Which of the Following Are Criticisms of a Risk-Based Capital

question 54

Multiple Choice

Which of the following are criticisms of a risk-based capital ratio?

• A)The risk-class categories might not adequately reflect riskiness.
• B)The 8% risk-based capital requirement has not created a level competitive playing field across banks.
• C)Credit risk portfolio diversification opportunities are largely ignored.
• D)All of the listed options are correct.

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Definitions:

Financing Activities

Transactions that involve raising funds for the company through debt, equity, or other financial means.

Investing Activities

Transactions involving the purchase and sale of long-term assets and investments, part of the cash flow statement.

Indirect Method

A technique used in financial accounting to calculate cash flows from operations by adjusting net income for non-cash transactions.

Operating Activities

The primary, day-to-day activities of a business that relate to its production, sales, and delivery of goods and services.