0% found this document useful (0 votes)
373 views14 pages

Batc 641

This document contains 30 multiple choice questions related to risk analysis modeling and concepts. The questions cover topics such as cardinal rules of risk analysis modeling, uncertainties in risk analysis, assumptions in risk analysis frameworks, risk analysis models, probability distributions, risk management strategies and options, and other quantitative risk analysis concepts.

Uploaded by

ankit kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
373 views14 pages

Batc 641

This document contains 30 multiple choice questions related to risk analysis modeling and concepts. The questions cover topics such as cardinal rules of risk analysis modeling, uncertainties in risk analysis, assumptions in risk analysis frameworks, risk analysis models, probability distributions, risk management strategies and options, and other quantitative risk analysis concepts.

Uploaded by

ankit kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 14

BATC-641

1. Which of the following is most likely a cardinal rule of risk analysis modelling?
 Every iteration of a risk analyst is model must lead to an element of sensitivity
analysis.
 Every iteration of a risk analyze is model must be a scenario that could physically
occur.
 Simulate when you can calculate.
 Simulate when you want exact answer
2. The biggest uncertainty in a risk analysis is:
 whether the analyst started off analyzing the right thing and inthe right way.
 associated with the estimation of probability of occurrence of a risk event.
 associated with the estimation of size of impact of the risk event.
 whether models developed are free from model risks and capable of withstanding
stress tests.
3. Which of the following is most likely true if a risk analysis is to sit within a certain
framework?
 Some assumptions are to be revised frequently for the sake of comparison
 A common set of assumptions often makes comparison meaningless and unfair.
 Risk analysts must avoid making any assumptions while developing a risk model.
 The risk analysis should comply with a common set of assumptions
4. A risk analysis model that separates uncertainty and variability is described as - ----
order .
 third
 first
 second
 fourth
5. The ------- process assumes that there is a constant probability that an event will occur
per increment of time.
 Pascal
 Hypergeometric
 Binomial
 Poisson

6. An influence diagram is essentially a:


 concept map that depicts the likelihood and impact of risk event.
 sketch of the mathematical functions used a risk model.
BATC-641
 replication of the mathematics built in a spreadsheet.
 diagram that reflects the efficacy of a risk model.
7. In terms of utility, suppose a business unit considers a loss of Rs. 500,000 vastly larger
than a gain of Rs. 500,000. Based on this infonnation. which of the following is most likely
the shape of the utility function of the business unit?
 Convex
 Kinked
 Linear
 Concave
8. The fourth moment about the mean is called the:
 variance
 skewness
 kurtosis
 percentile
9. A--------------- is a stochastic process with sequential variables, where the expected value
of each variable is the same and independent or previous observations.
 Gamma
 Pascal [ random walk]
 Dirichle
 Martingale
10. Which of the following is most likely to reduce the file size while building a risk model?
 Maintaining large datasets
 Using mega formulae
 Avoiding use of software's like Model Risk
 Avoiding use of fitted distributions
11.Which of the following probability distributions is most likely to return the number of
failures one will have before observing "s" successes?
 Negative Binomial Distnbution
 Hypergeometric Distnbution
 Normal Distribution
 Poisson Distnbution

12. Which of the following is/are least likely an element/s of an optimization problem?
 Input variables
BATC-641
 Output variables
 Objective function
 Constraints
13. Which of the following is least likely a common modelling error?
 Representing an uncertain variable more than once in a model
 Calculating means instead of simulating scenarios
 Calculating variances instead of simulating scenarios
 Manipulating probability distributions as if they were fixed numbers
14. Risk managers must distinguish between inherent risks and residual risks when
developing a risk management strategy . Which of the following best descnbes the
difference between inherent risk and residual risk?
 Residual risk is the level of risk after the impact of mitigation efforts, while inherent
risk is the risk associated with the business before any impact of mitigation efforts.
 Residual risk is concerned with hazard risks, while inherent risk deals with financial
risks.
 Residual risk is concerned with compliance risks, while inherent risk deals with
operational risks.
 Residual risk has got nothing to do with the mitigation efforts, while inherent risk
decreases as the mitigation efforts improve
15. Consider the following equations: F(x) = P(X ::; x) (I) G(F(x)) = x (2) Which of the
following is least likely true about the above-mentioned equations?
 The cumulative distribution function F(x) denotes the probability P that the
variable X will be greater than or equal to x
 F(x) obviously ranges from 0 to I.
 The cumulative distnbution function F(x) gives the probability P that the variable X
will be less than or equal to x.
 The inverse function G(F(x)) is used to generate random samples from each
distribution.

