The Measurement of Credit Risk Under the Basel II Accord

question 23

Multiple Choice

The measurement of credit risk under the Basel II Accord allows banks to choose between

• A)a standardized approach similar to that used under Basel I.
• B)a basic indicator approach that will cause banks to hold an additional 12 percent of capital.
• C)an internal rating system in which they must adhere to strict methodological and disclosure standards.
• D)All of the options.
• E)a standardized approach similar to that used under Basel I and an internal rating system in which they must adhere to strict methodological and disclosure standards.

---

Definitions:

Open Transaction

Any financial transaction that has been initiated but not yet completed or settled.

Customer Based

Customer based refers to a business strategy or perspective centered on understanding and addressing the needs, preferences, and behaviors of customers.

Confidential

Information meant to be kept secret or private from those not authorized to see it.

QuickBooks Enterprise

A comprehensive business management software designed for small to medium-sized businesses, offering advanced accounting features.