Difference between revisions of "Capital"

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Capital has both general and specific meanings that could be broadly summarized as 'money used to generate wealth through investment'.   
Capital has both general and specific meanings that could be broadly summarized as 'money used to generate wealth through investment'.   


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== Kinds of capital ==
== Kinds of capital ==
 
The standard accounting view of business capital focuses on the claims side of the balance sheet that represent sources of funding, such as shareholders' equity and paid-in earnings.<ref>{{cite web|url=http://www.riskcenter.com/story.php?id=7758|name=What Is “Economic Capital?” - A Quick Guide to the Differences between Economic Capital and Regulatory Capital|org=Riskcenter.com|date=July 29, 2008}}</ref> But regulators of financial insitutions like the [[Federal Deposit Insurance Corporation]] ([[FDIC]]), the [[Federal Reserve]] and the Bank of International Settlements ([[BIS]]) also take account of risk factors associated with different kinds of capital assets. Regulators assign different 'tiers' to bank assets when deciding what percentage of total assets must be held as required liquid capital, also called regulatory capital, at each tier. Such capital ratios are generally around 10 percent.
The standard accounting view of business capital focuses on the claims side of the balance sheet that represent sources of funding, such as shareholders' equity and paid-in earnings.<ref>{{cite web|url=http://www.riskcenter.com/story.php?id=7758|name=What Is “Economic Capital?” - A Quick Guide to the Differences between Economic Capital and Regulatory Capital|org=Riskcenter.com|date=July 29, 2008}}</ref> But regulators of financial insitutions like the [[Federal Deposit Insurance Corporation]] ([[FDIC]]), the [[Federal Reserve]] and the Bank of International Settlements ([[BIS]]) also take account of risk factors associated with different kinds of capital assets. Regulators assign different 'tiers' to bank assets when deciding what percentage of total assets must be held as required liquid capital, also called regulatory capital, at each tier. Such capital ratios are generally around 10 percent.


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