MCT Challenge file

michella0410

Hi, I have another question for this file, do we need to know what are included in Category B capital & Category C capital?

since this question does not providing these directly.

Thanks,

michella0410

Hi, another question for the same file:

the capital & surplus in EQ margin is calculated as 10% of total equity. In this case, should the Perpetual preferred shares (row 22) be included in total equity?

is the Perpetual preferred shares the Preferred Shares in the Shareholder's Equity section in Balance Sheet?

or the Perpetual preferred shares is the Preferred Shares - Debt in the liability section in Balance Sheet? if that's the case, then why it is Category B capital and also, why the Subordinated debt which is the liability in Balance Sheet is Category C capital?

thanks very much

Staff-T1

For first question : Yes you would need to know it
Question 2: Initially I didn't think so, but upon doing some research I think it makes sense to also includes preferred shares in the equity component
Question 3: Yes preferred shares are in the shareholder's Equity section
Question 4: I am not too sure why subordinated debt is considered under capital C, it is just started in the MCT paper that it is and I took it at face value

michella0410

thanks very much!

however, for the question 1, the Wiki page still indicates that "The syllabus excludes the entire subsections on category B and category C capital so it seems you don't have to know anything more about these."

what should be we need to learn about capital B&C?

Thanks

Staff-T1

Yes, you are right - The section around capital B and C is excluded. I actually misread it as capital A 😅