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Financial Risk Modelling Week Ten Flashcards | StudBud
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Financial Risk Modelling Week Ten
Financial Risk Modelling Week Ten
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Questions
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Answers
1
Events that can lead to undesired consequences are referred to as?
Adverse events.
All of the above
Risk events
Unanticipated events
2
A mathematical model that is used for causal analysis is referred to as?
Correlation model
All of the above.
Analytical model
Regression model
3
A risk assessment method that allows us to see possible outcomes of a future decision is known as
Monte Carlo simulation.
Net Present Value
Discounted Cash Flow Model
Mathematical methods
4
Data sets with high kurtosis tend to have…
Values greater than 3
All the above
Outliers
Heavy tails
5
A risk analyst is accessing the risk of default for a corporate lending application. Where would they look?
Disclosure data
Financial statements.
All of the above.
Personal data
6
The analysis that evaluates the strength of the linear relationships between two or more variables is referred to as
Deterministic analysis
Correlation analysis
Sensitivity analysis
Probability analysis
7
The range of values below and above the sample statistic in a confidence interval is known as
The margin of Error.
Sampling error
a) Standard error
Confidence level
8
A business is seeking to invest in the U.S market what level of business uncertainty would this fall into.
All of the above.
Level Two
Level One
Level Three
9
The analysis that helps us to identify the uncertain inputs with the biggest impact on our key outcomes is known as
Deterministic analysis,
Sensitivity analysis
Correlation analysis
Probability analysis
10
The third moment in a probability distribution can be used to measure--
None of the above.
The scale of the distribution.
The location of the distribution.
The shape of the distribution.
11
What type of model does not follow the trend of the past?
Invalid model.
Mathematical model.
Correlation model
Valid model
12
A sequence of data points ordered in time order is referred to as?
Cross-sectional data.
Time series.
Time indices
Panel data
13
What are the set of arguments for a normal probability distribution?
Standard Deviation and Variance
Mean and Standard Deviation.
Mean and Mode
Skewness and Kurtosis
14
The first moment in a probability distribution can be used to measure-
None of the above.
The shape of the distribution
The location of the distribution
The scale of the distribution
15
Statistical functions that describe the likelihood of obtaining values of a random variable are referred to as?
Statistical models
Mathematical models
Risk models
Probability distributions
16
The two core components of risk are?
Severity and Likelihood
Regression and Correlation
All of the above
Probability and statistics
17
The average error in a valid model is-
Zero
One
Five
TWO
18
The data values in a valid model must scatter
All the above.
Monotonically above and below the trend line
Randomly above and below the trend line.
Systematically above and below the trend line
19
Random variables that have an infinite number of values between any two values are referred to as?
Discrete variable.
a) Time series.
Continuous variable.
Panel variable.
20
Those events that are impossible to predict are referred to as?
Uncertain events.
None of the above
Probabilistic events
One-off events
21
The analysis that finds the combinations of input values responsible for changes in outputs are referred to as?
Regression analysis.
Sensitivity analysis
Correlation analysis
Scenario analysis
22
Which of the ratios can assist in assessing the repayment ability of a loan applicant?
Leverage analysis
Profitability analysis
Liquidity analysis
All of the above.
23
The recent changes to the Basel accord regulation falls under what level of business uncertainty?
Level Two
Level Three
All of the above.
Level One.
24
A random variable with only a finite number of possible values is referred to as?
Panel variable
Discrete variable
Continuous variable
Time series.
25
How do leaders manage level four uncertainty?
Look at the performance of a similar market.
Use a set of assumptions
Looking at actual data
All of the above.
26
The second moment in a probability distribution can be used to measure--
The shape of the distribution
None of the above.
The scale of the distribution.
The location of the distribution.
27
Risk management deals with the issue of uncertainty only?
True
False
28
The following except one is not a danger of using deterministic models in risk analysis?
Account for uncertainties via probability distributions.
Ignore underlying uncertainties
They force analysts to view uncertainty in a binary way
They make analysts underestimate the risk
29
Probability distributions can be used for the following.
To know the outcomes most likely to occur
Evaluate the likelihood of different results
All of the above
Understand the spread of potential values
30
The following except one is not a source of level three uncertainty.
New Basel three accord.
Volatile economic conditions.
Customer demand for new products
Opening a new franchise in the U.S.
