Match the situation with its corresponding risk category v The Federal Reserve increases capital requirements A. Credit risk v A rogue trader circumvents trading rules B. Settlement risk v A homeowner defaults on a mortgage loan c. Legal risk v On the date of settlement, the seller can't deliver the promised securities D. Liquidity risk v Interest rates rise causing the value of the bank's bond portfolio to decline E. Market risk A bank is unable to obtain short-term funding to meet deposit outflows F. Operational risk

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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**Match the Situation with Its Corresponding Risk Category**

1. The Federal Reserve increases capital requirements  
   - Options:  
     A. Credit risk  
     B. Settlement risk  
     C. Legal risk  
     D. Liquidity risk  
     E. Market risk  
     F. Operational risk

2. A rogue trader circumvents trading rules  
   - Options:  
     A. Credit risk  
     B. Settlement risk  
     C. Legal risk  
     D. Liquidity risk  
     E. Market risk  
     F. Operational risk

3. A homeowner defaults on a mortgage loan  
   - Options:  
     A. Credit risk  
     B. Settlement risk  
     C. Legal risk  
     D. Liquidity risk  
     E. Market risk  
     F. Operational risk

4. On the date of settlement, the seller can’t deliver the promised securities  
   - Options:  
     A. Credit risk  
     B. Settlement risk  
     C. Legal risk  
     D. Liquidity risk  
     E. Market risk  
     F. Operational risk

5. Interest rates rise causing the value of the bank’s bond portfolio to decline  
   - Options:  
     A. Credit risk  
     B. Settlement risk  
     C. Legal risk  
     D. Liquidity risk  
     E. Market risk  
     F. Operational risk

6. A bank is unable to obtain short-term funding to meet deposit outflows  
   - Options:  
     A. Credit risk  
     B. Settlement risk  
     C. Legal risk  
     D. Liquidity risk  
     E. Market risk  
     F. Operational risk
Transcribed Image Text:**Match the Situation with Its Corresponding Risk Category** 1. The Federal Reserve increases capital requirements - Options: A. Credit risk B. Settlement risk C. Legal risk D. Liquidity risk E. Market risk F. Operational risk 2. A rogue trader circumvents trading rules - Options: A. Credit risk B. Settlement risk C. Legal risk D. Liquidity risk E. Market risk F. Operational risk 3. A homeowner defaults on a mortgage loan - Options: A. Credit risk B. Settlement risk C. Legal risk D. Liquidity risk E. Market risk F. Operational risk 4. On the date of settlement, the seller can’t deliver the promised securities - Options: A. Credit risk B. Settlement risk C. Legal risk D. Liquidity risk E. Market risk F. Operational risk 5. Interest rates rise causing the value of the bank’s bond portfolio to decline - Options: A. Credit risk B. Settlement risk C. Legal risk D. Liquidity risk E. Market risk F. Operational risk 6. A bank is unable to obtain short-term funding to meet deposit outflows - Options: A. Credit risk B. Settlement risk C. Legal risk D. Liquidity risk E. Market risk F. Operational risk
Expert Solution
Step 1

1. Market risk

2. Legal. Risk

3. Credit Risk

4. Settlement risk

5. Operational risk

 

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