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Which of the following statements about stress tests versus economic capital (EC) methods is correct?
A
Stress tests tend to use cardinal probabilities, while EC methods use ordinal rank arrangements.
B
Stress tests tend to focus on shorter periods of time compared to EC methods.
C
Stress tests tend to focus on unconditional scenarios, while EC methods tend to focus on conditional scenarios.
D
Stress tests tend to compute losses from an accounting perspective while EC methods tend to compute them from a market perspective.
