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Financial Risk Manager Part 1

Financial Risk Manager Part 1

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A financial risk analyst working for an investment firm that is interested in blockchain technology is monitoring a stablecoin initiative in an Asian nation. This initiative is managed by the central bank, which is on the verge of deciding whether to issue the stablecoins for public use. The analyst considers the following two possible events:

Event A: The central bank releases the stablecoins for public use. Event B: Companies within the nation begin accepting stablecoins as a form of payment.

The analyst provides the following probability estimates:

  • P(A): The probability that the central bank distributes the stablecoins to the public is 70%.
  • P(B): The probability that companies will accept stablecoins as a payment method is 40%.
  • P(B|A): The probability that companies will accept the stablecoins as payment given that the central bank has distributed them is 20%.

What is the likelihood that either Event A or Event B will occur?

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