10-41 How Can Market Risk Be Defined in Absolute Terms

question 62

Multiple Choice

10-41 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:

Crisis-Induced Change

Transformations within an organization or society triggered by a crisis, necessitating immediate and significant adjustments.

Innovative Change

Alterations within an organization that introduce new methods, ideas, or products to improve efficiency, productivity, or competitive advantage.

Disruptive Change

Significant alteration that drastically impacts the way a sector operates, often leading to the creation of new markets and the decline or transformation of existing ones.

Unplanned Change

Modifications or adjustments that occur without forethought or intention, often in response to immediate circumstances or emergencies.