of:

Accepted Answer

35%

Answer

20%

Answer

50%

Answer

100%

Question 7

What is the primary purpose of the Net Stable Funding Ratio (NSFR)?

Accepted Answer

Promote resilient longer-term funding structures over a one-year horizon

Answer

Ensure banks hold enough liquid assets for a 30-day stress period

Answer

Limit interbank lending concentration

Answer

Set minimum core deposit requirements