nayizhenfeng

 

The correct answer is A

 

Tier 3 capital can only be used to satisfy capital requirements resulting from market-risk charges and cannot be applied to credit-risk charges.

nayizhenfeng

 

2、The Basel II Capital Accord corrected many of the deficiencies of Basel I. Which of the following statements is NOT accurate?

A) Basel I did not recognize the effects of diversification. 

B) Basel I did not recognize off-balance sheet activities. 

C) Basel II included a new role for supervisors. 

D) Basel II did not prevent the double counting of capital.

nayizhenfeng

 

The correct answer is D

 

The Basel II Accord covers any holding company that may be the parent of other entities involved in banking activities, and it looks at the entire group on a consolidated basis. The idea is to include the risks held at any level of a multilevel banking group and to prevent the double counting of capital.

nayizhenfeng

 

3、If an internationally active bank holding company has subsidiaries engaged in insurance activities:

A) those subsidiaries should be consolidated, and minimum capital requirements should be adjusted to reflect their risk. 

B) those subsidiaries should not be consolidated, and no adjustment to minimum capital requirements is necessary. 

C) those subsidiaries should be consolidated, but with no adjustment to minimum capital requirements. 

D) those subsidiaries should not be consolidated, but minimum capital requirements should be adjusted to reflect their risk.

nayizhenfeng

 

The correct answer is C

 

Related businesses such as insurance should be consolidated. The Accord calls on supervisors to look at not only the holding company, but also at each individual banking subsidiary to assure that the depositors of those subsidiaries are adequately protected by capital.