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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?

Ethics help in making unbiased risk assessments (C) Signup and view all the answers

What are the Basel Accords?

Voluntary measures for banking institutions (A) Signup and view all the answers

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

To prevent serious consequences of not considering risks (A) Signup and view all the answers

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

The possibility that an asset's or investment's outcome will differ from the expected outcome (D) Signup and view all the answers

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

Increased the exposure of financial transactions to various types of risks (C) Signup and view all the answers

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

They are two sides of the same coin and should be considered together (D) Signup and view all the answers

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

To prescribe leverage, liquidity, and capital requirements for banking institutions (D) Signup and view all the answers

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

Ethics (B) Signup and view all the answers

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

They are two sides of the same coin and should be considered together (C) Signup and view all the answers