1. The Basic Indicator Approach in calculating capital to cover operational risk requires banks to hold 15 percent of total assets in capital to cover operational risk exposure.

True

False

2.

Which of the following is an example of an operational risk loss by Firm A?

	A.	As a result of an increase in commodity prices, the share price of a company that Firm A invested in falls significantly, causing major investment losses.
	B.	After a surprise announcement by the central bank that interest rates would increase, bond prices fall, and Firm A incurs a significant loss on its bond portfolio.
	C.	The data capture system of Firm A fails to capture the correct market rates causing derivative trades to be done at incorrect prices, leading to significant losses.
	D.	A counterparty of Firm A fails to settle their debt to Firm A, and in doing this, they are in breach of a legal agreement to pay for services rendered.