Which of the Following Is Not a Weakness of Risk-Based

question 25

Multiple Choice

Which of the following is not a weakness of risk-based capital standards?

• A) They ignore interest rate risk.
• B) They ignore the value of deposit insurance.
• C) They ignore changes in the market value of assets.
• D) They ignore credit risk.
• E) They ignore the value of a bank's charter.

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Definitions:

Revenue Recognition

The accounting principle that determines the specific conditions under which income becomes recognized as revenue.

Installment Sales Method

An accounting method used to recognize revenue from sales where payment is received in installments over a period.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) aimed at making global financial reporting more transparent and comparable.

Realized Gross Profit

The portion of profit that has been earned from completed sales transactions, excluding unrealized profits from continuing transactions.