Bank's capital includes:

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BlackTom AI · Accepted Answer

First, consider the concept at hand: bank capital constitutes the funding that supports the bank’s risk-bearing capacity and regulatory requirements, typically composed of shareholder funds plus accumulated retained profits. 
Option a: 'a. shareholder's funds and Accumulated retained profits.' This aligns with standard definitions, as shareholder funds (also called paid-in capital or equity) and retained earnings constitute the bank’s core capital base that absorbs losses and supports solvency.
Option b: 'b. deposits and Shareholder's funds.' While shareholder’s funds are part of capital, deposits are liability items owed to customers and not part of capital; they are not considered capital themselves. This option confuses funding sources with capital.
Option c: 'c. deposits and borrowed funds.' Both deposits and borrowed funds are liabilities or sources of external funding, not capital; they do not represent the bank’s own net worth or loss-absorbing equity.
Option d: 'd. borrowed funds and accumulated retained profits.' Accumulated retained profits are part of equity, but borrowed funds are liabilities and do not belong to the capital base; relying on borrowings to constitute capital mischaracterizes capital structure and risk profile.
In summary, only combinations that include equity components (shareholder funds and retained profits) correctly describe bank capital, while options that pair capital with deposits or borrowings mislabel the nature of capital and its regulatory role.

Bank's capital includes:

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Bank capital performs several important roles except:

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