A bank reports the following items on its latest balance


Question: A bank reports the following items on its latest balance sheet: allowance for loan and lease losses, $42 million; undivided profits, $81 million; subordinated debt capital, $3 million; common stock and surplus, $27 million; equity notes, $2 mil-lion; minority interest in subsidiaries, S4 million; mandatory convertible debt, $5 million; identifiable intangible assets, $3 million; and noncumulative perpetual preferred stock, $5 million. How much does the bank hold in Tier 1 capital? In Tier 2 capital? Does the bank have too much Tier 2 capital?

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Finance Basics: A bank reports the following items on its latest balance
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