Which of the Following Statements Is True in the Context

question 26

Multiple Choice

Which of the following statements is true in the context of Basel II?

• A)The standardised approach is the most basic approach to calculating operational risk capital.
• B)FIs can choose whether or not to hold operational risk capital.
• C)In the basic indicator approach, operational risk capital is calculated as a fixed percentage of an FI's gross income figure, whereby gross income is defined as gross interest income plus gross non-interest income.
• D)None of the listed options are correct.

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Definitions:

Constitution

The fundamental law or set of principles by which a state or other organization is governed.

Establishment Clause

A clause in the First Amendment of the U.S. Constitution that prohibits the government from establishing an official religion, or unduly favoring one religion over others.

Secular Legislative Purpose

The requirement that legislation must have a non-religious rational objective to uphold the separation of church and state principle.

Excessive Government Entanglement

A situation where government involvement in religious or other private activities is so extensive that it violates constitutional separations.