When Fully Implemented, Basel III Will Increase the Quantity and Quality

question 43

Multiple Choice

When fully implemented, Basel III will increase the quantity and quality of capital held by banks by:

• A)decreasing the CAR but increasing the amount of 'tier 1' equity capital
• B)decreasing the CAR but increasing the amount of 'tier 2' equity capital
• C)increasing the CAR and the amount of 'tier 2' equity capital
• D)increasing the CAR and the amount of 'tier 1' equity capital
• E)increasing the CAR and the amount of 'tier 1' and 'tier 2' equity capital.

---

Definitions:

Activity Level

A metric indicating the volume or intensity of operations in a company, affecting its costs and resources.

Fixed Overhead

A set of costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Budget Variance

Budget variance is the difference between budgeted or planned financial performance and the actual performance, indicating whether a business is over or under its budgeted amount.

Budgeted Overhead

An estimated cost for indirect expenses related to operations that a company or project is expected to incur over a specific period.