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Questions and Answers
What are the two classifications of market risk mentioned in the text?
What are the two classifications of market risk mentioned in the text?
- Operational risk and credit risk
- Credit risk and settlement risk
- Sovereign risk and volatility risk
- Directional risk and non-directional risk (correct)
What type of risk arises when one fails to fulfill their obligations towards their counterparties?
What type of risk arises when one fails to fulfill their obligations towards their counterparties?
- Credit risk (correct)
- Settlement risk
- Operational risk
- Market risk
What is the cause of non-directional risk in market risk?
What is the cause of non-directional risk in market risk?
- Movement in stock price
- Volatility risks (correct)
- Interest rates
- Operational inefficiency
What is the classification of credit risk that usually arises due to difficult foreign exchange policies?
What is the classification of credit risk that usually arises due to difficult foreign exchange policies?
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What are the sources of financial loss mentioned in the text?
What are the sources of financial loss mentioned in the text?
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