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WorksheetsRisk Management: Credit risk and Market risk
Total questions: 10
Worksheet time: 4mins
Name
Class
Date
1.
If an individual investor, business, or financial institution cannot meet its short-term debt obligations, it is experiencing:
a)
Country risk
b)
Operational risk
c)
Market risk
d)
Liquidity risk
2.
Operational risk:
a)
summarises the uncertainties and hazards a company faces when it attempts to do its day-to-day business activities within a given field or industry.
b)
is the possibility that an individual or other entity will experience losses due to factors that affect the overall performance of investments in the financial markets.
c)
covers the volatility that may accompany interest rate fluctuations due to fundamental factors, such as central bank announcements related to changes in monetary policy.
d)
covers the changing prices of commodities
3.
The goal of credit risk management is:
a)
To control business operations by applying common standards of supervision
b)
Measuring the weighted average time of maturity of assets and liabilities using relative present values of cash flows as weights.
c)
Maximize a bank's risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters inherent in the entire portfolio as well as the risk in individual credits or transactions.
d)
Evaluating one's bank's portfolios for reflecting the variation of the assets prices due to the fluctuations of the price on the market
4.
Most common types of market risks including:
a)
Interest rate risk, default risk, currency risk, and commodity risk
b)
Interest rate risk, equity risk, currency risk, and commodity risk
c)
Interest rate risk, equity risk, downgrade risk, and commodity risk
d)
Interest rate risk, equity risk, currency risk, and liquidity risk
5.
External credit rating is mainly used in:
a)
US
b)
Europe
c)
Asia
6.
Banks provide funding limits for each client based on the creditworthiness of the client. These limits are calculated based on and determined by:
a)
the current situation of the client, market, industry, position in relation to competitors, etc.
b)
rating of the client, turnovers on their account, or assessment of the financial situation of the client.
c)
an individual basis to individual client, and on the basis of group of clients who have the same risk characteristics.
d)
A & B are correct
7.
BCBS stands for:
a)
Basel Committee for Banking Standard
b)
Basel Committee for Board Standard
c)
Basel Committee for Banking Supervision
d)
Basel Committee for Board Supervision
8.
Which one is the example of operational risk?
a)
borrowers default on a principal or interest payment of a loan.
b)
breach of private data resulting from cybersecurity attacks
c)
changes in equity prices or commodity prices
d)
financial institution cannot meet its short-term debt obligations
9.
Credit risk monitoring can be divided into two level: at the level of the client and at the level of the credit and bank portfolio.
a)
True
b)
False
10.
CaR is the amount of capital required for a bank to cover in advance potential losses in the coming period, and unlike VaR, it can only be calculated at the individual client level.
a)
True
b)
False
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