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Exam Code: HP2-I26

Exam Name: Project Management Fundamentals (ONLINE)

Certification Provider: HP

Related Certification: Project Management Fundamentals (ONLINE)

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The results of 'desk-level' stress tests cannot be added together to arrive at institution wide estimates because:
A. Desk-level stress tests tend to ignore higher level risks that are relevant to the institution but completely outside the control of the individual desks.
B. Desk-level stress tests tend to focus on extreme movements in risk parameters (such as volatility) without considering economy wide scenarios that may represent more realistic and consistent situations for the institution.
C. All of the above
D. Desk-level stress tests focus on desk specific risks that may be minor or irrelevant in the larger scheme at the institution level.
Answer: B
All the above listed reasons are valid explanations as to why an institution level stress test cannot be estimated by merely summing up the results of the stress tests of the individual desks.

1. Obtain or develop a cost-basis balance sheet
2. Determine which assets and liabilities on the cost-basis balance sheet require a revaluation adjustment
3. Identify off-balance sheet intangible assets or contingent liabilities that should be recognized and valued
4. Identify off-balance sheet or contingent liabilities that should be recognized and valued
5. Estimate the value of the various asset and liability accounts identified in steps 2 through 4
6. Construct a value-basic balance sheet, based on the indicated values concluded during step 1 through
5, and quantify the subject value All these above statements are the steps of:
A. Market based approach
B. Asset accumulation method
C. Liquidity approach
D. Asset based approach
Answer: B

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