Which of the following statements regarding capital adequacy requirements is incorrect? Question 5Select one:Existing credit-risk guidelines are extended to include market risk arising from bank's trading activities.Regulators focus on credit risk, market risks, operational risk and type of capital held.Tier 2 capital is divided into upper and lower Tier 2 parts.Eligible Tier 1 capital must constitute at least 70% of a bank's capital base.

Basel II requires that at least half of the risk-based capital ratio must take Tier 1 capital that is at least 4.5%. Question 5Select one:TrueFalse

Which of the following statements is FALSE? a. the Board may set a minimum desired level of risk in the Risk Appetite Statement. b. risk profile defines the maximum level of risk, above which an organisation will fail. c. Social Licence is lost when risk capacity is reached. d. risk appetite is the maximum level of risk tolerance.

3.Which of the following statements is most correct regarding the determination of capital for regulatory purposes a.The key premise underlying regulatory capital is that it is meant to provide a buffer between asset and liabilities, greater than a firm’s economic capital. b.Regulatory capital models are designed so that their measurement should be transparent, consistent and unambiguous c.Economic capital, if it can be shown to be calculated in a robust and transparent manner, can always be used for regulatory requirements d.a. and b. are both correct e.a., b., and c. are all correct

In reference to Basel Accord minimum bank capital adequacy requirements, risk-weighted assetsMultiple Choicerefers to traditional bank loans.refers to a "risk-focused" approach to determining adequate bank capital.provides a level of confidence measure of the probability of the maximum loss that can occur during a period of time.none of the options.

I. All capital assets are subject to CGT.II. All ordinary assets are subject to RIT.III. Some of capital assets are subject to RIT.IV. Some of ordinary assets are subject to CGT.*1 pointAll statements are correctStatement I only is correct.Statement II and IV is correct.Statement II and III is incorrect.Statement I and IV is incorrect.None of the statements is correct.