Banks Develop Statistical Models to Calculate Their Maximum Loss Over

question 47

Multiple Choice

Banks develop statistical models to calculate their maximum loss over a given time period. This approach is known as the

• A)stress-testing approach.
• B)value-at-risk approach.
• C)trading-loss approach.
• D)doomsday approach.

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Definitions:

Matched-Pairs Sample

A study design where subjects are paired based on certain characteristics, and each pair is treated differently to study effects of a variable.

Interval Data

A type of numerical data where the distance between two points is meaningful, including temperatures and dates.

Matched Pairs

An experimental design method where pairs of subjects are matched based on certain criteria to control for confounding variables.

Normally Distributed

Describing a dataset whose distribution of values forms a bell-shaped curve, with most of the values clustering around a central mean value.