Overview of Risk Management Part 5

6 May 2014

Social:

41. Strategic risk is a type of
a) Forex risk
b) Operational risk
c) Credit risk
d) none of these

42. Portfolio risk is less than weighted average of individual risks in the portfolio because
i) individual risk do not materialize in a unidirectional manner
ii) of diversification effect
a) only i) is true
b) only ii) is true
c) i) and ii) both are true
d) none of them is true.

43. Systemic risk is the risk of
a) Failure of a bank, which is not adhering to regulations
b) Failure of two banks due to bankruptcy of one bank
c) Where a group of banks fail due to contagion effect
d) Where banks fail due to inherent weakness in the financial system

44. In case of which of the following risks, Basel II does not cover capital requirement but are covered under ‘Supervisory Review Process’.
i) Liquidity risk ii) Interest rate risk iii) Strategic & business risk
a) i) and ii)
b) all of them
c) i) and iii)
d) ii) and iii)

45. 1988 Capital Accord accounted for
i) Credit Risk ii) Operational Risk iii) Market Risk iv) Defined capital requirement
a) All of them
b) i), ii) and iii)
c) i), iii) and iv)
d) i), ii) and iv)

46. Back testing of a model is done to
a) record performance
b) test a model
c) compare model results with actual performance
d) all of them

47. Capital charge for credit risk requires input for the following under IRB method.
i) PD ii) LGD iii) EAD
Under Foundation IRB method, the following inputs are provided by the supervisor
a) i), ii), iii)
b) ii) and iii)
c) i) and ii)
d) all of them

48 .Capital charge for credit risk requires input for the following under IRB method.
i) PD ii) LGD iii) EAD
Under Advanced IRB method, the following inputs are provided by the supervisor
a) i), ii) and iii)
b) ii), iii) and iv)
c) ii) and iv)
d) none of them

49. Market Discipline under Pillar 3 of Basel II Accord deals in
i) Enhancement of disclosure
ii) Core disclosures
iii) Supplementary disclosures
iv) Timeliness of disclosure
a) i), ii) and iii) is correct
b) i), ii) and iv) is correct
c) i), ii), iii) and iv) is correct
d) ii), iii), iv) is correct

50. The treasury expects a fall in the price of a security if sold in the market. The bank is facing _______ .
a) Market risk
b) Asset liquidation risk
c) Market liquidity risk
d) Operational risk

Other Parts
Risk Management Part 1
Risk Management Part 2
Risk Management Part 3
Risk Management Part 4
Risk Management Part 6
Risk Management Part 7
Risk Management Part 8

Post Category : Risk Management