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Which of the Following Statements Are True About Basel I

Question 21

Multiple Choice

Which of the following statements are true about Basel I?


A) Basel I set up new higher capital requirements including a leverage ratio, Tier 1 and Tier 2 capital and Tier 1 and Tier 1 & Tier 2 capital ratios as a % of risk-weighted assets.
B) Risk-weighted assets are based on how much capital must be held for particular types of assets with lower capital required for less risky types of bank assets.
C) Under Basel I off-balance sheet items are converted to risk-based assets that are also given weights and included for total risk-based assets.
D) Some analysts criticize overly simple rules for the buckets for risk-based assets under Basel I, such as subprime mortgage loans being put in a 50% risk category as mortgage loans allowing less capital to be held for them.
E) All of the above.

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