Part 1 of 3 -

Question 1 of 25
1.0 Points
A bank estimates that its profit next year is normally distributed with a mean of 0.8% of
assets and the standard deviation of 2% of assets. How much equity (as a percentage of
assets) does the company need to be 99.9% sure that it will have a positive equity at the end
of the year.

A. 15%

B. 5.38%

C. 2.08%

D. 1.6%

Question 2 of 25
1.0 Points
A bank estimates that its profit next year is normally distributed with a mean of 0.9% of
assets and the standard deviation of 3% of assets. How much equity (as a percentage of
assets) does the company need to be 99% sure that it will have a positive equity at the end of
the year.

A. 4%

B. 1%

C. 6.09%

D. 3.09%
Question 3 of 25
1.0 Points
Click to see additional instructions

Accepted characters: numbers, decimal point markers (period or comma), sign indicators (-), spaces (e.g., as thousands separator,
5 000), "E" or "e" (used in scientific notation). NOTE: For scientific notation, a period MUST be used as the decimal point marker.
Complex numbers should be in the form (a + bi) where "a" and "b" need to have explicitly stated values.
For example: {1+1i} is valid whereas {1+i} is not. {0+9i} is valid whereas {9i} is not.

Given the following information for Borderline Ltd, the expected return is % and
the standard deviation is %.

State of the Economy Probability Return

State 1 0.40 12%

State 2 0.28 7%

State 3 0.12 3%

State 4 0.20 3%

Question 4 of 25

Click to see additional instructions

Accepted characters: numbers, decimal point markers (period or comma), sign indicators (-), spaces (e.g., as thousands separator,
5 000), "E" or "e" (used in scientific notation). NOTE: For scientific notation, a period MUST be used as the decimal point marker.
Complex numbers should be in the form (a + bi) where "a" and "b" need to have explicitly stated values.
For example: {1+1i} is valid whereas {1+i} is not. {0+9i} is valid whereas {9i} is not.

Given the following information for Carefull Ltd, the expected return is % and
the standard deviation is %.
State of the Economy Probability Return
State 1 0.35 15%
State 2 0.45 10%
State 3 0.20 4%
Question 5 of 25
1.0 Points
Click to see additional instructions
Accepted characters: numbers, decimal point markers (period or comma), sign indicators (-), spaces (e.g., as thousands separator,
5 000), "E" or "e" (used in scientific notation). NOTE: For scientific notation, a period MUST be used as the decimal point marker.
Complex numbers should be in the form (a + bi) where "a" and "b" need to have explicitly stated values.
For example: {1+1i} is valid whereas {1+i} is not. {0+9i} is valid whereas {9i} is not.

The return from the market last year was 12% and the risk-free rate was 5%. A hedge fund
manager with a beta of 1.2 has an alpha of 3%. The return that the hedge fund manager earn
is %

Part 2 of 3 - Defaullt

Question 6 of 25
1.0 Points
Public offering is a new security that is offered to the general public.

True
False

Question 7 of 25
1.0 Points
The spread between cost of funds and lending rate is greater for wholesale banking than for
retail banking.

True
False

Question 8 of 25
1.0 Points
The front end load of a mutual fund is the amount an investor pays as a percentage of their
investment when the shares of the fund are purchased.

True
False

Question 9 of 25
1.0 Points
The net asset value of a firm is calculated as the value of the assets held by fund divided by
the number of shares outstanding

True
False
Question 10 of 25
1.0 Points
The spread between cost of funds and lending rate is smaller for wholesale banking than for
retail banking.

True
False

Question 11 of 25
1.0 Points
The number of shares in an open ended mutual fund increase and decrease as investments in
the fund increased or funds are withdrawn.

True
False

Question 12 of 25
1.0 Points
Annuity contracts have exposure to longevity risk.

True
False

Question 13 of 25
1.0 Points
The net interest income of a bank is the interest received plus the interest paid.

True
False
Question 14 of 25
1.0 Points
The front office of a bank is responsible for:

A. Evaluating the banks profit and losses

B. Human resources and marketing

C. Dealing with clients and customers

D. Managing risk and compliance

Question 15 of 25
1.0 Points
Private placement is a new issue of security that is sold to the general public.

True
False

Part 3 of 3 -
Question 16 of 25
1.0 Points
Which of the following is not a major component of Basel III:

A. Countercyclical buffer

B. Incremental risk charge

C. Capital conservation buffer

D. Leverage ratio

Question 17 of 25
1.0 Points
Basel I was introduced in:

A. 1988

B. 2009

C. 1999

D. 2018
Question 18 of 25
1.0 Points
Click to see additional instructions
Accepted characters: numbers, decimal point markers (period or comma), sign indicators (-), spaces (e.g., as thousands separator,
5 000), "E" or "e" (used in scientific notation). NOTE: For scientific notation, a period MUST be used as the decimal point marker.
Complex numbers should be in the form (a + bi) where "a" and "b" need to have explicitly stated values.
For example: {1+1i} is valid whereas {1+i} is not. {0+9i} is valid whereas {9i} is not.

Assets within AAA Bank consist of $350 million in corporate loans, $25 million in OECD
government bonds and $68 million in residential mortgages. The total risk-weighted assets of
AAA Bank is million.

Question 19 of 25
1.0 Points
Which of the following in not considered an approach for credit risk under Basel II

A. basic indicators approach

B. standardised approach

C. advanced internal ratings-based approach

D. foundation internal ratings-based approach

Question 20 of 25
1.0 Points
Investment risk is subdivided into market risk and credit risk

True
False

Question 21 of 25
1.0 Points
Tier 1 capital under Solvency II consists of liabilities that are subordinated to policyholders
and that satisfy certain criteria concerning their availability in wind-down scenarios.

True
False
Question 22 of 25
1.0 Points
Investment risk is subdivided into risk arising from life insurance, non-life insurance and
health insurance

True
False

Question 23 of 25
1.0 Points
Which of the following is not a major component of Basel II.5:

A. Comprehensive risk measure for instruments dependent on credit correlation

B. Countercyclical buffer

C. Calculation of stressed VaR

D. New incremental risk charge

Question 24 of 25
1.0 Points
Stressed VaR is calculated from the most recent one to four years of daily data.

True
False
Question 25 of 25
1.0 Points
Incremental risk charge is calculated as:

A. The one-year 99.9% VaR for losses from market instruments in the banking book

B. The one-year 99.9% VaR for losses from credit instruments in the trading book

C. The one-year 90% VaR for losses from credit instruments in the trading book

D. The one-year 99.9% VaR for losses from credit instruments in the banking book