nayizhenfeng

 

2、Which of the following does the supervisory pillar of Basel II NOT intend to provide?

A) a clear interpretation of the results of the analytical models.  

B) clear signals to the market resulting from risk models.   

C) clear signals on a bank’s market valuation.   

D) required capital adjusted for institutional differences.

nayizhenfeng

 

The correct answer is C

 

Pillar 2 (supervision) of Basel II should bring balance to the model by providing clear interpretation of the result of the analytical models and clear signals to the market. Supervision will determine the required capital for each bank, including necessary adjustments for institutional differences.

nayizhenfeng

 

3、Which of the following is a concern about the implementation of the supervisory and market discipline pillars of Basel II?

A) Studies suggest VAR measures do not provide useful information for valuation.  

B) Supervision, not analytics will determine the required capital for each bank. 

C) Accounting standards foster inconsistent evaluations by bond raters.   

D) More than one of the above.

nayizhenfeng

 

The correct answer is C

 

Studies suggest VAR provides useful information. Supervision is supposed to balance omissions and inconsistencies of the analytics alone, using analytical results as inputs.

sarui

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