How does organizations use risk management techniques as a i. Liability tool ii. Opportunity Tool iii. Organization tool iv. Compliance tool v. Communication tool What is meant by risk aggregation and risk decomposition? Which requires an in-depth understanding of individual risks? Which requires a detailed knowledge of the correlations between risks? A bank's operational risk includes the risk of very large losses because of employee fraud, natural disasters, litigation, etc. Do you think operational risk is best handled by risk decomposition or risk aggregation? Outline the differences between the way market risk capital is calculated in (a) Basel 2, and (b) Basel 2.5 The expected return on the market portfolio is 12% and the risk-free rate is 6%. What is the expected return on an investment with a beta of (a) 0.2, (b) 0.5, and (c) 1.4? "Arbitrage pricing theory is an extension of the capital asset pricing model." Explain this statement. What is the difference between systematic and nonsystematic risk? Which is more important to an equity investor? Which can lead to the bankruptcy of a