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What is Tier 1 Capital? - Definition, Ratio & Core Capital

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question 1 of 3

Tier 1 capital is held by a bank because _____.

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1. Tier 1 capital does NOT include:

2. Tier 1 capital is also known as what?

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Quiz & Worksheet

To see just how much you understand about characteristics of Tier 1 capital and where it is held, complete the quiz and worksheet. Some questions on the quiz go over forms of Tier 1 capital and another name for it.

Quiz & Worksheet Goals

Be sure to complete these tools, testing your understanding of:

  • Components of the Tier 1 capital ratio formula
  • The minimum percentage of Tier 1 capital that a bank should hold
  • Examples of Tier 1 capital
  • Why Tier 1 capital is held by a bank

Skills Practiced

  • Reading comprehension - ensure that you draw the most important information from the lesson on Tier 1 capital
  • Information recall - access the knowledge you have gained about what Tier 1 capital is also known as
  • Interpreting information - verify that you can read and correctly interpret information about why Tier 1 capital is held by a bank and at what minimum percentage

Additional Learning

Give yourself the chance to review more finance topics by going through the lesson called What is Tier 1 Capital? - Definition, Ratio & Core Capital. Use this lesson to complete the following objectives:

  • Determine what risk-weighted assets are
  • Understand why Tier 1 capital is important
  • Learn how to calculate the Tier 1 common capital ratio
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