CBA Risk Management in Banking 2

Question 1

Under Basel III, what is the minimum Common Equity Tier 1 (CET1) capital ratio required for banks?

Accepted Answer

4.5%

Answer

6.0%

Answer

8.0%

Answer

10.5%

Question 2

Which risk management technique involves assigning probability distributions to uncertain variables to assess the range of possible outcomes?

Accepted Answer

Monte Carlo simulation

Answer

Stress testing

Answer

Gap analysis

Answer

Scenario analysis

Question 3

A bank's net interest margin (NIM) declines when interest rates rise unexpectedly. This is an example of which risk?

Accepted Answer

Interest rate risk in the banking book (IRRBB)

Answer

Liquidity risk

Answer

Credit risk

Answer

Operational risk

Question 4

The risk that a bank cannot meet its payment obligations as they fall due without incurring unacceptable losses is called:

Accepted Answer

Funding liquidity risk

Answer

Solvency risk

Answer

Market liquidity risk

Answer

Counterparty risk

Question 5

Which of the following best describes the 'repricing risk' component of interest rate risk?

Accepted Answer

Risk from timing differences in asset and liability maturity or repricing

Answer

Risk from changes in the shape of the yield curve

Answer

Risk from embedded optionality in bank products

Answer

Risk from basis differences between reference rates

Question 6

A bank auditor reviewing credit concentration risk should MOST likely focus on:

Accepted Answer

Large exposures to single borrowers or correlated sectors

Answer

Foreign exchange hedging positions

Answer

Trading book mark-to-market losses

Answer

Intraday liquidity positions

Question 7

Under the standardized approach for operational risk capital (Basel III), the Business Indicator Component (BIC) is multiplied by which factor?

Accepted Answer

Internal Loss Modifier (ILM)

Answer

Loss Multiplier

Answer

Marginal Coefficient

Answer

Scaling Factor