Basel II: International Convergence contains 18 pages covering the following concepts:

The key elements of the three pillars of Basel II:

Minimum capital requirements

Supervisory review

Market discipline

The major elements of the three options available for the calculation of credit risk:

Standardized Approach

Foundation IRB Approach

Advanced IRB Approach

The major elements of the three options available for the calculation of operational risk:

Basic Indicator Approach

Standardized Approach

Advanced Measurement Approach

The major elements—including a description of the risks covered—of the two options available for the calculation of market risk:

Standardized Measurement Method

Internal Models Approach

Defining in the context of Basel II and calculating where appropriate:

Capital ratio

Capital charge

Tier 1 capital and its components

Tier 2 capital and its components

Tier 3 capital and its components

Probability of default (PD)

Loss given default (LGD)

Exposure at default (EAD)

Maturity (M)

Stress tests

Concentration risk

Residual risk

After reviewing the notes you will be able to apply what you learned with practice questions and answers.

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