16. Guruswamy, a risk manager at Global Finance Company, has allocated extra funds to a
project to deal with the associated risks. Which of the following risk management options
has been exercised by Guruswamy in the a fore said scenario?
BATC-641
 Risk acceptance
 Risk avoidance
 Risk reserve
 Risk transfer
17. A ------- plot is produced by grouping the data generated for a model's output into a
number of bars or classes.
 spider
 histogram
 trend
 scatter
18. Arpit, a risk manager at Pioneer Manufacturers, has changed the country location of a
factory to avoid political instability in that country. Which of the following risk
management options has been exercised by Arpit in the aforesaid scenario?
 Elimination
 Reduction
 Acceptance
 Transfer
19. If a random variable X is continuous, i.e., it may talce any value within a defined range
(or sometimes ranges), the probability of X having any precise value within that range is:
 significantly large because the total probability of I is allocated among an infinitely
small number of values.
 equal to 0.5 because of its central location.
 vanishingly small because the total probability of I is allocated among an infinite
number of values.
 equal to 1 because of its certainty.
20. Which of the following is most likely true if A and B are not mutually exclusive events?
 P(A UB) =P(A) +P(B) +P(A n B)
 P(A UB) =P(A) + P(B)
 P(A UB) = P(A) + P(B) - P(A n B)
 P(A UB) = P(A) - P(B)

21. Which of the following is most likely to make Excel nm faster?


 Using more and more array functions available in Excel
 Keeping the simulation model in different workbooks
BATC-641
 Avoiding links to external files
 Avoiding built-in Excel functions
22. Which of the following is least likely true regarding calculations relating to moments?
 The mean of the product of two distributions is equal to the product of their means.
 The mean of the sum of two distributions is equal to the sum of their means.
 The variance of the sum of two independent distributions is equal to the sum of their
variances.
 The variance of the sum of two independent distributions is equal to the product of
their variances.
23. Which of the following best describes the difference between a risk and an opportunity?
 A risk is a random event while an opportunity is a likely event.
 The size of impact is less for a risk as compared to an opportunity.
 The probability of occurrence is always more for a risk as compared to that of an
opportunity.
 A risk is likely to impact an organization negatively while an opportunity would
have positive impact on an organization.
24. Which of the following is least likely to be included in a risk register?
 Potential risk impacts
 Risk drivers
 P-I scores
 Risk identification techniques
25. ----- is a numerical measurement of the likelihood of an outcome of some stochastic
process.
 Probability
 Variability
 Opportunity
 Uncertainty

26. The cumulative distnbution function, F(x), is a mathematical equation that descnbes
the:
 probability that a variable X is greater than x.
 most likely estimate of event x.
BATC-641
 least likely estimate of event x.
 probability that a variable X is less than or equal to x.
27. If a risk analyst is interested in finding where a distribution is centered, he should look
at a measure of-----------
 consistency
 spread
 shape
 location
28. Which of the following is most likely to make your simulation software nm slower?
 Running bootstrap analyses and Bayesian distribution calculations in a separate
spreadsheet when you are estimating uncorrelated parameters
 Turning off the Update Display feature if your Monte Carlo add-in has that ability
 Using the Vose Cumu JAO. Vose DiscreteQ, Vose D UniformO. Vose RelativeO and
Vose HistogramO distributions with large arrays if possible
 Using Multiple CPUs if your simulation software offers this
29. The NUSAP (Numeral Unit Spread Assessment Pedigree) method is a notational system
that communicates the:
 noise in a dataset that is used in a risk analysis.
 outliers in a dataset that is used in a risk analysis.
 level of inconsistency for data in a qualitative analysis used for policy making.
 level of uncertainty for data in a scientific analysis used for policy making.
30. Latin hypercube sampling uses a technique known as:
 convenience sampling with replacement.
 stratified sampling with replacement
 convenience sampling without replacement.
 stratified sampling without replacement
BATC-641
1. The ------------ process occurs when one is sampling randomly without replacement
from some population, and where one is counting the number in that sample that
have some particular characteristics.
 Hyper geometric
 Binomial
 Pascal
 Poisson
2. Which of the following is least likely true regarding P-1 scores
 A base measure of risk for calculating P-1 scores is impact divided by
probability.
 P-1 scores for a project pro, de a consistent measure of risk that can be used
to perform trend analyses.
 P-1 scores can be used to rank the identified risks.
 Higher the P-1 score, the greater is the risk.
3. Which of the following probability models is to most likely yield answers faster?
 A probability model that calculates the required probability
 A probability model that simulates the required probability
 A probability model that estimates the impact of a risk event
 A probability model that estimates the opportunities from a risk event
4. Which of the following is most likely to reduce the file size while building a risk
model?
 Avoiding use of software’s like model Risk
 Using mega formulae
 Maintaining large datasets
 Avoiding use of fitted distributions
5. Which of the following risk management options is most likely to involve a range of
techniques which may be used together to reduce the probability of the risk, its
impact or both"
 Acceptance
 Mitigation
 Transfer
 Elimination

