Question

1. a) The main difference between Value at Risk and Stress Testing is:

- Value at Risk takes a non-statistical approach, as opposed to Stress Testing.

- Stress Testing takes a non-statistical approach with its scenarios analysis.

- Value at Risk is not a quantitative approach.

- There is not difference

b ) Which of the following are new advancements and changes in finance? Select more than 1.

Information Technology; Insurance; Banking; Behavioural finance

c ) Why was the National Association of Insurance Commissioners created?

- To suggest laws that would prevent insurance corporations from becoming “too big to fail”

- To suggest laws that would decentralize the insurance industry

- To suggest laws that would decrease the complexity of insurance regulation

- To suggest laws that would strengthen the insurance industry

3 points

Answer 1

Q.No.1.a.

Stress Testing takes a non-statistical approach with its scenarios analysis

because Value at risk is a type of satistical tool based on Standard Deviation.

Q.No. 1.b.

Information technology and Behavioural finance are new advancements and changes in finance.

As we know new trends in the finance sector are mobile banking, net banking, Artificial intelligence(Information technology),etc.. and approaching investor, etc psychologically (Behavioural finance).

Insurance and banking are traditional.

Q.No.3

1. .To suggest laws that would decrease the complexity of insurance regulation.
2. To suggest laws that would strengthen the insurance industry
3. To suggest laws that would prevent insurance corporations from becoming “too big to fail”

Note: they are asking for 3 points, these are some main objectives National Association of Insurance Commissioners.   Decentralize the insurance industry is a kind of disbursing management.