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1. Which of the following was a key problem in the Barings Bank case?
A) The different time zones that the office was trading in
B) Leeson was executing an arbitrage strategy even though he was not authorized to do so
C) Having the back office and front office operations under the same person
D) Difference in the contract sizes in the OSE and SIMEX
2. Several clients, including Procter and Gamble took legal action against Bankers Trust, claiming Bankers Trust
A) hid profits
B) did not honour its contractual obligations to pay
C) was involved in accounting fraud
D) sold them derivative products without properly advising them of the relevant risks
3. When considering the performance of Northern Rock within its peer group of banks, which of the following is not correct?
A) Only a few months previously it had reported record profits.
B) The quality of its' assets was never in question.
C) Its' loan loss record was poor by industry standards.
D) For many years it was regarded as a star-performer in the financial markets.
4. The problems in the Orange County case can best be characterized as failures related to:
A) Market Risk
B) Operational and Regulatory Compliance Risk
C) All of the Above
D) Credit Risk
5. Finite insurance is reinsurance which
A) transfers only a limited amount of risk at less cost than traditional reinsurance
B) transfers the total risk at the usual reinsurance price
C) transfers the total risk at less cost than traditional reinsurance
D) transfers only a limited amount of risk at the usual reinsurance price
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: D | Question # 3 Answer: C | Question # 4 Answer: A | Question # 5 Answer: A |
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