Question

1. The Basel 2 risk weighting factor for a bank loan Australian company withe a Moddy’s Investors Service rating of C is

A: 20% B: 50% C: 100% D: 150%

2. A bank provides a loan of $1 million to a company that has ran A rating. Calculate the dollar value of capital required under the capital adequacy requirements to support the facility.

A. $16000. B.$40000 C. $80000 D. 120000

3. Part of bank’s liquidity management means:

A. term loans

B. Mortgages

C. Commonwealth government securities

D. Credit card loans

Answer 1

1.

The Basel 2 risk weighting factor for a bank loan Australian company withe a Moddy’s Investors Service rating of C is 150%.

Option (D) is correct answer.

2.

For A rating compnaies loan, dollar value of capital required under the capital adequacy requirements is 8% of Loan value.

So, For one million of loan total dollar value of capital required under the capital adequacy requirements is calculated below:

Capital required = $1,000,000 × 8%

= $80,000

total dollar value of capital required under the capital adequacy requirements is $80,000.

Option (C) is correct answer.

3.

Part of bank’s liquidity management means Credit card loan, because Credit card loan is short term loan while other are long term loan.

Option (D) is correct answer.