nayizhenfeng

 The correct answer is D

Risk profiling models relate performance indicators to control indicators to identify operational weaknesses. As such, they are not in the class of top-down approaches that relate macroeconomic factors to financial variables. For example, multi-factor models regress stock returns against macroeconomic factors. The residual variance from this regression measures the unexplained variance that is attributable to operational risk. Income-based models and expenses-based models are similar in that they relate measures of income or expenses to macroeconomic factors.

nayizhenfeng

18、The risks that will have the largest impact on the capital charge for operational risk are:

A) low-frequency, low-severity risks.
 
B) high-frequency, low-severity risks.
 
C) high-frequency, high-severity risks.
 
D) low-frequency, high-severity risks.

nayizhenfeng

 The correct answer is C

The measurement of operational risk is the least developed of the risks facing most firms.

nayizhenfeng

17、Operational risk is defined as all of the following EXCEPT:

A) risk of breakdown in normal operations.
 
B) financial risk that is not caused by market risk.
 
C) risk of default by a foreign customer.
 
D) risk of fraud.

nayizhenfeng

The correct answer is C

Operational risk does not include default risk, which would be considered credit risk.

nayizhenfeng

14、Operational risk is all risk that is NOT:

A) credit or market risk.
 
B) exchange rate or interest rate risk.
 
C) credit or interest rate risk.
 
D) exchange rate or credit risk. 

nayizhenfeng

The correct answer is A

Operational risk is also defined as the residual risk – all risk that is not credit or market risk.

nayizhenfeng

15、Operational risk is most poorly defined because:

A) the definition of human risk changes periodically.
 
B) it is a component of overall market risk.
 
C) it is difficult to measure accurately.
 
D) it is poorly correlated with exchange rate risk. 

nayizhenfeng

The correct answer is C

Operational risk is the most poorly defined component of a firm’s overall risk because among other things, it is difficult to measure accurately. The human risk component of operational risk is well defined but is also difficult to measure. Operational risk is not a component of market risk and correlation with exchange rate risk is irrelevant.

nayizhenfeng

16、The measurement of which of the following risks is least developed?

A) Credit risk.
 
B) Market risk.
 
C) Operational risk.
 
D) Business risk.