Barings Lost $1.2 Billion Because of What

question 7

Multiple Choice

Barings lost $1.2 billion because of what?

• A)a failure of risk controls in one of its foreign offices
• B)model risk in their VAR models
• C)fraudulent transactions
• D)regulators shut it down because of poor risk management
• E)speculating on German interest rates

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Definitions:

Dumping

A firm’s or an industry’s sale of products on the world market at prices below its own cost of production.

Natural Comparative Advantage

A situation where a country or region can produce a particular good or service at a lower opportunity cost compared to other countries or regions.

Factor Endowments

Refers to the quantity and quality of resources a country or region has available, such as labor, land, and capital.

Heckscher-Ohlin Theorem

An economic theory stating that countries export what they can most efficiently and abundantly produce.