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    Question

    If external rating of a borrower is changes from A to

    BBB, how does risk weight change under Basel norms?
    A Decrease Correct Answer Incorrect Answer
    B Increase Correct Answer Incorrect Answer
    C No change Correct Answer Incorrect Answer
    D Doubles Correct Answer Incorrect Answer
    E Becomes zero Correct Answer Incorrect Answer

    Solution

    Lower rating means higher credit risk; thus, risk weight increases as per Basel norms.

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