A deficiency of the risk-based capital ratio is that it measures the ability of a bank to meet both the on- and off-balance-sheet credit risk, but not the interest rate or market risks.

Name: A deficiency of the risk-based capital ratio is that it measures the ability of a bank to meet both the on- and off-balance-sheet credit risk, but not the interest rate or market risks.
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Question

Quizplus · Accepted Answer

The risk-based capital ratio only takes into account credit risk, not interest rate or market risks.

A Deficiency of the Risk-Based Capital Ratio Is That It