Which of the Following Is NOT a Criticism of the Basel

question 124

Multiple Choice

Which of the following is NOT a criticism of the Basel I risk-based capital ratio?

• A)All commercial loans are given equal weight regardless of the credit risk of the borrower.
• B)The ratio incorporates off-balance-sheet risk exposures.
• C)Grouping assets into different risk categories may encourage balance sheet asset allocation games.
• D)The treatment does not include interest rate or foreign exchange risk.

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Definitions:

Valid Contract

An agreement between parties that meets all legal requirements and is enforceable by law.

Implied Contracts

Agreements that are not written or spoken but are understood by the actions or behaviors of the parties involved.

Express Contracts

Contracts in which the terms and conditions are explicitly stated, either orally or in writing, between the parties involved.

Executory

In legal contexts, referring to contracts or obligations that are yet to be fully performed or completed by one or more parties.