The Use of Risk-Based Capital Measures Under Basel I (1993)

question 78

True/False

The use of risk-based capital measures under Basel I (1993) effectively mark-to-market the bank's on- and off-balance-sheet for the purpose of reflecting credit and market risk.

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Definitions:

Common Stock

Equity ownership in a corporation, entitling holders to vote at shareholder meetings and to receive dividends.

T-account

A visual representation used in accounting to depict the debit and credit sides of an account.

Debits

Financial transactions representing increases in assets or expenses or decreases in liabilities, equity, and income.

Credits

Entries made in the accounting records to increase liabilities or revenues, or to decrease assets or expenses.