Test Exam 3 Question 231

[Anonymous]

Question 231 : What percentage of average annual gross income is to be held as capital for operational risk under the basic indicator approach specified under Basel II?

(a) 15%

(b) 8%

(c) 12.50%

(d) 12%

Banks using the basic indicator approach must hold 15% of the average annual gross income for the past three years, excluding any year that had a negative gross income. Therefore Choice ‘a’ is the correct answer.

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My question is : where is this issue adressed in the PRM Handbook ? I just cannot find the chapter about this ? More globally I don’t see any chapter describing in details the requirement of basic approaches (basic indicator or standardized) for operational risk capital calculation ?

[kzg]

Test Exam 3 Question 231

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