Sumitomo Bank's Risk Manager Has Estimated That the DEARs of Two

question 96

Multiple Choice

Sumitomo Bank's risk manager has estimated that the DEARs of two of its major assets in its trading portfolio, foreign exchange and bonds, are -$150,000 and -$250,000, respectively. What is the total DEAR of Sumitomo's trading portfolio if the correlation among assets is assumed to be 0.0?

• A)-$100,000.
• B)-$291,548.
• C)-$350,000.
• D)-$380,789.
• E)-$400,000.

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Definitions:

Preconscious

The part of the mind containing information that is not currently in focal awareness but can easily be accessed, as described in psychoanalytic theory.

Free Association

A psychoanalytic technique where the patient says whatever comes to mind, used to explore the unconscious.

Hypnosis

A trance-like state of focused attention, reduced peripheral awareness, and increased susceptibility to suggestion.

Psychic Energy

A concept in psychoanalytic theory referring to the force or drive behind human behavior and mental processes.