Learning Goal: I’m working on a finance test / quiz prep and need support to help me learn.
For a particular transaction assume a credit exposure at default (EAD) of $500, a probability of default (PD) of 2%, and a loss rate given default (LGD) of 80% and determine the expected loss.
O a. $80
O b.$2
O c. $20
O d.$8
Assume the market value of a firm’s assets is $9,000,000 and the assets have a duration of S years, and the market value of a firm’s liabilities is $8,500,000 and the liabilities have a duration of 2 years, what is the firm’s.
O a. 100
0 b.10
O c. 120
O d. 110
In the secondary loan market distressed loans are those trading at _____of their nominal value.
O a. 70% or less
O b. 90% or less
O c. 30% or less O d. 50% or less
Assume that the value at risk (VaR) over a 1-day time horizon for an $80 million equity portfolio at the 95 percent confidence level is calculated to be $792,000.
Which of the following is a drawback to this VaR calculation?
O a. The actual loss in a time of extreme market stress could be much greater than $792.000.
O b. The interpretation of the VaR measure would be different for a fixed-income portfolio.
O c. Increasing the time period used in the calculation will increase the VaR O d. The measure is backward looking.
is most simply defined as the probability that a bank borrower or counterparty will fail to meet its obligations in accordance with agreed terms.
O a. Credit risk
O b Business risk
O c. Operational risk O d. Market risk
defined as the event when a firm misses a payment on coupon and/or the reimbursement of principal at debt maturity.
O a. Concentrations of credit
O b. Credit risk
O c. Bankruptcy
O d. Default
Which of the following would least likely be associated with conducting a stress test?
O a. Monte Carlo simulations that generate extreme values.
O b. Market values and relationships observed during the Crash of 1987.
O c. Modified VaR where kurtosis is three and skewness is zero.
O d. Using one-percentile values of factors in an estimated factor analysis equation.
Sensitivity Analysis changes ________ and then impact of such a change on the portfolio
O a. Three risk parameters at a time, all-risk parameters and then measures impact of such a change on the portfolio.
O b. Two risk parameters at a time, keeping all others constant
O c. Important parameters at a time, keeping parameters constant
O d. One risk parameter at a time, keeping all others constant
Riding the yield curve” typically refers to borrowing on______ maturities and lending on_________ maturities when the yield curve has a ________ slope
a. Short; long; negative
b. Short; long: positive
O c. Long; short; negative O d. Long; short; positive
The global corporate average cumulative default rates for bonds rated CCC/C in the past 30 years is approximately
O a. 50%
0 b.30%
O c. 40%
0 d. 90%
Describe the prospects for various credit transfer markets since the 2007-2009 crisis ( 400-500)
Describe the actuarial and reduced form approach to estimate portfolio credit risk based on statistical models used by insurance industry ( 350-400)
REASONS WHY RISK MANAGEMENT IS IMPORTANT
Risks are a daily occurrence in most businesses, so a system must be put in place to effectively control them. Risks inherently turn into incidents if not dealt with properly – not only harming employees, but also resulting in productivity loss, increased admin burden and unfortunate legal disputes.
When it comes to health and safety, risks can arise from a variety of sources at your workplace. These include chemicals and substances, electrical sources, equipment and machinery and even contagious illnesses.
Risks are a daily occurrence in most businesses, so a system must be put in place to effectively control them. Risks inherently turn into incidents if not dealt with properly – not only harming employees, but also resulting in productivity loss, increased admin burden and unfortunate legal disputes.
When it comes to health and safety, risks can arise from a variety of sources at your workplace. These include chemicals and substances, electrical sources, equipment and machinery and even contagious illnesses.
Proactively managing risks and identifying sources can help ensure a business accurately works through a fall, fire or spillage. To be successful, investing in a health and safety risk management software can help ensure safe operations are prioritized.
What is Risk Management:
Health and safety risk management is the process of identifying, assessing and controlling threats to health and safety. It’s a formal process that evaluates risks and lays out plans to eliminate or control them. Risk management is essential for any organization that proactively looks to prioritize safe operations and the well-being of their employees.
Risks are a daily occurrence in most businesses, so a system must be put in place to effectively control them. Risks inherently turn into incidents if not dealt with properly – not only harming employees, but also resulting in productivity loss, increased admin burden and unfortunate legal disputes.
When it comes to health and safety, risks can arise from a variety of sources at your workplace. These include chemicals and substances, electrical sources, equipment and machinery and even contagious illnesses.
Proactively managing risks and identifying sources can help ensure a business accurately works through a fall, fire or spillage. To be successful, investing in a health and safety risk management software can help ensure safe operations are prioritized.
Importance of Risk Management in the Workplace:
Risk within the workplace has the potential to cause any number of unexpected outcomes. Unresolved risks can lead to unfavorable occurrences – from injuries and permanent workspace damage to legal liabilities, to name a few.
Your organization is responsible not only for complying with regulations, but for proactively protecting your organization and it’s people. By determining hazards and risks, assessing them for severity and then controlling them appropriately, your organization will experience an improved level of safety.
Reasons Why Risk Management is Important:
Health and safety risk management is invaluable to your organization in a multitude of ways. Here are a few benefits:
Reason 1: Crucial for Planning
Believe it or not, risk management strategy plays an important role in planning for the future. Through an increased awareness of hazards, and therefore possible risks, your department can create a strategy that effectively controls hazards and risks moving forward.
Reason 2: Informed Decision Making
Risk management in health and safety is a great tool for forward-thinking. Not only can you plan better with a more informed understanding of risk, but you can also make quicker decisions across business operations due to available the data. With more information, decisions can be made with more confidence
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