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There are some options in weighing risks for some claims, below are the summary as it might be likely to be implemented. NOTE: For some "unrated" risk weights, banks are encouraged to use their own internal-ratings system based on Foundation IRB and Advanced IRB in Internal-Ratings Based approach with a set of formulae provided by the Basel-II accord.
Estimate the risk parameters—probability of default (PD), loss given default (LGD), exposure at default (EAD), maturity (M)—that are inputs to risk-weight functions designed for each asset class to arrive at the total risk weighted assets (RWA) The regulatory capital for credit risk is then calculated as 8% of the total RWA under Basel II.
The ECTS grading scale is a grading system for higher education institutions defined in the European Credit Transfer and Accumulation System (ECTS) framework by the European Commission. Since many grading systems co-exist in Europe and, considering that interpretation of grades varies considerably from one country to another, if not from one ...
Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time liabilities and other risks such as credit risk, operational risk etc. In the most simple formulation, a bank's capital is the "cushion" for potential losses, and protects the bank's depositors and other lenders.
A Credit valuation adjustment (CVA), [a] in financial mathematics, is an "adjustment" to a derivative's price, as charged by a bank to a counterparty to compensate it for taking on the credit risk of that counterparty during the life of the transaction. "CVA" can refer more generally to several related concepts, as delineated aside.
The term Advanced IRB or A-IRB is an abbreviation of advanced internal ratings-based approach, and it refers to a set of credit risk measurement techniques proposed under Basel II capital adequacy rules for banking institutions. Under this approach the banks are allowed to develop their own empirical model to quantify required capital for ...
In this version, E stands for "exemplary" and P proficient, with AE and AP for work that approaches the E and P levels. "Credit" is equivalent to the D level and "No Credit" is equivalent to F. [23] The use of M (for "mediocre") in place of the N and I (for "insufficient") in place of the U was used in some places, and included the F. E (Excellent)
In recent years, some schools have begun using an N for failing grades, presumably to represent "No Credit". Another letter used to represent a failing grade is U, representing "unsatisfactory." Chromatic variants ("+" and " − ") are used. In most 100-point grading systems, the letter grade without variants is centered around a value ending ...