Financial Awareness - Risk, Stability & Emerging Finance
Which of the following is NOT a component of the Basel III Capital Adequacy framework?
Which of the following is NOT a component of the Basel III Capital Adequacy framework?
hard Q10 of 15
Step-by-Step Solution
Step 1: Understand Basel III capital components
Basel III capital adequacy framework includes Common Equity Tier 1 (CET1), Additional Tier 1, and Tier 2 capital as components of regulatory capital.Step 2: Analyze options
CET1, Tier 1, and Tier 2 are capital components. Liquidity Coverage Ratio is a separate liquidity standard, not a capital component.Step 3: Explain why other options are incorrect
Common Equity Tier 1 is the highest quality capital; Tier 1 includes CET1 plus additional capital; Tier 2 is supplementary capital. LCR is a liquidity metric, not capital.Final Answer:
Liquidity Coverage Ratio (LCR) → Option CQuick Check:
Liquidity Coverage Ratio (LCR) = correct ✅
Quick Trick: LCR is liquidity, not capital component.
Common Mistakes:
- Confusing liquidity ratios with capital components.
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