Capital and credit - Introduction and context

A reduction in the value of assets of a bank might be caused by (choose incorrect answer)

• worsening of the credit quality of customers

• plunging share prices in portfolio

• increase in the total bonds issued

• a fall in commodity prices

Capital might be understoood as the buffer to absorb losses without compromising the survival of the entity

• True

• False

With a low leveraged financial system the liquitidty claim production is better met

• True

• False

There are three different types of capital depending on their complexity of calculation and risk sensitivity

• Accounting, international and economic capital

• Accounting, regulatory and economic capital

• Accounting, regulatory and adjusted capital

• Accounting, regulatory and buffer capital

Provisions are not...

• A business cost

• Present in the P&L

• A regulatory risk measure

• An average value of losses

The Basilea Committee on Banking Supervision was created in 1944 alongisde the IMF

• True

• False

The Basilea standards are binding for all members of the committee

• True

• False

The 3 Pillars of BIS II are

• Minimum capital requirements, supervisory process and market discipline

• Credit risk capital requirements, supervisory process and market discipline

• Credit risk capital requirements, capital compliance and market discipline

• Minimum capital requirements, supervisory process and stress test