Under Basel Securitization rules the highest potential risk weight is:
A) 350%
B) 750%
C) 1250%
D) 1500%

Question

Quizplus · Accepted Answer

Basel Securitization rules assign risk weights to different types of assets based on their credit risk. The highest potential risk weight is 1250%, which applies to certain unrated securitization exposures with weak due diligence standards or where credit risk is difficult to assess. Choice A (350%) is too low and applies to rated senior tranches. Choice B (750%) applies to rated subordinated tranches or unrated senior tranches. Choice D (1500%) is not an option under Basel Securitization rules.

Under Basel Securitization Rules the Highest Potential Risk Weight Is