1. Counter party credit risk in OBS contracts

is the risk that the counterparty will likely default when he is in the money on a contract position.

refers to the risk that a counterparty will default when suffering large actual or potential losses on its position.

requires the counterparty to return to the market and replace contracts at less favorable terms.

All of the above.

None of the above.

2. The evaluation of credit risk of off-balance-sheet (OBS) assets under Basel III requires that the notional amount of OBS items be converted to credit equivalent amounts of on-balance-sheet items.

True

False

3. Basel II attempts to encourage market discipline by having banks disclose capital structure, risk exposures, and capital adequacy in a systematic manner.

True

False

4. Shortening the Cash Conversion Cycle cost companies more money because it increases financing costs.

True or False