Which of the following statement(s) are true concerning RAROC (risk-adjusted return on capital) ?
A) Under RAROC each particular asset is given a capital charge based on the amount of capital needed to be held according to an asset's risk, with a higher equity to asset % allocated to more risky types of assets.
B) With RAROC an extra capital charge will be added to the price of assets, such as loans to cover the capital that has to be held given that asset's risk.
C) Higher capital requirements for more risky types of assets at times make them less attractive versus other types of activities.
D) All statements above are true.
Correct Answer:
Verified
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