The Buffer Proposed by Basel III That Is Designed to Ensure

question 92

Multiple Choice

The buffer proposed by Basel III that is designed to ensure that DIs build up a capital surplus outside of periods of financial distress is called the

• A)Capital conservation buffer.
• B)Countercyclical buffer.
• C)Leverage buffer.
• D)Tier II buffer.
• E)CET1 capital buffer.

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Definitions:

Gross Debt Service Ratio

A financial ratio that compares an individual's monthly housing costs (including mortgage payments, property taxes, and utilities) to their gross monthly income, used by lenders to assess borrowing capacity.

Gross Monthly Income

The total amount of income earned in a month before taxes and deductions.

Compounded Monthly

Interest or returns on an investment are calculated and added to the principal amount every month.

Amortized

Refers to the process of paying off debt over time in equal installments of principal and interest.