alleryStart learning →A bank has Rs 4,00,000 exposure, a 5% default chance and 60% severity. Expected loss is how much?
ARs 20,000
BRs 12,000
CRs 1,20,000
DRs 2,400
Answer & Solution
Correct answer: B. Rs 12,000
Multiplying 4,00,000 by 0.05 and then by 0.6 gives Rs 12,000.
Keep practising Risk Management
Browse all Risk Management questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
What does an option give its buyer?Which contract is standardized in terms of asset, quantity, price and date?An investor holds a stock and buys an option to sell it at a set price. What is the cost oWhat is hedging?What went wrong with diversification in the late-2000s recession?Diversification benefits increase when the correlation between assets is what?Who initiated modern portfolio theory in 1952 with the thesis "Portfolio Selection"?In modern portfolio theory, how is the risk of a portfolio defined?