The Primary Difference Between Basel I and the Proposed Basel

question 27

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 the above.
• E)Answers A and C only.

Understand the concept of payback period and its application in evaluating investment projects.

Learn how to calculate and interpret the internal rate of return (IRR) for various projects.

Grasp the principles of discounted cash flow (DCF) and their use in investment decisions.

Understand the concept of net present value (NPV) and profitability index as methods of investment appraisal.

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