Chartered Financial Analyst Level 2
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Which of the following statements about market risk management and capital allocation is most accurate?
Which of the following statements about market risk management and capital allocation is most accurate?
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A
Statement 1: In market risk management, capital allocation requires a reduction in the size of a portfolio, or its complete liquidation, when a loss of a particular size occurs in a specified period.
B
Statement 2: Capital allocation cannot be used if leverage is used by the portfolio.
C
Statement 3: Economic capital is designed to measure how much shareholders' equity could be required to meet tail risk losses.
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