Financial Risk Manager Part 1
Get started today
Ultimate access to all questions.
Comments
Loading comments...
Ultimate access to all questions.
Consider the following scenario: Barings Bank, a distinguished financial institution, experienced a catastrophic collapse, leading to its bankruptcy. This downfall was triggered by Nick Leeson, a rogue trader within the bank, who accumulated over USD 1 billion in unauthorized trading losses. Which of the following statements accurately describes this situation?
A
Leeson avoided reporting the unauthorized trades by convincing the head of his back office that they did not need to be reported.
B
Management failed to investigate high levels of reported profits even though they were associated with a low-risk trading strategy.
C
Leeson traded primarily in OTC foreign currency swaps that allowed Barings Bank to delay cash payments on losing trades until the first payment was due.
D
The loss at Barings Bank was detected when several customers complained of losses on trades that were booked to their accounts.