nayizhenfeng

The correct answer is B

The silo approach simply sums each operations capital requirements to arrive at an overall capital figure. It does not consider the capital requirements of non-licensed financial operations engaged in lending or leasing activities. It does not aggregate risk across diverse regulated subsidiaries, which would lower capital requirements through diversification benefits or increase them because of concentration of risk.

nayizhenfeng

2、Focusing on each individual operation of a conglomerate to arrive at a total capital adequacy figure describes the:

A) silo approach.
 
B) legal-based approach. 
 
C) market-based approach.
 
D) building-block approach.

nayizhenfeng

The correct answer is A

The silo approach treats the individual businesses as independent silos to determine total capital adequacy. The building-block approach aggregates risks based on modeling the three levels of a financial conglomerate. The legal-based and market-based approaches are part of the capital regulation of financial conglomerates.

nayizhenfeng

3、Which of the following are NOT limitations of the silo approach of risk measurement for financial conglomerates?

A) The supervision may lack the experience required to monitor risks outside her primary business area.
 
B) It does not consider the capital requirements of non-licensed financial operations engaged in lending or leasing activities.
 
C) The operations’ risk levels could be similar yet regulation would require a different treatment for each unit.
 
D) It does not aggregate risks across diverse regulated subsidiaries.