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Financial Risk Management Quiz 1 Question and answers correctly solved

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Financial Risk Management Quiz 1 Question and answers correctly solved Historical Evolution - correct answer -Short-term interest rate fluctuations -Exchange rate fluctuations -Long-term interest rate fluctuations -The evolution of risk management products -The global OTC derivatives markets ...

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  • August 11, 2024
  • 8
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • financial risk management quiz 1
  • financial risk management quiz 1 question and answ

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  • GARP
  • GARP

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Financial Risk Management Quiz 1
Historical Evolution - correct answer ✔-Short-term interest rate fluctuations
-Exchange rate fluctuations
-Long-term interest rate fluctuations
-The evolution of risk management products
-The global OTC derivatives markets
-The global OTC foreign exchange derivative markets
-The global OTC interest rate derivative markets
-global turnover in OTC derivatives markets
-trading revenues from cash instruments and derivatives
-notional amounts of derivatives of leading banks


Regulatory Environment - correct answer ✔-Many banks failed to manage
"maturity mis-matched" positions
-Push to implement risk management risk management systems came from
the regulators rather inside banking institutions
-Feds move to require more capital against risky assets
-Regulators attempt to create a level playing field for all banks
-BIS assigned to the job of studying the positions of banks world-wide
-BIS 1998 Accord
-G30 Study on risk management


Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of
1980 - correct answer ✔-Liberalization of the economic banking environment
-Phasing out of Reg Q

, Garn-St. Germain Depository Institution (DIA) Act of 1982 - correct answer
✔Allowed banks to offer money market deposits


The Academic Background and Technological Changes - correct answer
✔Types of risk: business, financial, market, liquidity, default, systematic,
specific, residual, credit, counterparty, operations, settlement, country,
portfolio, systemic, legal


Markowitz Theory - correct answer ✔


Sharpe/Lintner Theory - correct answer ✔


Black-Scholes/Merton - correct answer ✔


Miller/Modigiliani Theorems - correct answer ✔


Market efficiency - correct answer ✔


Accounting Systems vs Risk Management Systems - correct answer ✔-Risk
affects financial reporting
-Traditional approach is backward looking
---Past performance only was considered
-GARP (generally accepted risk principles) is based on forward looking
systems
---Incorporate future profitability
---Incorporate additivity of systematic or beta risk
---Explicitly incorporate the degree of correlation between pairs of securities

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