7. Which of the following is most accurate regarding the risks faced by financia

Question

7.

Which of the following is most accurate regarding the risks faced by financial institutions?

Select one:

a. Operational risk is the risk incurred by an FI when its technological investments do not produce anticipated cost savings

b. Technological risk is the risk that existing technology or support systems may malfunction or break down

c. Country or sovereign risk is the risk that repayments from foreign borrowers may be interrupted because of interference from foreign governments

d. Credit Risk is the risk that an FI may not have enough capital to offset a sudden decline in the value of its liabilities relative to its assets

e. All of the answers are correct

Explanation / Answer

Ans e. All of the answers are correct

Financial Istitutions faces all of the risks like Operational risk, Technological risk, Country or sovereign risk, Credit Risk. Other than above, there are other risks too like Insolvency risk, Off Balance sheet Risk, Interest Rate Risk, Market Risk.

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