Multiple Choice
Which of the following statements regarding economic capital is correct?
A) Economic capital is calculated externally and is the amount of capital the firm should have to support its target credit rating
B) Economic capital is calculated on an expected shortfall basis with a specific time horizon and confidence level.
C) Economic capital is used for measuring and reporting risks across a financial organisation.
D) Economic capital is always lower than regulatory capital because of the more adequate modelling of correlation effects compared to the regulatory approach.
Correct Answer:
Verified
Correct Answer:
Verified
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