Financial Risk Management Quiz

What type of risk arises due to the movement in the prices of financial instruments?

• Liquidity risk

• Market risk

• Credit risk

• Operational risk

Which risk arises when one fails to fulfill their obligations towards their counterparties?

• Operational risk

• Market risk

• Credit risk

• Liquidity risk

What type of risk arises out of an inability to execute transactions?

• Market risk

• Credit risk

• Liquidity risk

• Operational risk

Which element of financial risk management system involves developing responses to the risks being identified?

• Assessment

• Risk response

• Risk identification

• Prioritization

What is the strategy that implies a willingness of the company to accept the risk and manage it internally within the framework of normal business operations?

• Risk-sharing strategies

• Risk transfer strategies

• Natural hedging

• Internal netting

Which strategy relates to strategies that mitigate or share risks with an outside party?

• Risk-sharing strategies

• Internal strategies

• Joint ventures

• Risk transfer strategies

What is the contract made today for delivery of an asset at some specified future date, at a pre-agreed price?

• Forwards

• Futures contracts

• Joint ventures

• Swaps

Which strategy involves paying a third party to take over the downside risk while retaining the possibility of taking advantage of the upside risk?

• Forwards

• Securitization

• Insurance

• Options

What is the contract that gives the holder the right to buy or sell an underlying asset at an agreed price at one or more specified future dates?

• Forwards

• Futures contracts

• Insurance

• Options

What includes payment of premiums to secure the purchaser against losses on insured assets brought by any incidents such as fire, natural calamity, etc.?

• Swaps

• Options

• Insurance

• Securitization