The Primary Difference Between Basel I and the Proposed Basel

question 118

Multiple Choice

The primary difference between Basel I and the proposed Basel III in calculating risk-weighted assets is

• A)that Basel II considers OBS assets.
• B)the use of only three weight classes rather than four classes.
• C)a heavier reliance on the use of ratings by external credit rating agencies for the assignment of assets to weight classes.
• D)All of the options.
• E)that Basel II considers OBS assets as well as a heavier reliance on the use of ratings by external credit rating agencies for the assignment of assets to weight classes.

---

Definitions:

Total Expenditures

The sum of all spending or costs incurred by an individual, firm, or government.

Price Elasticity of Demand

An indicator of the responsiveness of the quantity demanded of a product to changes in its price.

Movie Tickets

A form of voucher or certificate that entitles the holder to admission to a film screening.

Elastic

Describes a situation where a change in one variable, such as price, leads to a significant change in another variable, such as demand.