OSFI MCT - 2015 Spring # 23 Part a

Study

The solution is as follows:

Limit on category B + C capital instruments
o 40 % * (Capital Available – AOCI) = 40% * (38,000 – 4,000) = 13,600
o This is less than 12,000 + 2,000, so an adjustment is required.
 Limit on category C capital instruments
o 7 % * (Capital Available – AOCI) = 7% * (38,000 – 4,000) = 2,380
o This is more than 2,000, so an adjustment is required.  
 The adjustment required is 400 for B + C and 380 for C. Since we must take the maximum,
we adjust the capital available by 400.
 Capital available after adjustment = 38,000 – 400 = 37,600

My question is since capital under Category C is less than the limit, then there should be no adjustment for category C. But the solution said the adjustment is 380 instead of 0.

Just want to confirm if the solution is not correct regarding the limit for Category C.

Thanks,

javid

Yes, you are correct. The final answer is still correct though because the 400 adjustment was used instead of the 380 adjustment.

@graham, could we mention briefly in the Battlecard for MCT (#59 - 2015 Spring #23 a)) that the examiner's report has a typo and no adjustment is made for category C?

graham

Thanks @Study, @javid. I have inserted a footnote in the BattleTable, a note in the wiki article text, and a note in the BattleCard referenced by @Study above:

• https://battleactsmain.ca/wiki6c/OSFI.MCT#BattlePlan

Thanks for noticing this!