6. ----- is a measure of the degree to which a distribution is '1opsided."


 Skewness
 Kurtosis
 variance
 Mode
BATC-641
7. If a risk analyst is interested in determining how broad a distribution is, he should
analyze a measure of----------
 location
 spread
 shape
 consistency
8. In a least-squares linear regression, the fraction of the total variation in the
dependent variable that is explained by the independent variable is known as the:

 Coefficient of correlation.
 Total s1un of square.
 Coefficient of determination.
 stun of squares errors
9. If a risk analyst wants to determine how skewed a distribution is, he should focus on
a measure of ----------
 location
 shape
 spread
 consistency
10. The NUSAP (Numeral Unit Spread Assessment Pedigree) method is a notational
system that communicates the:
 Outliers in a dataset that is used in a risk analysis.
 Level of inconsistency for data in a qualitative analysis is used for policy
making.
 Noise in a dataset that is used in a risk analysis.
 Level of uncertainty for data in a scientific analysis used for policy making.
11. Which of the following is least likely a limitation of risk models built using
spreadsheet?
 Spreadsheets are generally limited to the two dimensions of a grid.
 Spreadsheets scale very badly.
 Spreadsheets cannot easily handle modelling dynamic systems.
 Spreadsheets function too fast to be applied to a huge risk analysis model.

12. fra
13. that you are doing a risk analysis and have made 20 reasonable assumptions
concerning your analysis. Also assume that there is a 95°o chance that an
assumption made is correct which of the following is the closest to the probability
that all the assumptions made are correct?
 0.73
 0.36
BATC-641
 0.37
 0.63
14. Which of the following probability distributions is most likely to return the number
of failures one will have before observing "s" successes?

 Normal Distribution
 Hyper geometric Distribution
 Negative Binomial Distribution
 Poisson distribution
15. Which of the following is least likely to be included in a risk register
 Potential risk impacts
 P-1 scores
 Risk drivers
 Risk identification techniques
16. Which of the following is most likely an extension of the binomial process which
treats the probability. p" as a random variable

 Beta-Binomial Process
 Negative-Binomial Process
 Positive-Binomial Process
 Multinomial Process
17. Which of the following best describes the difference between the terms "variability"
and 'uncertainty
 Variability does not depend on the system while uncertainty depends on the
system.
 Variability cannot be reduced by changing the physical system while
Uncertainty cru1be reduced by altering die physical system.
 Variability cru1be controlled while 1u1certainty c.ruu1ot be controlled.
 Variability is associated wid1die effect of chance while uncertainty relates to
assessor’s level of ignorance.

18. Which of the following best describes the difference between a risk and an
opportunity?
 The size of impact is less for a risk as compared to an opportunity.
 A risk is likely to impact an organization negatively while an opportunity
would have positive impact on rut organization.
 A risk is a random event while rut opportunity is a likely event.
 The probability of occurrence is always more for a risk as compared to that
of an opportunity.
BATC-641
19. Which of the following is most likely true if A and B are not mutually exclusive
events?
 P(A U B) = P(A) + P(B)
 P(A u B) = P(A) + P(B) + P(A n B)
 P(A u B) = P(A) + P(B) - P(A n B)
 P(A U B) = P(A) - P(B)
20. The -----------process assumes that there is a constant probability that an event will
occur per increment of time.
 Binomial
 Pascal
 Hyper geometric
 Poisson
21. Pawan Singh, a risk analyst ill Iconic Risk Consultancy, says his teammates that
"We have to maintain a healthy pessimism about published work and about how
good our subject matter experts are." Which of the following qualities of a risk
manager is most likely to be associated with the Pawan's statement
 Cynical
 Pedantic
 Careful
 Social
22. Which of the following is most likely true about the Value-of-information (VOI)
analysis?
 Value of perfect information (\TOPI) is the outcome of the VOI analysis.
 VOI analysis helps to determine the worth of acquiring extra information to
help the decision-maker.
 The usual starting point of a VOI analysis is to consider the value of
imperfect information (VOI).
 VOI analysis helps to determine value of imperfect information (VOI) to
facilitate decision making.

