Pre Exam CICC Day 7

When managing conflict which situation requires a collaborative approach?

• You wish to demonstrate that you are reasonable.

• You wish to achieve a temporary solution when the issues are complex.

• A situation where you need to combine different perspectives on a problem.

What is the best way to monitor physical assets in a distress situation?

• More than anything else, keeping in contact with the borrower.

• Regular visits to the borrower to check on the security; in the case of land, particular attention to environmental concerns.

• Asking for periodic written confirmation form the borrower that the security is still there.

When should a provision on a loan be recognized?

• As soon as it becomes likely that some or all of a loan will not be repaid.

• When the book value of the loan can no longer be justified.

• As soon as an early warning sign is first observed.

What are unexpected losses?

• Losses that result from unexpected changes in interest rates.

• Losses that result from loans that are not completely repaid.

• Losses in a year that are below expected levels, from a statistical perspective.

• Losses in a year that are above expected levels, from a statistical perspective.

Which asset has the highest risk weighting under Basel I?

• Claims on commercial companies owned by the public sector. 100%

• Claims secured by OECD central-government securities. 0%

• Claims on multilateral development banks. 20%

• Claims on domestic public-sector entities.

What is the central goal of the First Pillar of Basel II?

• Assess the enterprise risk for a bank in its totality.

• Calculate minimum capital requirements for credit risk, market risk, and operational risk. This is the central component of the First Pillar.

• Provide a framework to assess a prudent capital buffer.

• Provide risk management guidance and address supervisory transparency and accountability.

Which of the following are classed as non-core Tier 1 capital?

• Non-cumulative preference shares.

• Contingent equity products.

• Share premium reserves.

• Issued and fully paid ordinary shares.

Which approach makes use of the risk components prescribed by each country's respective regulator?

• Advanced Internal-based Approach.

• Advance Measurement Approach.

• Internal Ratings-Based Approach - Foundation IRB Approach.

• Standardised Approach.

Which capital adequacy ratio would be considered best for bank clients?

• 5%

• 8%

• 10%

• 12%

Which approach to calculating the requirement for operational risk capital involves calculating the 3- year average of the sum of the regulatory capital charges across each business line in each year?

• Internal ratings-based approach.

• Basic indicator approach.

• Standardised approach.

• Advanced measurement approach.