Assertion: The risk-weighted assets for retail loans are generally lower than those for unrated corporate exposures under the standardized approach of capital adequacy. Reasoning: Retail portfolios benefit from the principle of diversification because the default of a single individual borrower does not significantly impact the overall solvency of the banking institution compared to a large corporate default.

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Economics · Banking Regulation

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Both Assertion and Reasoning are true and Reasoning is the correct explanation of Assertion.

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Answer 1

Assertion is false but Reasoning is true.

Answer 2

Assertion is true but Reasoning is false.

Answer 3

Both Assertion and Reasoning are true but Reasoning is not the correct explanation of Assertion.

Answer 4

Both Assertion and Reasoning are true and Reasoning is the correct explanation of Assertion.

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