The Calculation of the Risk-Adjusted Asset Values of OBS Market

question 42

Multiple Choice

The calculation of the risk-adjusted asset values of OBS market contracts:

• A)nearly always equals zero because the exchange over which the contract initially traded assumes all of the risk
• B)requires multiplication of the credit equivalent amounts by the appropriate risk weights and includes all OBS transactions
• C)requires the calculation of a conversion factor to create credit equivalent amounts for all OBS transactions
• D)requires multiplication of the credit equivalent amounts by the appropriate risk weights and the calculation of a conversion factor to create credit equivalent amounts

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Definitions:

Pre-Reconciliation Cash Balance

The cash balance reported in accounting records before adjustments are made for reconciling items in a bank reconciliation.

Outstanding Checks

Checks that have been written and recorded in a company's financial ledger but have not yet been cashed or cleared by the bank.

Deposits in Transit

Funds that have been deposited by a company but not yet recorded by the bank, often causing a discrepancy in the bank statement versus the company’s record.

Contra-Revenue Account

An account that is deducted from a company's gross revenue, which results in net revenue, examples include sales returns, allowances, and discounts.