$1.$ What is the risk faced by financial institutions that was not taken into account in the Basel II accord?

a$.$ Market risk.

b$.$ Credit risk.

c$.$ Liquidity Risk d$.$ Operational risk.

$2.$ Which of the following statements is false?

a$.$ Bank creditors must be equally well off under resolution and under liquidation.

b$.$ A bank is liquidated if it is declared failing or likely to fail.

c$.$ In resolution, public funds can still be used under specific circumstance.

d$.$ Creditors with the same ranking must be treated equally.

$3.$ Which of following statements concerning the application of Basel $3$ in the United States is correct?

a$.$ Credit risk on commercial loans is assessed based on ratings.

b$.$ Risk weights on loans to foreign banks are the same as on loans to corporates.

c$.$ Risk weights to sovereign exposures are determined by the Country Risk Classification.

d$.$ None of the above.

$4.$ Which, among the following, is not an objective of bank resolution?

a$.$ Protect $($insured$)$ depositors and similar investors.

b$.$ Ensure continuity of the bank$$s critical functions.

c$.$ Avoid significant adverse effects on financial stability.

d$.$ Transfer a bank$$s assets to a bad bank.

$5.$ What, among the following options, are duties of the Single Resolution Board?

a$.$ Implement the recovery plans

b$.$ Conduct the public assessment test once a bank has been declared Failing or Likely to Fail $($FOLTF$)$

c$.$ Carry out the liquidation of banks

d$.$ All of the above

TRUE$/$FALSE QUESTIONS $0\mathrm{.}5$ point each

$1.$ The objective of the Lender of Last Resort is to prevent financial panics and contagion because of a lack of liquidity.

$2.$ Currently, the European Central Bank gives unlimited funds to banks at an increasing interest rate as long as they provide good collateral.

$3.$ The deposit insurance schemes can only be ex ante funded. In fact, banks would be unable to contribute to the scheme during a crisis.

$4.$ Bail$-$in and sale of assets are two tools used in resolution.

$5.$ The SRB is in charge of approving banks$$ recovery and resolution plans.