Explanation:
Basel II was created before the financial crisis. Basel IV has yet to be fully codified. Basel III, which incorporates firm-specific and market risks, is the regulatory regime created specifically in response to the crisis.
(Book 1, Module 3.1, LO 3.a)
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Question 87
The financial crisis of 2007-2009 provided an opportunity for regulators to create rules that specifically addressed risks inherent in financial institutions. Which of the following regulatory structures was created in direct response to the crisis, as well as its corresponding new or additional regulatory considerations?
A
Basel II to include trading and lending activities when calculating capital adequacy.
B
Basel IV to include regulator and regulation concentration risks when calculating capital adequacy.
C
Basel III to include firm-specific and market risks when calculating the overall risk profile.
D
Basel III to include commodity trading and risk-weighted asset capital adequacy impacts.
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