©THESTAR 2024/2025 ALL RIGHTS RESERVED 12:43 PM.
FDIC Technical Examination Exam
Questions With Correct Answers 100%
Verified
What are the four purposes of Capital? - Answer✔1. Absorb Losses
2. Promote Public Confidence
3. Restrict Excessive Asset Growth
4. Protect Depositors and the Deposit Insurance Fund
What are Basel III Capital Standards designed to do? - Answer✔To strengthen the quality and
quantity of bank capital and promote a stronger financial industry that is more resilient to
economic stress
Who do Basel III standards apply to? - Answer✔All FDIC insured depository institutions
What is emphasized by Basel III standards as the predominant form of bank capital? -
Answer✔Common Equity Tier 1 Capital
What is the most loss absorbing form of capital? - Answer✔Common Equity Tier 1 Capital
Why is Common Equity Tier 1 Capital widely recognized as the most loss-absorbing form of
capital? - Answer✔It is permanent and places shareholders' funds at risk of loss in the event of
insolvency
Where can you find the capital rules for all FDIC supervised institutions? - Answer✔Part 324 of
of the FDIC rules and regulations
What are the four purposes of Part 324 of the FDIC rules and regulations? - Answer✔-Defines
capital elements
- Establishes risk-weighting guidelines for determining capital requirements under the
standardized and advanced approaches
1
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 12:43 PM.
-Sets PCA standards that prescribe supervisory action for institutions that are not adequately
capitalized
-Establishes requirements to maintain a capital conservation buffer that affects capital
distributions and discretionary payments
What are the components of regulatory capital? - Answer✔- Common equity tier 1 capital
- Additional tier 1 capital
- Tier 2 capital
What comprises Tier 1 Capital? - Answer✔Common equity tier 1 capital
Additional tier 1 capital
What comprises total capital? - Answer✔Tier 1 Capital (CET1 and Aditional Tier 1 Capital)
Tier 2 Capital
What serves as the numerators for calculating regulatory capital ratios? - Answer✔- Common
equity tier 1 capital
- Tier 1 capital
- Total capital
What serves as the denomonator for calculating regulatory capital ratios? - Answer✔Risk
weighted assets
What serves as the numerator for calculating the Tier 1 Leverage Capital Ratio? -
Answer✔Average total assets
What is the formula for calculating CET1 Capital? - Answer✔Common Stock + Surplus Net of
Treasury Stock + Retained Earnings + AOCI + (Regulatory Deductions/ Adjustments) + CET1 Non
Controlling Minority Interest
What is Surplus Net of Treasury Stock? - Answer✔The excess amount of capital from the re-
acquisition of previously sold issuance of shares above par value, which is recorded in the
Shareholders' Equity account.
What is the AOCI opt out election? - Answer✔A one-time opt-out election, enabling non-
advanced approach institutions to calculate regulatory capital without AOCI.
What is the benefit of the AOCI opt out election? - Answer✔Neutralizes the impact of
unrealized gains or losses on available-for-sale bond portfolios in the context of regulatory
capital levels.
2
FDIC Technical Examination Exam
Questions With Correct Answers 100%
Verified
What are the four purposes of Capital? - Answer✔1. Absorb Losses
2. Promote Public Confidence
3. Restrict Excessive Asset Growth
4. Protect Depositors and the Deposit Insurance Fund
What are Basel III Capital Standards designed to do? - Answer✔To strengthen the quality and
quantity of bank capital and promote a stronger financial industry that is more resilient to
economic stress
Who do Basel III standards apply to? - Answer✔All FDIC insured depository institutions
What is emphasized by Basel III standards as the predominant form of bank capital? -
Answer✔Common Equity Tier 1 Capital
What is the most loss absorbing form of capital? - Answer✔Common Equity Tier 1 Capital
Why is Common Equity Tier 1 Capital widely recognized as the most loss-absorbing form of
capital? - Answer✔It is permanent and places shareholders' funds at risk of loss in the event of
insolvency
Where can you find the capital rules for all FDIC supervised institutions? - Answer✔Part 324 of
of the FDIC rules and regulations
What are the four purposes of Part 324 of the FDIC rules and regulations? - Answer✔-Defines
capital elements
- Establishes risk-weighting guidelines for determining capital requirements under the
standardized and advanced approaches
1
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 12:43 PM.
-Sets PCA standards that prescribe supervisory action for institutions that are not adequately
capitalized
-Establishes requirements to maintain a capital conservation buffer that affects capital
distributions and discretionary payments
What are the components of regulatory capital? - Answer✔- Common equity tier 1 capital
- Additional tier 1 capital
- Tier 2 capital
What comprises Tier 1 Capital? - Answer✔Common equity tier 1 capital
Additional tier 1 capital
What comprises total capital? - Answer✔Tier 1 Capital (CET1 and Aditional Tier 1 Capital)
Tier 2 Capital
What serves as the numerators for calculating regulatory capital ratios? - Answer✔- Common
equity tier 1 capital
- Tier 1 capital
- Total capital
What serves as the denomonator for calculating regulatory capital ratios? - Answer✔Risk
weighted assets
What serves as the numerator for calculating the Tier 1 Leverage Capital Ratio? -
Answer✔Average total assets
What is the formula for calculating CET1 Capital? - Answer✔Common Stock + Surplus Net of
Treasury Stock + Retained Earnings + AOCI + (Regulatory Deductions/ Adjustments) + CET1 Non
Controlling Minority Interest
What is Surplus Net of Treasury Stock? - Answer✔The excess amount of capital from the re-
acquisition of previously sold issuance of shares above par value, which is recorded in the
Shareholders' Equity account.
What is the AOCI opt out election? - Answer✔A one-time opt-out election, enabling non-
advanced approach institutions to calculate regulatory capital without AOCI.
What is the benefit of the AOCI opt out election? - Answer✔Neutralizes the impact of
unrealized gains or losses on available-for-sale bond portfolios in the context of regulatory
capital levels.
2
