Amount of capital a company has to secure in order to remain solvent. Computed internally, it is the amount of capital a firm must have to support any risks it takes or will take on. The measurement process entails converting a specified risk to the amount of capital needed to support it. Computations are based on the firm’s financial strength and expected losses.
Financial strength pertains to the probability of the company not becoming insolvent within the measurement period and the confidence level in the statistical condition. Most banks use a confidence measurement between 99.96% and 99.98%, the insolvency rate expected for an institution with a AA or Aa credit rating.
On the other hand, the expected loss refers to the expected average loss within the measurement period and represent the cost of operating business, normally fianced by operating profits.
Unlocking the Myths about Free Markets
DIY: Trading Methods
Hurdles to Overcome when Purchasing a New Home
Signs of Economic Recuperation
Settle Your Mortgage Without Being Broke
SEE FOREX TUTORIAL
A Guide to Your Personal Income Tax: Papers
A Guide to Income Tax: Overlooked Credits and Cuts
Buying a Home: Getting Into the Escrow Process
A Guide to Your Personal Income Tax: Last-Minute Moves
Buying a Home: Writing an Offer
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