Financial Risk Management Quiz
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Questions and Answers

What is risk management?

  • Predicting exact outcomes of investments
  • Encouraging unnecessary risks
  • Ignoring the consequences of risky decisions
  • The process of identifying, measuring, and taking action on risks (correct)
  • How does globalisation impact financial transactions?

  • It eliminates all risks from financial transactions
  • It increases the exposure of financial transactions to various risks (correct)
  • It reduces the need for ethical considerations
  • It simplifies risk management processes
  • What are risk management and risk-taking?

  • Completely different processes
  • Two unrelated concepts
  • Two sides of the same coin (correct)
  • Opposites
  • Why is ethics considered a vital component in risk management?

    <p>Ethics help in making unbiased risk assessments</p> Signup and view all the answers

    What are the Basel Accords?

    <p>Voluntary measures for banking institutions</p> Signup and view all the answers

    Why is it important to pay attention to risk management at an enterprise level?

    <p>To prevent serious consequences of not considering risks</p> Signup and view all the answers

    According to the passage, what does risk relate to in financial terms?

    <p>The possibility that an asset's or investment's outcome will differ from the expected outcome</p> Signup and view all the answers

    What impact has globalisation and increasing market integration had on financial transactions?

    <p>Increased the exposure of financial transactions to various types of risks</p> Signup and view all the answers

    What does the passage state about risk management and risk-taking?

    <p>They are two sides of the same coin and should be considered together</p> Signup and view all the answers

    What is the purpose of the Basel Accords according to the passage?

    <p>To prescribe leverage, liquidity, and capital requirements for banking institutions</p> Signup and view all the answers

    What is a vital component of the considerations around risk management and risk-taking according to the passage?

    <p>Ethics</p> Signup and view all the answers

    What is the relationship between risk management and risk-taking according to the passage?

    <p>They are two sides of the same coin and should be considered together</p> Signup and view all the answers

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