Start learning →

CA Final Risk Management — practice questions

Explore 61 free Risk Management questions in CA Final Strategicfinancialmanagement. Open each question or exercise to read its content, reference answers and available explanation.

Practise Risk Management with Quill →

Risk Management questions and exercises with answers

Showing questions 1–30 of 61.

Which four are the standard market risk factors?Read the answer and worked solution →The risk that a borrower defaults on a contractual loan obligation is called what?Read the answer and worked solution →A trader cannot sell a security fast enough to prevent a loss. Which risk is this?Read the answer and worked solution →Risk that stock prices in general, not tied to one company, will change is called what?Read the answer and worked solution →Changes in the price of crude oil or copper create which kind of market risk?Read the answer and worked solution →A firm holds assets in a foreign currency whose exchange rate may change. Which risk applies?Read the answer and worked solution →A 4% 30-year mortgage, then market rates rise to 6%. Result?Read the answer and worked solution →What does Value at Risk (VaR) estimate?Read the answer and worked solution →A portfolio has a one-day 5% VaR of Rs 10 lakh. What does this mean?Read the answer and worked solution →A portfolio has a one-day 5% VaR. About how often is a loss beyond VaR expected?Read the answer and worked solution →A desk uses a one-day 1% VaR. Over 250 trading days, how many VaR breaks are expected?Read the answer and worked solution →A one-day 5% VaR is tested over 200 trading days. How many breaks would a well-calibrated model show?Read the answer and worked solution →What is a loss that exceeds the VaR threshold called?Read the answer and worked solution →Which pair of tail probabilities are the most common VaR parameters?Read the answer and worked solution →A one-day 5% VaR is also described as which confidence-level VaR?Read the answer and worked solution →How is VaR conventionally reported even though it represents a loss?Read the answer and worked solution →Which is a nonparametric method of estimating VaR?Read the answer and worked solution →What does a fixed VaR not show on a breach?Read the answer and worked solution →Which measure is a common alternative metric to VaR?Read the answer and worked solution →The VaR risk metric summarizes the distribution of possible losses by what?Read the answer and worked solution →The VaR risk measure defines risk as loss on what basis?Read the answer and worked solution →Which event triggered VaR's emergence in the late 1980s?Read the answer and worked solution →Which bank's CEO famously asked for a daily "4:15 report" combining firmwide risk?Read the answer and worked solution →In which year did J. P. Morgan publish its VaR methodology and free parameter estimates?Read the answer and worked solution →The J. P. Morgan VaR methodology was spun off into which business?Read the answer and worked solution →The revised Basel market-risk framework uses what for internal-model capital requirements?Read the answer and worked solution →What does backtesting of VaR compare?Read the answer and worked solution →Which regulator ruled in 1997 that public corporations must disclose derivatives activity quantitatively?Read the answer and worked solution →Under the three-regime system, losses of one to three times VaR are treated how?Read the answer and worked solution →In the three-regime system, which loss range is the domain of stress testing?Read the answer and worked solution →

Worked practice questions

Which four are the standard market risk factors?

  1. Interest rate, model, IT, liquidity
  2. Credit, liquidity, legal, reputational
  3. Equity, credit, legal, operational
  4. Equity, interest rate, currency, commodity
Show answer and solution

Correct answer: D. Equity, interest rate, currency, commodity

Market risk is split into equity, interest rate, currency and commodity risk, each tied to a different market variable.

Open this question →

The risk that a borrower defaults on a contractual loan obligation is called what?

  1. Market price risk
  2. Credit risk of default
  3. Funding liquidity risk
  4. Statistical model risk
Show answer and solution

Correct answer: B. Credit risk of default

Credit risk is the chance that a borrower fails to repay a loan or meet a contractual obligation, so the lender loses interest or principal.

Open this question →

A trader cannot sell a security fast enough to prevent a loss. Which risk is this?

  1. Currency risk
  2. Credit risk
  3. Liquidity risk
  4. Equity risk
Show answer and solution

Correct answer: C. Liquidity risk

Liquidity risk arises when an asset cannot be traded quickly enough in the market to avoid a loss or earn the required profit.

Open this question →

How to practise

  1. Choose a Risk Management question and try to work out your answer.
  2. Open the question to check the correct answer and read its worked solution.
  3. Continue in the app for bite-sized lessons, explanations and review with Quill. You can start without creating an account.

More Strategicfinancialmanagement topics

Mergers Acquisitions and Corporate RestructuringBusiness ValuationCapital BudgetingForeign Exchange Exposure and Risk ManagementInterest Rate RiskModern Portfolio TheoryPortfolio ManagementValuation (Finance)