What are the most important things you do as a financial risk manager to ensure your bank's financial health?

2. "Liquidity is a Bank's Capacity to fund increase in assets and meet both Expected and Unexpected Cash and Collateral Obligations at reasonable cost and without incurring unacceptable losses." Do you agree the above statement for explaining the importance of liquidity risk in the banking sector.
4. Uni Investment company bought a futures contract at $ 120. If, the initial margin is 40% and maintenance margin is 25%, at what price the margin call will be initiated for Uni Investment company?
6. What are the Over the counter (OTC) derivatives considered risky?
8. Calculate the 1-day VaR for a portfolio with a standard deviation of $50,000 and a confidence level of 99%. Use the z-score for the 99% confidence level.
10. Calculate the daily standard deviation of returns for a stock using historical data for the past month. What insights can you gain from this calculation?

Here's a fictional dataset of daily closing prices for the past month for the stock of XYZ Inc.:

Day 1: $50.00

Day 2: $51.20

Day 3: $52.10

Day 4: $51.80

Day 5: $53.00

Day 6: $52.70

Day 7: $52.50

Day 8: $51.90

Day 9: $50.80

Day 10: $50.40

Day 11: $50.60

Day 12: $51.20

Day 13: $51.80

Day 14: $51.40

Day 15: $51.70

Day 16: $51.90

Day 17: $52.20

Day 18: $53.40

Day 19: $54.00

Day 20: $53.80

Day 21: $54.10

Day 22: $54.50

Day 23: $54.30

Day 24: $54.60

Day 25: $54.70

Day 26: $54.20

Day 27: $54.40

Day 28: $53.80

Day 29: $53.50

Day 30: $53.70

1. Let's consider a fictional stock, XYZ Inc., with the following characteristics:

Current Stock Price: $100 per share

Option Expiration Date: One month from today

Strike Price for CALL Option: $105 per share

Strike Price for PUT Option: $95 per share

Risk-Free Interest Rate: 2% per annum

Daily Volatility of Stock Returns: 1% (daily standard deviation)

What insights can you gain from this calculation?

Answer rating: 100% (QA)

As a financial risk manager ensuring the banks financial health involves several key responsibilities Risk Identification Identifying and assessing va... View the full answer