BetaFin, a financial services firm, does not have retail branches, but has fixed income, equity, and asset
management divisions. Which one of the four following risk and control self-assessment (RCSA) methods fits
the firm's operational risk framework the best?

• A.RCSA workshop approach
• B.RCSA scenario analysis approach
• C.RCSA questionnaire approach
• D.RCSA loss data approach

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Which type of risk does a bank incur on loans that are in the "pipeline", i.e loans that are in the process of
origination but not yet originated?

• A.The bank does not incur any risk since the loan is not yet originated
• B.Interest rate risk only
• C.Interest rate risk and credit risk
• D.Credit Risk only

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As an example of the balance sheet effect, if rates rise, Delta Bank can expect:

• A.Its fixed rate assets to increase in value, although that effect will be offset by a reduction in the value of
  its fixed rate liabilities.
• B.Its fixed rate assets to drop in value, while that effect will be amplified by a reduction in the value of its
  fixed rate liabilities.
• C.Its fixed rate assets to increase in value, while that effect will be amplified by a reduction in the value of
  its fixed rate liabilities.
• D.Its fixed rate assets to drop in value, although that effect will be offset by a reduction in the value of its
  fixed rate liabilities.

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Which one of the following four statements about regulatory capital for a bank is accurate?

• A.Regulatory capital reflects the economic tradeoffs of the bank as accurately as the bank can represent
  them.
• B.Regulatory capital is the lowest level of economic capital the bank should have to meet regulatory
  requirement.
• C.Regulatory capital is less than the regulatory capital requirement.
• D.Regulatory capital is determined by rules imposed by an outside authority, such as a supervisor or
  central bank.

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The retail banking business of BankGamma has an expected P & L of $50 million and a VaR of $100 million.
The bank seeks to diversify its revenue, and is considering the opportunity to acquire a credit card business
with an expected P & L of $50 million and a VaR of $150 million. What will be the overall RAROC if the
bank acquires the new business?

• A.50%.
• B.33.3%.
• C.72%.
• D.58%.

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