The Risk-Based Capital Requirements Have Received Several Types of Criticism

question 135

Short Answer

The risk-based capital requirements have received several types of criticism.Please match the criticism headings below (as stated in the text)with the appropriate criticism explanations in questions 20-122 to 20-130.
-20-124 The BIS plans largely ignore the covariance among asset risks between different parties.
A)Competition
B)DI specialness
C)Excessive complexity
D)Impact on capital requirements
E)Other risks
F)Pillar 2 may ask too much of regulators
G)Portfolio aspects
H)Risk weights
I)Risk weights based on external credit rating agencies

• A)Competition
• B)DI specialness
• C)Excessive complexity
• D)Impact on capital requirements
• E)Other risks
• F)Pillar 2 may ask too much of regulators
• G)Portfolio aspects
• H)Risk weights
• I)Risk weights based on external credit rating agencies

---

Definitions:

Combined Margin

refers to the total margin generated by a product or entity after accounting for various types of costs, merging both gross and net margins to provide an overall profitability measure.

Fixed Expenses

Costs that do not change with the level of production or sales over a short period.

Turnover

A measure of the efficiency and effectiveness of a company's operations, often calculated as total revenues divided by total assets.

Operating Assets

Assets used by a company in its day-to-day operations to generate revenue, including cash, inventory, and equipment.