What is CET 1 capital?

Sufficient capital is required by banks to absorb any losses that arise during the normal course of the bank’s operations. The Capital of a bank is divided into different tiers according to the characteristics / qualities of each qualifying instrument. The Basel III framework tightens the capital requirements by limiting the type of capital into…

What is Value at Risk (VaR)?

Value at risk is a statistic technique that measures and estimates the level of financial risk within an organization or investment portfolio or position over a specific time frame (holding period). The three major methods are used to calculate VaR   are (i) Parametric Estimates (ii) Monte Carlo simulation (iii) Historical simulation. Parametric Estimates:  The method…