Bachelor of Management Studies (B.M.S.) SEM V 2018 19 Nov 2018-19 FINANCE RISK MGT Question Paper - Mumbai University | munotes

Questions asked in this paper

• 3. Figures to the right indicate full marks

1. Q1 A State True or False (any 8). 8 marks
   • 1. Risk Measurement involves tactical and Strategic decisions to control risk
   • 2. Credit Risk is alternatively called as Default Risk
   • 3. Beta less than 1 indicates that the security is theoretically more volatile than the market
   • 5. In the money Option leads to negative cash flows to the holder if it were exercised
   • 6. Markowitz Risk Return Model is also called as Modern Portfolio Theory
   • 7. Value at risk measures the potential loss in value of a risky asset ora portfolio
   • 8. Option Premium is paid by Option seller to the Option buyer
   • 9. Actuaries are professionals who apply mathematics to financial problems
   • 10. Translation exposure in Exchange rate risk impacts the future cash flows of a firm
2. Q1 B Match the column (any 7) Risk Register Call and Put 7 marks
   • iv. | Standardized exchange traded contracts Exchange of cash flows between two vi | Swaps f Master document that captures all the possible risk in a project vill | Systematic Risk Profit from price difference in two ix | Beta=1 i Risk of failure of systems, processes and people in the organization Operational Risk No standardized contract
3. Q2 a) Distinguish between Risk Measurement and Risk Management. 8 marks
4. Q2 b) Explain Diversification? State the techniques used for Diversification. 7 marks
5. Q2 c) What is Derivatives? Explain the types of Derivatives. 8 marks
6. Q2 d) Explain Arbitrage? State the techniques of Arbitrage. 7 marks
7. Q3 a) Explain the challenges of Risk assurance in an organization. 8 marks
8. Q3 b) Define Stakeholder? How stakeholders can be managed. 7 marks
9. Q3 c) The following is the information of Stock A and Stock B under the possible states of
   • (i) Calculate the expected return of A and B Calculate the Standard deviation of Stock A and B
   • (iii) you want to invest in any one stock, which stock would you prefer
10. Q4 a) Explain the powers, functions and duties of IRDA 8 marks
11. Q4 b) what is Actuaries? Explain the role of Actuaries 7 marks
12. Q4 c) From the following information, calculate Beta (B) of a security 8 marks
13. Q4 d) Expected losses are given in the table below: Find the fair premium if: 7 marks
    • (b) Underwriting cost = 12% of pure premium
    • (c) Claims are paid at the end of the year
    • (d) Interest rate = 8%
    • (f) Fair profit = 10% of pure premium
14. Q5 a) Explain Risk and the three lines of Defense. 8 marks
15. Q5 b) Explain Enterprise Risk Management Matrix. 7 marks
16. Q5 c) Write Short notes on (Any Three) 15 marks
    • i) Reinsurance
    • ii) Bancassurance

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