A Criticism of the Basel I Risk-Based Capital Ratio Is

question 111

Multiple Choice

A criticism of the Basel I risk-based capital ratio is

• A)the incorporation of off-balance-sheet risk exposures.
• B)the application of a similar capital requirement across major banks in international banking centers across the world.
• C)the more systematic accounting of credit risk differences.
• D)the lack of appropriate consideration of the portfolio diversification effects of credit risk.
• E)the application of a similar capital requirement across major banks in international banking centers across the world and the more systematic accounting of credit risk differences.

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Definitions:

Variable Costs

Costs that change in proportion to the level of production or business activity.

Full Costs

This refers to the comprehensive total amount that includes all relevant costs of production, including direct, indirect, fixed, and variable costs.

Cost of Goods Sold

The historical cost of products sold as reported in the income statement.