A
Acadi
Fi
Courses
Knowledge Hub
Community
Practice
Pricing
About
Search
⌘K
Question Bank
/
FRM
/
Part II
/
Basel Regulation
Basel Regulation
Medium
Before the 2008 crisis, Northland Bank had a Tier 1 capital ratio of 11.5% but a leverage ratio of only 1.8%. This divergence was most likely caused by:
A
Concentration in assets with low risk weights (sovereign bonds, AAA-rated MBS) that reduced RWA while total exposure remained high
B
The bank having too much Tier 2 capital relative to Tier 1
C
An error in the calculation of risk-weighted assets
D
The leverage ratio including off-balance-sheet exposures that the Tier 1 ratio excluded
Select an answer to continue
Tags
#leverage-ratio
#risk-weights
#pre-crisis
#capital-adequacy
More Basel Regulation questions
Start full Part II quiz