Exam 18: Capital Management and Adequacy

Tier 1 capital is used to provide loss absorption on a gone-concern basis and must be subordinated to depositors and general creditors and an original maturity of at least five years.

The book value of an asset or liability is the value reported according to the historical cost of the asset or liability.

Which of the following statements is true?

Which of the following statements is true?

Within the framework of Pillar I, which Basel Accord introduced two capital buffers: a capital conservation buffer and a countercyclical capital buffer?

Choose the correct statement:

Credit-risk-adjusted assets are on- and off-balance-sheet assets whose values are adjusted for the credit rating of the FI.

The market risk capital charge is included in capital regulations as regulators recognise that changes in market value can impact on an FI's insolvency risk.

Current credit exposure is the:

Procyclicality refers to features or characteristics that:

Current credit exposure is the cost of replacing a derivative securities contract at today's prices.

The term 'credit equivalent amount' refers to the:

Which of the following statements is true?

Total capital ratio is the ratio of the total regulatory capital to the risk-adjusted assets of a DI.

Common equity Tier I capital ratio is the ratio of common equity Tier 1 capital to the risk-adjusted assets of a DI.

Which of the following is the correct way to calculate the historic value of an FI's equity per share?

Which of the following statements is true?

Basel II established minimum capital requirements, procedures to ensure that sound internal process are used to assess capital adequacy and set targets that were commensurate with the risk profile and environment in an endeavour to protect solvency of individual FIs.Basel III introduced liquidity and higher capital levels to protect the financial system in general.

Pillar 3 of APRA's supervision framework is to encourage market discipline through an information disclosure framework.Pillar 3 requires:

Which of the following statements is true?