8008 Exam Dumps | Under the standardized approach to calculating operational risk capital under Basel II, negative regulatory

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PRM Certification - Exam III: Risk Management Frameworks, Operational Risk, Credit Risk, Counterparty Risk, Market Risk, ALM, FTP - 2015 Edition
PRMIA.8008.v2021-08-28.q125
Question 52

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Question 52/125

Under the standardized approach to calculating operational risk capital under Basel II, negative regulatory capital charges for any of the business units:

A. Should be ignored completely

B. Should be offset against positive capital charges from other business units

C. Should be included after ignoring the negative sign

D. Should be excluded from capital calculations

Correct Answer: B

Explanation
According to Basel II, in any given year, negative capital charges (resulting from negative gross income) in any business line may offset positive capital charges in other business lines without limit. Therefore Choice 'b' is the correct answer.

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