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NEW QUESTION: 1
Which of the following conditions could lead an organization to enter into a new business through internal development rather than through acquisition?
A. It is expected that there will be slow retaliation from incumbents.
B. The number of bidders to acquire the organization for sale is low.
C. The acquiring organization has information that the selling organization is weak.
D. The condition of the economy is poor.
Answer: A

NEW QUESTION: 2
----
Which of the following is correct with respect to roles within an enterprise-wide risk management process?
The board provides oversight to the risk management process.
Executive management owns the risk management framework.
Senior management is assigned ownership of risks.
Internal audit modifies the risk assessment determined by management.
A. 1, 2, and 3 only.
B. 1, 2, 3, and 4.
C. 3 and 4 only.
D. 1 and 2 only.
Answer: A

NEW QUESTION: 3
Which of the following introduces model error when basing VaR on a normal distribution with a static mean and standard deviation?
A. Volatility clustering
B. Heavy tails
C. Autocorrelation of squared returns
D. All of the above
Answer: D
Explanation:
Explanation
When VaR is based on an assumption of normality with a static mean and volatility, it means anything that violates these assumptions will introduce model error. Volatility clustering implies a non-static volatility.
Heavy tails imply non-normality of the shape of the distribution. Autocorrelation of squared returns implies that returns are not independent and identically distributed. Therefore all of these introduce model error.
Choice 'd' is therefore the correct answer.