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NEW QUESTION: 1
What is the area under the normal curve for z > 1.79?
A. 0.0401
B. 0.9599
C. 0.4633
D. 0.0367
E. None of these answers
Answer: D
Explanation:
Explanation/Reference:
Explanation:
From the z-tables, z = 1.79 is 0.4633. So 1 - 0.4633*2 = 0.0734. Since it is on each side of the curve,
0.0734/2 = 0.0367.
NEW QUESTION: 2
Which of the following statements is true:
I. Expected credit losses are charged to the unit's P&L while unexpected losses hit risk capital reserves.
II. Credit portfolio loss distributions are symmetrical
III. For a bank holding $10m in face of a defaulted debt that it acquired for $2m, the bank's legal claim in the bankruptcy court will be $10m.
IV. The legal claim in bankruptcy court for an over the counter derivatives contract will be the notional value of the contract.
A. III and IV
B. II and IV
C. I and III
D. I, II and IV
Answer: C
Explanation:
Explanation
Statement I is true as expected losses are the 'cost of doing business' and charged against the P&L of the unit holding the exposure. When evaluating the business unit, expected losses are taken into account. Unexpected losses however require risk capital reserves to be maintained against them.
Statement II is not true. Credit portfolio loss distributions are not symmetrical, in fact they are highly skewed and have heavy tails.
Statement III is true. The notional, or the face value of a defaulted debt is the basis for a claim in bankruptcy court, and not the market value.
Statement IV is false. In the case of over the counter instruments, the replacement value of the contract represents the amount of the claim, and not the notional amount (which can be very high!).
NEW QUESTION: 3
Which of the following factors is the most important driver of supply chain change?
A. Competitor actions
B. Customer perceptions of value
C. Health and safety concerns
D. Government regulations
Answer: B