Bank capital is the amount of money a bank has in reserve to cover unexpected losses. It includes the capital contributed by the bank's shareholders plus accumulated retained profits. This is because shareholders' contributions and retained earnings are the two primary sources of a bank's equity capital. Bank capital acts as a cushion against losses, providing protection to depositors and lenders.

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Bank Capital Is

Question 32

Multiple Choice

Bank capital is

A) the current market value of the bank's physical assets.
B) the historical or original value of the bank's physical assets.
C) the capital contributed by the bank's shareholders plus accumulated retained profits.
D) the sum of the value of the bank's assets plus the value of the bank's liabilities.

Correct Answer: