A company has assessed its exposure to fraud risk in terms of potential fraud losses and has determined the following:

• The monthly mean of fraud losses is $15,000 and monthly standard deviation of fraud losses is $55,000.

• The confidence level applied assumes a normal distribution

• The risk-free rate is 4%pa.

• The monthly net income is $95,000.

1. What is SmartBank’s annual Value at Risk exposure, using a 95% confidence level

2. Calculate the monthly RAROC, using a 95% confidence level

3. Calculate the amount of Economic Capital needed annually for the potential fraud losses based on a 99% confidence level