2016-FRR Exam Dumps | What is the role of market risk management function within a bank? I. Control and minimize the risks

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Question 18

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Question 18/145

What is the role of market risk management function within a bank?
I. Control and minimize the risks the bank should take.
II. Establish a comprehensive market risk policy framework.
III. Define, approve and monitor risk limits.
IV. Perform stress tests and other qualitative risk assessments.

A. I and III

B. II and IV

C. I, II and III

D. II, III, and IV

Correct Answer: D

The market risk management function within a bank encompasses several key roles:
* Establish a comprehensive market risk policy framework: This ensures that there are clear guidelines and procedures for managing market risk.
* Define, approve, and monitor risk limits: This involves setting boundaries on the levels of risk that can be taken and continuously overseeing them.
* Perform stress tests and other qualitative risk assessments: These are conducted to evaluate the bank's resilience to extreme market conditions and to identify potential vulnerabilities.
These activities are crucial for maintaining the bank's overall market risk exposure within acceptable levels.

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