Explanation:
Leeson’s inappropriate trading positions were adversely impacted by adverse movements in Japanese equity prices. However, it was his ability to control and manipulate accounting reports that allowed the outsized losses to accumulate. By the time accounting revealed the actual positions, as well as their size, the bank was unable to cover and had to liquidate.
(Book 1, Module 9.1, LO 9.a)
Ultimate access to all questions.
Question 71
Barings Bank was forced to liquidate due to Nick Leeson's trading positions. The main reason cited for the accumulation of such a large loss position has been attributed to which of the following?
A
Adverse movements in Japanese equity prices.
B
Inappropriate positions taken by Leeson and his traders.
C
Control of the trading, accounting, and reporting of activities.
D
Lack of knowledge about how an arbitrage trade should be structured.
No comments yet.