Types of foreign exchange risks

Assignment Help Risk Management

Reference no: EM133212177

Assignment:

1. The process of identifying all of a firm's risks and their values is a very detailed process is known as

A.Risk profiling
B.Risk forecasting
C.Risk identification
D.Risk mapping

2. When MayBank refuses to give loans even though borrowers are willing to pay is called

A.Credit Conditioning
B.Credit management
C.Credit rationing
D.Credit limitations

3. Managing credit risk involve the following EXCEPT ___

A.Credit limitation
B.Loan commitment
C.Security
D.Monitoring

4. The process of projecting the frequency and severity of losses into the future based on current data and statistical assumptions is known as _____

A.Risk mapping
B.Risk profiling
C.Risk identification
D.Risk forecasting

5. ______ is the amount of cash that a borrower must maintain in an account that serve as a collateral

A.Security deposit
B.Compensating balance
C.Cash Collateral
D.All of the Options

6. The risk management tool used as an alternative financial action for each frequency/severity combination on a risk map is known as___

A.Risk map
B.Risk identification
C.None of the above
D.Risk management matrix

7. The displacement of risk to a third, unrelated party is known as______

A.Risk avoidance
B.None of the above
C.Risk transfer
D.Loss reduction

8. Which of the following tools gives risk managers the ability to interpret data in any way that may help assess and evaluate the risks their companies face?

A.Risk Matrix
B.Risk Map
C.None of the above
D.Risk Management Information System

9. A risk manager may advise a company never to invest in Cryptocurrencies. Which kind of strategy is being applied by the manager from the traditional risk management matrix?______

A.None of the above
B.Risk transfer
C.Risk avoidance
D.Loss reduction

10. Income Gap Analysis is used to _____

A.Determine rate sensitive items
B.Determine exchange rate sensitive items
C.Determining time series data
D.Determining time of transaction occurrence

11. The following are Types of foreign exchange risks EXCEPT __

A. Economic
B..Transfiguration
C.Translation
D.Transaction

12. Adverse selection is a problem created by ____

A.Too big to fail banks
B.Credit rationing
C.Asymmetric information
D.Symmetric information

13. Ahmed lent 100RM to Ben. Ben might not pay back the 100RM or he might return only 60RM to Ahmed. What type of risk did Ahmed take on?

A.Business risk
B.Foreign exchange risk
C.Default risk
D.None of the above

14. Airasia has gone through a tough time during the pandemic. There was a possibility of risk that the Airline could close because of the situation. Which type of risk has Airaisa faced?

A.Foreign exchange risk
B.Business risk
C.Default risk
D.None of the above

15. ______ratings are backward looking and do not forecast bank activity

A.BASEL Accords
B.CAMELS
C.REGULATION Q
D.BASEL 1

16. According to a holistic risk map, a tornado can be categorized under...

A.None of the above
B.Hazard risk
C.Financial risk
D.Operational risk

17. RSA - RSL =

A.Asset gap
B.Liability gap
C.Expenditure gap
D.Income gap

18. _______ focus on the ability to pay obligations.

A.Liquidity
B.Capacity
C.Capital Adequacy
D.Credit management

19. If an exporter (receipt) expects that the currency it is due to receive will depreciate over the next three months it may try to obtain payment immediately. This technique is called __

A.Invoice in Home currency
B.Matching
C.Leading and lagging
D.Collection mechanism

20. A bank agrees to fix an exchange rate at a set date in the future (expressed as a premium or discount on the spot rate, equal to the interest rate differential between the two countries), thus giving the exporter certainty in their exchange rate. This is known as ___.

A.Risk shifting
B.Risk sharing
C.Risk management
D.Risk allocation

Reference no: EM133212177

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