23. The biggest uncertainty in a risk analysis is:


 Whether the analyst started off analyzing the right thing and in the right
way.
 Associated with the estimation of size of impact of the risk event.
 Associated with the estimation of probability of occurrence of a risk event.
 Whether models developed are free from model risks and capable of
wid1standing stress tests.

24. Which of the following is least likely to be associated with risk-analysis software’s
BATC-641
 SQL
 PERT master
 Crystal Bail
 Analytica
25. Stochastic dominance tests are a statistical means of:
 Calculating the relative Skewness of two distributions.
 Calculating the relative kurtosis of two distributions.
 Determining the variance of one distribution over another.
 Determining the superiority of one distribution over another.
26. A risk analysis model that separates uncertainty and variability is described as-----
order
 fourth
 first
 third
 second
27. --------------is a numerical measurement of the likelihood of an outcome of some
stochastic process
 Uncertainty
 Probability
 Variability
 Opportunity
28. Which of the following is most likely true regarding an event tree
 An event tree offers a way to describe a sequence of probabilistic events,
together with their probabilities and impacts.
 An event depicts a probabilistic event without any reference to its impact.
 An event tree foils to be intuitive due to its complexity.
 An event trees start from the right with a node and arrows to the left
indicating possible outcomes.

29. Which of the following is most likely a reason for doing risk analysis
 Identifying risks and risk management strategies
 Analyzing past performances
 Validating risk models and eliminating model risks
 Writing a risk report

30. Which of the following is the most likely the purpose of a risk analysis
 To mitigate risks completely
 To calculate the probability of a risk event
BATC-641
 To estimate the impact of a risk event
 To pro, de information to help make better decisions in an uncertain world
31. If a risk analyst is interested in finding where a distribution is centered, he should
look at a measure of ---------
 Consistency
 Spread
 Shape
 Location

1. -----is a measure of the tailedness of a distribution


 Quartile
 Kurtosis
 Percentile
 Mean
2. The third moment about the mean is called the:
 quartile
 percentile
 skewness
 kurtosis
3. The results of a risk model must be presented in a form that clearly answers the
questions that the analyst sets out to answer. However, many reports fail in that respect.
Which of the following is most likely a reason for such a failure?
 The report includes an explanation for the model assumptions.
 The report relies purely on statistics.
 The report is ored to audience.
 The report is customized to the problem.

4. Monte Carlo simulation is often criticized as being an approximate technique.Which of


the following is most likely a means to overcome the aforesaid criticism?
 Theoretically, any required level of precision can be achieved by simply increasing
the number of iterations in a simulation.
BATC-641
 Correlation and other interdependencies can be modelled.
 The level of mathematics required to perform a Monte Carlo simulation is quite
basic.
 Changes to the model can be made very quickly and the results can be compared
with previous models.
5. -----is a measure of the degree to which a distribution s 1opsided."
 Skewness
 Kurtosis
 Mode
 Variance
6. Which of the following is least likely a quality of a risk analyst?
 Curious
 Unbending
 Modest
 Confident
7. The cumulative distnbution function, F(x), is a mathematical equation that descnbes the:
 most likely estimate of event x.
 probability that a variable X is less than or equal to x.
 probability that a variable X is greater than x.
 least likely estimate of event x.
8. Which of the following is the most likely a reason that can make a risk analysis terrible?
 Made-up numbers due to non-availability of relevant data
 Availability of too much of raw data
 Congenial business environment for creative thinking and innovation
 Absence of regulations and guidelines

9. Which of the following best describes the relationship between cdf and density
(histogram) plots?
 The steeper the s
 e of a cdf, the lower a relative frequency (histogram) plot.
 The steeper the slope of a cdf, the higher a relative frequency (histogram) plot.
BATC-641
 The flatter the slope of a cdf, the higher a relative frequency (histogram) plot.
 The flatter the slope of a cdf, the closer a relative frequency (histogram) plot to
vertical axis.

You might also like