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NEW QUESTION: 1
Why is economic capital across market, credit and operational risks simply added up to arrive at an estimate of
aggregate economic capital in practice?
A. Regulators require banks to add up economic capital across market, credit and operational risks.
B. Since market, credit and operational risks are significantly different measures of risk, there is no
diversification benefit to computing economic capital to banks across types of risks.
C. Market, credit and operational risks are perfectly correlated which justifies adding up their associated
economic capital.
D. In practice, it is very difficult to estimate the correlations between the risk categories and as a result a
conservative estimate is obtained by adding up the risks.
Answer: D

NEW QUESTION: 2

A. Option B
B. Option A
C. Option D
D. Option C
Answer: C,D

NEW QUESTION: 3

A. Option B
B. Option D
C. Option A
D. Option C
Answer: C