Investment Risk Management Quiz
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Questions and Answers

What is risk in finance?

  • A potential for losing all or a portion of the investment
  • An unforeseen financial event that could lead to loss of investment or lower earnings (correct)
  • A guaranteed financial event that leads to profit
  • A potential for earning higher returns

    • What is the relationship between risk and return?

  • The likelihood of profit decreases with risk
  • The likelihood of profit increases with risk (correct)
  • There is no relationship between risk and return
  • Risk and return are unrelated factors

    • Why must banks effectively manage the risks they take?

  • To avoid any potential negative impact on the financial health of financial institutions (correct)
  • To reduce the likelihood of profit
  • To take more risks
  • To increase profits

    • What are the benefits of implementing IT systems for risk management?

    <p>IT systems can streamline activities, ensure consistency, and reduce errors (D)</p> Signup and view all the answers

    Who is accountable for risk management in an organization?

    <p>Everyone in the organization (D)</p> Signup and view all the answers

    What is the relationship between risk and return?

    <p>The higher the risk, the higher the return (C)</p> Signup and view all the answers

    What is the definition of risk?

    <p>An adverse or unforeseen financial event that could lead to loss of investment or lower earnings (C)</p> Signup and view all the answers

    What is the importance of risk management in financial institutions?

    <p>It can ruin a business if not managed properly (D)</p> Signup and view all the answers

    What is one of the key benefits of implementing IT systems for risk management?

    <p>It provides compliance monitoring and market analysis (B)</p> Signup and view all the answers

    Who is responsible for risk management in an organization?

    <p>Everyone in the organization (B)</p> Signup and view all the answers

    What is the reason for the constantly changing regulatory environment for the financial services industry?

    <p>All of the above (B)</p> Signup and view all the answers

    What are some examples of cybersecurity threats that financial services organizations face?

    <p>Malware, phishing, and Denial of Service assaults (C)</p> Signup and view all the answers

    What can traditional banks do to counter the increased competition from online banking companies and digital firms?

    <p>Both A and B (A)</p> Signup and view all the answers

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