The Primary Difference Between Basel I and the Proposed Basel

question 62

Multiple Choice

The primary difference between Basel I and the proposed Basel III in converting OBS values to on-balance-sheet credit equivalent amounts is

• A)the use of credit ratings in Basel III to assign credit risk weights on the OBS activities.
• B)the use of six weight classes by Basel III rather than four classes.
• C)the use of the underlying counterparty activity in Basel II to assign credit risk weights on the OBS activities.
• D)All of these.
• E)the use of credit ratings in Basel III to assign credit risk weights on the OBS activities, and the use of the underlying counterparty activity in Basel II to assign credit risk weights on the OBS activities.

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Definitions:

Benefits of Scale

Advantages obtained from expanding the size of operations, which often lead to reduced costs per unit.

Undifferentiated Marketing

A marketing strategy that does not segment the market, but rather targets the whole market with one offer or message.

Wide Appeal

The characteristic of a product, service, or content that makes it attractive to a broad and diverse range of consumers or audiences.

Strong Competitors

Firms that possess a significant market share, resources, competitive advantage, or influence within an industry.