__________________ capital specifies the amount of capital financial institutions should hold based on the riskiness of their assets.

Question

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Risk-based capital specifies that a financial institution should hold a certain amount of capital based on the risk associated with its assets. This approach takes into account the risk-weighted assets and ensures that the institution has enough capital to withstand losses due to credit risk, market risk, and operational risk.

__________________ Capital Specifies the Amount of Capital Financial Institutions Should