CAIIB - RISK MANAGEMENT – MODULE B. G.R.Rao, Faculty, IIBF. WHAT IS RISK. EVERY ACTION HAS A REACTION IF REACTION IS FOR OUR BEENFIT; NO WORRY AND NO RISK IF IT IS AGAINST OUR INTEREST ONLY WE ARE WORRIED AND THAT IS RISK RISK IS THEREFORE POSSIBILITY OF A NEGATIVE RESULT FOR OUR ACTIONS
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G.R.Rao, Faculty, IIBF
SOURCE, IMPACT AND EVENT
Q. RAROC STANDS FOR
A. RISK ADJUSTED RETURN ON CAPITAL
B. RISK ADJUSTED RETURN ON COST.
C. RETURN ADJUSTED RISK ON CREDIT.
D NONE OF ABOVE.
Q.CREDIT DEFAULT SWAPS ARE
A. ONE OF CREDIT DERIVATIVES.
B. A KIND OF BANK GUARANTEE
C. A KIND OF LINE OF CREDIT.
D. STAND BY CREDIT.
Q. THE BETA FACTOR FOR CALCULATING OPERATIONAL RISK UNDER STANDARDIZED APPROACH FOR RETAIL BANKING IS
D. NONE OF ABOVE.
Q. PROBABILITY OF OCCURRENCE =4; POTENTIAL FINANCIAL IMPACT =4; IMPACT OF INTERNAL CONTROL =0%
WHAT IS ESTIMATED LEVEL OF OPERATIONAL RISK?
c. Cannot say
d. Only RBI can fix rate
A++ A+ A B+ B C Default
1 1 75 12 3 5 3
a. 2 b. 23 c. 25 d. 21
Expt. rate = p * r + q [ (1 + r) R -1]
Where p is probability of repayment q= 1-p
r is contractual rate and R is recovery rate
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SUCCESS IN EXAMINATION