Which of the following are problems associated with the BIS approach to calculating capital requirements for equities?
A)The approach assumes the same systematic risk factor for every stock.
B)The approach assumes the same unsystematic risk factor for every stock.
C)The approach does not fully consider the benefits from portfolio diversification.
D)The approach assumes the same systematic risk factor for every stock and the approach does not fully consider the benefits from portfolio diversification.

Question

Quizplus · Accepted Answer

The BIS approach assumes the same systematic risk factor for every stock, which is a problem because different stocks have different levels of risk. Additionally, the approach does not fully consider the benefits from portfolio diversification, which is important for reducing risk. Therefore, choice D is the best answer.

Which of the Following Are Problems Associated with the BIS