What is the connection between ordinary shares and level 1?
level 1 capital is a measurement of the total financial institution. In this case, ordinary shares are shares issued by a company and traded on the primary market to obtain capital. Originally, the level 1 was determined mainly through the initial offer of the company's ordinary shares of the PLUS undivided earnings. This has been slowly modified over the years and is now connected by several factors to determine the total level 1 capital, although a very large part is still formed by ordinary shares. The weighted value of money borrowed institutions and parts of external investments now also plays an important role. This shares are awarded the amount he initially sold on the primary market; Essentially the value he held for the first time when she was sold. When the market causes the value of the stock value, the changes have no effect on the value of the shares to determine the Tvalue 1.
Since the company earns money, the value of the shares provided does not change,But it continues to affect the total level 1 capital. If the financial company is profitable, this money can be used by a company or provided to investors as a dividend. The money provided as a dividend is considered to be lost in terms of capital and is no longer counted. When the money is reinvested in the company, the total reinvestment is added to capital.
Originally, these two factors were the entire level 1. In the later part of the 20th century, the changes that expanded the overall measurement of the capital value came into force. Now the financial institution can count the money it has lent or invested in other companies. These debit and investments are weighed on the basis of how money is invested and with whom. The whole amount of money is rarely added directly to capital; Usually, a direct percentage is first removed.
As with all forms of capital, losses are removed before determining the final value. This was one of the main blocks of the injury in the capital level 1 because many debts of the financial firm Je in fact money that lent rather than real losses. Political reforms alleviated some of these concerns restructuring exactly what was considered as assets and what debts were in relation to banks. Now all these factors meet - ordinary shares, reinvested income, borrowed money and total debt - to determine the actual capital value of level 1.