How Can Market Risk Be Defined in Absolute Terms

question 57

Multiple Choice

How can market risk be defined in absolute terms?

• A)A dollar exposure amount or as a relative amount against some benchmark.
• B)The gap between promised cash flows from loans and securities and realized cash flows.
• C)The change in value of an FI's assets and liabilities denominated in nondomestic currencies.
• D)The cost incurred by an FI when its technological investments do not produce anticipated cost savings.
• E)The capital required to offset a sudden decline in the value of its assets.

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Definitions:

Selling Price

The amount of money for which a product or service is sold to the customer.

Cost

The amount of money required to purchase, produce, or maintain something.

Markup Percent

The extra portion put on the cost of items to cover the expenses of operation and achieve profit.

Selling Price

The amount for which something is sold, making it the price a buyer pays to acquire a product or service.