11. ______risk refers to risk which is caused due to factors unique or related to a firm or industry.1. Systematic
2. Unsystematic
3. Market
4. Interstate
5. None of the above
Option “2” is correct. There is always a risk incorporated in every investment like shares or debentures. The two major components of risk systematic risk and unsystematic risk, which when combined results in total risk. The systematic risk is a result of external and uncontrollable variables, which are not industry or security specific and affects the entire market leading to the fluctuation in prices of all the securities. On the other hand, unsystematic risk refers to the risk which emerges from controlled and known variables, that are industry or security specific.
12. Basel II introduced a new _____ weighting for borrowers with lower credit ratings.1. 100%
2. 125%
3. 150%
4. 200%
5. None of the above
Option “3” is correct. Basel II introduced a new 150% weighting for borrowers with lower credit ratings.
13. Which tier capital has the highest capacity to Absorb losses?1. Tier-IV
2. Tier-III
3. Tier-II
4. Tier-I
5. None of the above
Option “4” is correct. Tier 1 capital deemed to have highest capacity to absorb losses in order to allow banks continue to operate on an ongoing basis.
14. Which out of the following is not one of the approaches of calculating Operational Risk as per Basel-II framework?1. Basic Indicator Approach
2. Standardized Approach
3. Advanced Measurement Approach
4. Foundation Internal Ratings-based approach
5. None of the above
Option “4” is correct. The Basel framework provides three approaches for the measurement of the capital charge for operational risk. These are Basic Indicator Approach (BIA), Standardized Approach and Advanced Measurement Approach.
15. Which out of the following is an approach of calculating Market Risk as per Basel-II framework?1. Standardized Approach
2. Value at Risk
3. Foundation Internal Ratings-based approach
4. Advanced Internal Ratings-based approach
5. None of the above
Option “2” is correct. For market risk the preferred approach is VaR (value at risk) Yield to maturity is considered a long-term bond yield but is expressed as an annual rate. In other words, it is the internal rate of return (IRR) of an investment in a bond if the investor holds the bond until maturity, with all payments made as scheduled and reinvested at the same rate.