Risk-based capital guidelines establish a ________ weight for all assets where a weight depends on the credit risk associated with each asset.

Question

Quizplus · Accepted Answer

Risk-based capital guidelines are used by banks to determine how much capital they must hold to cover their risky assets. These guidelines categorize all assets by their credit risk and assign a weight to each category accordingly. The higher the credit risk, the higher the weight assigned to that asset. Therefore, the correct answer is C, which refers to credit risk.

Risk-Based Capital Guidelines Establish a ________ Weight for All Assets