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NEW QUESTION: 1
Which of the following was not a policy response introduced by Basel 2.5 in response to the global financial crisis:
A. Comprehensive Risk Model (CRM)
B. Incremental Risk Charge (IRC)
C. Stressed VaR (SVaR)
D. Comprehensive Capital Analysis and Review (CCAR)
Answer: D
Explanation:
Explanation
The CCAR is a supervisory mechanism adopted by the US Federal Reserve Bank to assess capital adequacy for bank holding companies it supervises. It was not a concept introduced by the international Basel framework.
The other three were indeed rules introduced by Basel 2.5, which was ultimately subsumed into Basel III.
Stressed VaR is just the standard 99%/10 day VaR, calculated with the assumption that relevant market factors are under stress.
The Incremental Risk Charge (IRC) is an estimate of default and migration risk of unsecuritized credit products in the trading book. (Though this may sound like a credit risk term, it relates to market risk - for example, a bond rated A being downgraded to BBB. In the old days, the banking book where loans to customers are held was the primary source of credit risk, but with OTC trading and complex products the trading book also now holds a good deal of credit risk. Both IRC and CRM account for these.) While IRC considers only non-securitized products, the CRM (Comprehensive Risk Model) considers securitized products such as tranches, CDOs, and correlation based instruments.
The IRC, SVaR and CRM complement standard VaR by covering risks that are not included in a standard VaR model. Their results are therefore added to the VaR for capital adequacy determination.
NEW QUESTION: 2
Which compensation column in the User Data File (UDF) is required for multi-currency deployments?
Please choose the correct answer.
Response:
A. Functional currency code
B. Salary type
C. Country
D. Local currency code
Answer: D
NEW QUESTION: 3
A. Option C
B. Option E
C. Option B
D. Option A
E. Option D
Answer: B,C
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