14 Risk related to counterparty failure to meet their obligation based on the initially agreed terms is referred to as:* A. Operational risk B. Funding risk C. Credit risk D. Fiduciary risk
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- 13. Identify the risks described in each statement: 1st: Dependent on the covenants set and agreed in between the lenders and the borrowers.2nd: Classified as a systematic risk because it arises from external forces or based on the movement of the industry. a. Legal; Market b. Market; Legal c. Contractual; Industry d. Industry; ContractualWhich of the following risks cannot be hedged?A. CreditB. LiquidityC. CurrencyD. DurationCounterparty credit risk is a function of the probability of default, exposure at default, and loss given default. Assuming that the individual exposure at default with a counterparty is fixed, which of the following statements is correct? A. The probability of default can be mitigated by collateral, and exposure at default can be mitigated by netting. B. The probability of default can be mitigated by netting, and exposure at default can be mitigated by collateral. C. Loss given default can be mitigated by collateral, and exposure at default can be mitigated by netting. D. Loss given default can be mitigated by netting, and exposure at default can be mitigated by collateral.
- How the following risk can be mitigated and managed 1. Market risk 2. Liquidity risk 3. Insolvency risk 4. Credit riskThe risk of an accounting loss from a financial instrument due to possible failure of another party to perform according to terms of the contract is known as: [A] Credit risk [B] Investment risk [C]Market risk [D]Opportunity risk.18. Which of the following loss contingencies is not usually accrued? a. product warranty obligationsb. premium offer obligationsc. risk of loss from fired. noncollectibility of receivables
- 1. The significant risk that is transferred from the policyholder to the issuer of an insurance contract is:a. Lapse or persistency riskb. Financial riskc. Expense riskd. Insurance risk2. Under the general model of PFRS 17, a group of insurance contracts is initially measured at:a. The fulfillment cash flowsb. The contractual service marginc. Either a or bd. Both a and b3. A group of insurance contracts is subsequently measured at:a. The liability for remaining coverageb. The liability for incurred claimsc. Either a or bd. Both a and b4. According to PFRS 17, an insurance contract is NOT derecognized when:a. Expiredb. Terms have been modified, and the modification is not substantivec. Terms have been modified, and the modification is substantived. Extinguished5. According to PFRS 17, an accounting service result is recognized in:a. Profit or lossb. Other comprehensive incomec. Statement of financial positiond. Partly in profit or loss, and partly in other comprehensive incomeUse the…A risk-based deposit insurance program is defined as: a. A program that assesses the concentration risks of insured deposits. b. A program that assesses fines on the basis of capital adequacy and supervisory judgments. c. A program that uses market risk as the basis for deposit insurance premiums. d. A program that assesses insurance premiums on the basis of capital adequacy and supervisory judgments.Define counterparty risk
- 5. Changes in the fair value of the effective portion of a hedging financial instrument are recognized as a part of current earnings of the period for which of the following? Cash Flow Hedge Fair Value Hedge a. Yes Yes b. No Yes c. Yes No d. No No Multiple Choice a. b. c. d.When should a debt security be classified as held-tomaturity?4 What is counter party risk? Which financial contracts does it apply to?