📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    Question

    Revaluation reserve are included as Tier II capital at a

    _______ discount for the purpose of capital adequacy ratio.
    A 35% Correct Answer Incorrect Answer
    B 50% Correct Answer Incorrect Answer
    C 55% Correct Answer Incorrect Answer
    D 60% Correct Answer Incorrect Answer
    E 65% Correct Answer Incorrect Answer

    Solution

    Revaluation reserves arise from revaluation of assets that are undervalued in the bank's books. Revaluation reserves at a discount of 55% when determining their value for inclusion in Tier II Capital i.e. only 45% of revaluation reserve should be taken for inclusion in Tier II Capital. Such reserves will have to be reflected on the face of the balance sheet as revaluation reserves.

    Practice Next
    More Financial Management Questions

    Relevant for Exams:

    ask-question