Unit 5

Bank capital should be measured on a ___ basis.

• Debt-adjusted

• Risk-adjusted

• Leverage-adjusted

• Liquidity-adjusted

The rise of a ___ number of ___ banks changed the international financial markets.

• small, small

• small, large

• large, small

• large, large

The "level playing field” refers to...

• fair treatment of customers

• self-regulation

• equal competition

• equal credit risk

The global financial system became more vulnerable when...

• the Bretton Woods system collapsed

• derivatives emerged

• some banks became very large

• all of the above

Financial derivatives are...

• extremely dangerous

• risk management tools

• a form of financing

• a good investment

The key institutions that oversee international regulatory frameworks for banks are the...

• BIS and BCBS

• BSI and BISD

• PRA and FCA

• BoE and ECB

The latest Basel Accord is the

• Basel II

• Basel III

• Basel V

• Basel VI

Basel I introduced an international framework for...

• bank transparency

• liquidity requirements

• higher capital ratios

• risk-adjusted capital

Basel II used a significantly more detailed method to estimate

the...

• capital

• CEO compensation

• risk-weighted assets

• bank size

Which two of the following were the biggest shortcomings of Basel II?

• Neglected systemic exposures

• Very high capital requirements

• Neglected operational risk

• Heavy reliance on credit rating agencies