20-107 Which of the Following Is NOT a Criticism of the Basel

question 49

Multiple Choice

20-107 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.
• E)The weights in the four risk categories imply a cardinal measurement of relevant risk between each category.

---

Definitions:

Members

Individuals or entities that are part of an organization or group and typically have certain rights, privileges, or responsibilities associated with membership.

Substantiation

The provision of evidence or proof to support a claim, allegation, or request, typically required in legal and financial contexts.

Limited Liability Companies

A business structure in the United States whereby the owners are not personally liable for the company's debts or liabilities.

Register

An official list or record, for example, of births, marriages, and deaths, legal transactions, or voters.