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

question 102

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.

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Definitions:

Marginal Utility

The added satisfaction or utility that a consumer derives from consuming an additional unit of a good or service.

Total Utility

This term refers to the total satisfaction received by consuming a certain amount of goods or services.

Milk Shakes

Although commonly a beverage, if not directly relevant to economics or provided as a specific economic term, the answer is NO.

Marginal Utility

The additional satisfaction or utility that a person receives from consuming one additional unit of a good or service.