The bank’s projected capital ratio is in line with the capital target.

The bank is projected to have a capital excess next period; it can meet its capital target by increasing the dividend payout ratio.

The bank is projected to have a capital excess next period; it can meet its capital target by reducing the dividend payout ratio.

The bank is projected to have a capital shortage next period; it can meet its capital target by reducing the dividend payout ratio. 

The credit or default risk of OBS non-market contracts is approximately zero.

The credit conversion factors for OBS non-market contracts are between 0% and 150%.

The credit equivalent amount of OBS non-market contracts consists of a potential future exposure element and a current exposure element.

All of the above are correct.

The process requires converting OBS non-market contracts into credit equivalent amounts and multiplying the credit equivalent amounts by the appropriate risk weights.

The Basel III capital framework consists of three mutually reinforcing pillars.

Pillar 2 deals with market discipline.

Pillar 3 deals with the supervisory review process. 

All of the above are correct.

Pillar 1 deals with the calculation of regulatory capital against FIs’ credit risk only.

assuring the highest possible return on equity for the shareholders.

absorbing losses in a manner that allows the FI to continue as a going concern.

funding the branch and other real investments to provide financial services.

protecting uninsured depositors in the event of insolvency and liquidation.

protecting the insurance fund and the taxpayers.

protect creditors from decreases in asset values.

make work for regulators.

protect shareholders from managerial fraud or incompetence.

force banks to follow socially desirable practices.

reduce banks' cost of funding.

Par value of non-cumulative perpetual preferred stock.

Surplus value (share premium) of common shares issued by the bank.

Par value of common shares issued by the bank.

Retained earnings.

Common shares issued by consolidated subsidiaries of the bank.

7.60 percent.

3.68 percent.

5.48 percent.

18.25 percent.

will not change because the total assets have not changed.

will increase because the asset portfolio will have more credit risk.

will not change because the credit risk weight of Treasury securities is zero.

will increase because the asset portfolio will have less credit risk.

banks with riskier assets should have lower capital ratios.

banks with riskier assets should have higher capital ratios.

there is no relationship between asset risk and capital.

banks with riskier assets should have lower absolute amounts of capital.

banks with riskier assets should have higher absolute amounts of capital.