Question 1. Discuss the new capital requirements for Basel III. What are the additional capital buffers required by Basel III and what new ratios are required to monitor the funding status of banks?
Question 2. What is contingent capital and how can it be beneficial to help solve the debt over hang problem faced by banks during a financial crisis?
Question 3. What is meant by corporate separateness and why is it important? What are the implications for market discipline and capital rationing if corporate separateness is impaired for a bank holding company?