Chapter 8 Self-Test Problems

which one is correct please confirm? QUESTION 28 The kind of analysis that consists of rerunning the model to determine the effect on the output variables of changes in the input variables is __________.   a. scenario analysis   b. probabilitistic analysis   c. simulation   d. sensitivity analysis

1. What are some questions which should be addressed in the risk management plan? 2. What is the difference between brainstorming and the Delphi technique when identifying risks? 3. Choose one of the tools associated with risk management and explain its advantages/disadvantages

2. Give one real life scenario where you can apply or experience the following concepts. a. Mark on: b. Mark up c. Markdown

Q1. a Tabulate different type of interest and their related formulae. b. Collect one example for each solve it showing appropriate steps

What is; A. risk B. risk management C.hedging

Question Four a) Outline step-by-step, the Johansen's methodology for testing for cointegration between a set of variables in the context of a VAR. b) Suppose that a researcher has a set of three variables, yt (t = 1, ........., T), i.e. y denotes a p-variate, or p x 1 vector, that she wishes to test for the existence of cointegrating relationships using the Johansen procedure. What is the implication of finding that the rank of the appropriate matrix takes on a value of; i.) 0 ii.) 1 iii.)2 iv.)3? c) The researcher obtains results for the Johansen test using the variables outlined in part (b) as follows: r 0123. λmax 38.65 26.91 10.67 8.55 5% critical value 30.26 23.84 17.72 10.71 Determine the number of cointegrating vectors, explaining your answer.

5)      Chartists practice          A)   technical analysis.          B)   fundamental analysis.         C)   regression analysis.         D)   insider analysis.         E)   psychoanalysis.   Please justify your answer.

3. Risk registers would normally detail which of the following: (Select all that apply.) A. Risk level before controls are implemented B. Risk lével after controls are implemented C. Responsibility for managing risks D. The total cost of a control being implemented Answer: Page 3 of 11 ted States) E Focus МacВook Pro

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Question One FRS for SMEs- Who can use it? Highlights of the Model(s)? Discuss key differences between the Model and GAAP.

Going beyond just calculating NPV, discuss it qualitatively. What is it used for? Is it a good method; how important is it? What are the advantages of using it? On the other hand, what are some challenges or disadvantages in calculating it.

This is is used to check the effect on the recommendations of a model if the estimates turn out to be wrong (say by changing the values of the parameters). Decision analysis O Predictive analysis O What-if analysis O Break-even analysis

Can you provide a manual written working of calculating CAPM Req. Return and beta

Explain how NPV varies with risks. Show your argument using formulate for cases with different risks.

Miller orr Model describes different levels such as____. a. Upper Limit b. Lower limit c. Return Point d. Upper Limit, Lower limit and Return Point

D3) Explain the idea of forecasting the VaR. Which methods one can use to predict μ and why is it difficult to get good forecasts?

Pls Briefly explain these four.  1. The process of assessing overall risks can be difficult and balancing resources to mitigate between risks with a high probability of occurrence but lower loss versus a risk with a high loss but lower probability of occurrence can often be mishandled. Ideal risk management should minimize spending on manpower or other resources and at the same time minimize the negative effect of risks. 2. DEFAULT RISK - is related to the probability that some or all of the initial investment will not be returned. The degree of default risk is closely related to the financial condition of the company issuing the security and the security's rank in claims on assets in the event of default or bankruptcy. 3. LIQUIDITY RISK - is associated with the uncertainty created by the inability to sell the investment quickly for cash. An investor assumes that an investment can be sold at the expected price when future consumption is planned. As the investor considers the sale of…

15) When managers use the decision process to make decisions, what is the output after using the prediction method? A) predictions C) evaluation B) decision D) implementation

The most popular method used to calculate VaR is: Group of answer choices B. Parametric VaR D. All three methods are equal in popularity. C. Monte Carlo Analysis A. Historical Simulation