Under the standardized approach to calculating operational risk capital under Basel II, negative regulatory capital charges for any of the business units:

Under the standardized approach to calculating operational risk capital under Basel II, negative regulatory capital charges for any of the business units:
A . Should be ignored completely
B . Should be offset against positive capital charges from other business units
C . Should be included after ignoring the negative sign
D . Should be excluded from capital calculations

View Answer

Answer: B

Explanation:

According to Basel II, in any given year, negative capital charges (resulting from negative gross income) in any business line may offset positive capital charges in other business lines without limit. Therefore Choice ‘b’ is the correct answer.