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When preparing a report for the senior management team regarding their risk appetite discussions, which of the following statements should the analyst include for an effective comparison between regulatory capital and economic capital requirements?
A
The regulatory capital for credit risk is designed to be sufficient to cover a loss that is expected to be exceeded only once every ten years.
B
Regulatory capital is sometimes referred to as going concern capital because it absorbs losses incurred while the bank is still in business.
C
The most important capital for a bank is regulatory capital, which equals the bank's estimate of its expected losses.
D
Economic capital is an internal risk measure that reflects the amount of capital needed to ensure a company remains solvent with a high level of confidence, given its risk profile.
