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18. George Hudson, a risk officer, is studying a firm that has an intraday VaR of 1,786,000 while the company holds Economic Capital of 1.78 million. In his analysis, George concluded that the company is not likely to go bankrupt as it has the Economic Capital of the firm is 1.78 million. Which of the following options if correct? A. George is correct as the Economic Capital is net of losses, the company is not likely to go bankrupt B. George is incorrect as the Economic Capital is insufficient C. George is incorrect as the Economic Capital is not used to cover losses ascertained by VaR D. George is incorrect as the bankruptcy of the firm cannot be analyzed with given information 19. Which of the following is least likely the definition of risk measure tools and procedures used by a firm to measure and manage risk? A. Value-at-risk (VaR) is a quantitative risk measure that states the probability a given amount of loss occurring on any given day B. Scenario Testing is a quantitative risk measure that takes into consideration potential risk factors such as interest rate, payroll data, etc. that are often quantifiable C. Stress Testing is a qualitative risk measure tool that analyses the financial outcome of a firm based on a given stress D. Enterprise Risk Man ent (ERM) is an integ tive risk measure approach that considers entity wide risk factors and integrates all the risk factors in entity-wide decisions 20. The relationship between risk and return is simple for some assets and complex for others. The public perception of risk and return trade-off is that higher risk will lead to higher returns. However, in some asset classes like fixed income securities, a large number of factors such as market risk, inflation, interest rate risk, and risk tolerance are considered. Which of the following options is most appropriate for a market with investors having a high risk tolerance? A. As the risk tolerance of investors high, the spread between corporate bonds and government bonds will widen B. As the risk tolerance of investors is high, the spread between the returns of fixed income assets and equity assets will narrow down C. As the risk tolerance of investors is high, the spread between corporate bonds and government bonds will narrow down D. As the risk tolerance of investors is high, the spread between risky bonds and corporate bonds will narrow down