Following an in-depth mid-year stress test performed by EveRate Bank (ERB), a risk specialist from a national financial regulatory authority compiles a summary report evaluating ERB's overall risk management in comparison to its industry peers. The assessment by ERB encompasses internal evaluations of risk, efficiency in asset-liability management, capital return assessments, and adherence to regulatory capital requirements. In drafting the report, the risk expert uses five competitors to establish an industry benchmark. It is assumed that trading positions for both ERB and its competitors are of equivalent scale. ERB reports its assets and liabilities at market value. The essential information about ERB and its peer-group banks under normal market conditions is summarized below:

Selected Data for EveRate Bank

Item	Value
10-day ES of the trading book at the 99% confidence level	USD7 million
Core Tier 1 capital	USD2 billion
Total risk-weighted assets	USD25 billion
Total leverage exposure	USD31 billion
Number of trading positions	200
Average default probability per year	5%

Average Measures for Five Peer-Group Banks (Industry Benchmark)

Metric	Value
10-day VaR of the trading book at the 99% confidence level	USD7 million
Basel II Tier 1 leverage ratio	6%
Number of trading positions	300
Hazard rate per year	5%

The expert presumes that the daily portfolio returns for both ERB and its competitors are normally distributed with a mean of zero and that these returns are uncorrelated with each other.