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Answer: There was ambiguity concerning who was responsible for performing specific oversight functions.
**Explanation:** **Correct Answer: D** - There was ambiguity concerning who was responsible for performing specific oversight functions **Why this is correct:** - Barings Bank had poor organizational structure with unclear reporting lines - Leeson reported to multiple managers in different locations, creating confusion about oversight responsibilities - This ambiguity allowed his unauthorized trading to go undetected **Why other options are incorrect:** - **A**: Barings' bankruptcy wasn't primarily due to liquidity issues; it was due to massive trading losses that exceeded the bank's capital - **B**: Leeson actually used a short straddle strategy (selling options), not a long straddle - **C**: Leeson held long positions (not short) in Nikkei 225 futures, betting the market would rise The key failure was operational - poor internal controls and unclear accountability structures.
Author: LeetQuiz Editorial Team
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A
Barings had insufficient liquidity to cover marked to market losses.
B
Leeson used a long straddle strategy on the Nikkei 225.
C
Leeson held speculative double short positions in the market for Nikkei 225 futures contracts.
D
There was ambiguity concerning who was responsible for performing specific oversight functions.
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