Risk-based standards for capital adequacy and liquidity

Assignment Help Financial Management

Reference no: EM131603641

1. The Basel Committee on Banking Supervision prescribes risk-based standards for capital adequacy and liquidity. Which of the following is a goal stipulated by the Basel Committee?

[I] Improve the consistency of capital requirements across banks in different countries

[II] Encourage a greater level of risk management practices especially among international financial institutions

[III] Increase the deposit insurance coverage for all banks

[IV] Make regulatory capital more risk sensitive

[V] Increase the spread between the deposit rate and the lending rate so as to improve the net interest margin of banks

[VI] Ensure that banks have sufficient high-quality liquid assets to cover their net cash flows

I, III, V

II, III, IV, V

I, II, IV, VI

All are correct

2. The Basel Accords contain a set of recommendations on bank regulation, supervision, and risk management issued by the:

Basel Committee on Banking Supervision

Federal Reserve System of the United States

International Monetary Fund (IMF)

Bank for International Settlements

3. Under Basel III, total regulatory capital now includes

[I] Tier 1 capital,

[II] Capital conservation buffer,

[III] Countercyclical capital buffer, and

[IV] additional capital for systemically important banks.

I, II only

II and IV only

II, III, IV only

All are included

Reference no: EM131603641

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