1. Which of the following banks would normally be considered "systemically important?"
Deutsche Bank
HSBC
JPMorgan Chase
Royal Bank of Scotland
All of the above
None of the above
2. Under Basel III, which of the following could be considered appropriate for measuring a financial institution's liquidity coverage ratio?
Short-term liquidity assets divided by average cash flow
Short-term liquidity assets divided by long-term debt
Long-term loans divided by average cash flow
Long-term loans divided by long-term reliable liability and equity
None of the above
3. Under Basel III, which of the following could be considered appropriate for measuring Net Stable Funding Ratio?
Short-term liquidity assets divided by average cash flow
Short-term liquidity assets divided by long-term debt
Long-term loans divided by average cash flow
Long-term loans divided by long-term reliable liability and equity
None of the above
4. The liquidity problem of banks can be explained by
The size of delinquent loans
Maintaining a common equity ratio below the regulatory standard
Insufficient cash and near cash assets to meet deposit customer payout requests
None of the above
5. The third standard of Basel III calls for a Countercyclical Capital Buffer, which is up to 2.5% of Core Tier 1 capital. This is required during periods of high credit growth. The motivation behind this provision is as follows:
Banking crises have been found to often follow periods of high credit growth
Banking crises have been found to often follow periods of slow credit growth
Banking crises have been found to often follow periods of high interest rates and high inflation
Banking crises have been found to often follow periods of liquidity problems for banks
None of the above