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
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Academia199. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.99. You're not tied to anything after your purchase.
