Chat with AIExam 18: Capital Management and Adequacy
Exam 1: Why Are Financial Institutions Special66 Questions
Exam 2: The Financial Services Industry: Depository Institutions66 Questions
Exam 3: The Financial Services Industry: Other Financial Institutions56 Questions
Exam 4: Risk of Financial Institutions67 Questions
Exam 5: Interest Rate Risk Measurement: The Repricing Model69 Questions
Exam 6: Interest Rate Risk Measurement: The Duration Model64 Questions
Exam 7: Managing Interest Rate Risk Using Off Balance Sheet Instruments63 Questions
Exam 8: Credit Risk I: Individual Loan Risk65 Questions
Exam 9: Market Risk55 Questions
Exam 10: Credit Risk I: Individual Loan Risk66 Questions
Exam 11: Credit Risk II: Loan Portfolio and Concentration Risk63 Questions
Exam 12: Sovereign Risk65 Questions
Exam 13: Foreign Exchange Risk63 Questions
Exam 14: Liquidity Risk65 Questions
Exam 15: Liability and Liquidity Management66 Questions
Exam 16: Off-Balance-Sheet Activities65 Questions
Exam 17: Technology and Other Operational Risk67 Questions
Exam 18: Capital Management and Adequacy66 Questions
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Consider an FI with the following off-balance-sheet items: A two-year loan commitment with a face value of $120 million, a standby letter of credit with a face value of $20 million and trade-related letters of credit with a face value of $70 million.All counterparties have a credit rating of BBB.What is the capital amount the FI needs to hold against these exposures?
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VerifiedB
Consider an FI with the following off-balance-sheet items: A two-year loan commitment with a face value of $120 million, a standby letter of credit with a face value of $20m and trade-related letters of credit with a face value of $70 million.What is the total credit equivalent amount?
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(38) Correct Answer:Verified
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Which of the following statements is true?
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The book value of an asset or liability is the value reported according to the historical cost of the asset or liability.
(True/False)
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(31) Credit derivatives were included in the banking book with the introduction of:
(Multiple Choice)
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(37) In determining the risk-adjusted value of the on-balance-sheet credit equivalent amounts of the contingent guaranty contracts, the risk weights are determined by the credit rating of the underlying counterparty of the off-balance-sheet activity.
(True/False)
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(28) Which of the following elements is usually not included in the book value of capital?
(Multiple Choice)
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(33) Why is a regulatory capital charge against operational risk necessary?
(Essay)
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(39) The market risk capital charge is included in capital regulations as regulators recognise that changes in market value can impact on a FI's insolvency risk.
(Multiple Choice)
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(37) In the standardised approach to operational risk capital, FI's are required to map their overall gross income into eight business lines that are pre-determined by the bank regulator.
(True/False)
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(31) Counterparty credit risk is the risk that the other side of a contract will default on payment obligation, whereby 'the other side' is always the FI.
(True/False)
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(41) Which of the following statements is true for Basel II agreement?
(Multiple Choice)
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(34) To calculate the operational risk capital charge, the DI's activities are first divided into:
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