1. The “Doctrine of No Surprises” states that:

A. risk managers are expected to predict risks.
B. the effect of the outcome of a predictable or an unpredictable event would not surprise the risk manager and the effect would have been quantified and considered in advance.
C. the effect of the outcome of a predictable or an unpredictable event would not surprise the risk manager, but it would be difficult to quantify it in advance.

 

2. Two students make the following statements:

Student 1: The risk tolerance decision begins with analysis of an “inside” view and an “outside” view. The first deals with the shortfalls in the internal environment of the organization that could lead to failure. The later deals with outside uncertain forces that the organization is exposed to.

Student 2: The risk tolerance decision begins with analysis of a “Proactive” view and a “reactive” view. The first deals with outside uncertain forces that the organization is exposed to. The later deals with the shortfalls in the internal environment of the organization that could lead to failure.

Which student’s statement is most likely correct?

A. Student 1.
B. Student 2.
C. Both.

 

3. The concept that directly measures the risk of derivatives is:

A. Beta and standard deviation.
B. Probability.
C. Delta and gamma.

 

Tomorrow’s questions of the day will be on R43: Portfolio Risk and Return: Part I

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