Financial Risk Manager Part 1
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About tail risk, GARP observes, "Some risk events have a diabolical side that seems designed to outwit the human mind. This may be because such events are very rare and extreme or they arise from unobserved structural changes in a market." Which of the following statements about tail risk is TRUE?
About tail risk, GARP observes, "Some risk events have a diabolical side that seems designed to outwit the human mind. This may be because such events are very rare and extreme or they arise from unobserved structural changes in a market." Which of the following statements about tail risk is TRUE?
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A
Extremely rare events can happen even if the system is structurally stable.
B
The problem with tail risk is that we lack statistical techniques to help us make the tails visible.
C
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