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please answer the questions ASAP, just a letter will do. Thank you Conditional Stress Testing involves: (1 mark) A. Scenarios are generated using a few
please answer the questions ASAP, just a letter will do. Thank you
Conditional Stress Testing involves: (1 mark) A. Scenarios are generated using a few core variables, and peripheral variables are ignored. B. Scenarios are generated using a few core variables, and peripheral variables are included in the scenario generation. The peripheral variables' relationship with the core variables is determined using regression analysis. C. Scenarios are generated using a few core variables, and peripheral variables are included in the scenario generation. The peripheral variables' are included using subjective estimates. D. Scenarios are generated using a few core variables, and peripheral variables are included in the scenario generation. The peripheral variables' are included for days when there is a significant rovement. QUESTION 5 A US bank is entering into a one year forward contract with a corporate customer where the bank will sell 2M Pounds for 2.64M USD to the corporate client. The riskless rate is 3% in both US and UK (assume annual compounding). How can the bank hedge? (1.5 marks) A. Sell $2.56M today. B. Sell 1.94M pound today. c. Buy $2.56M today. D. Buy 1.94M pounds todayStep by Step Solution
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