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NEW QUESTION: 1
A. Option B
B. Option A
C. Option C
D. Option D
Answer: D
NEW QUESTION: 2
Which two are AssemblyLine Hooks? (Choose two.)
A. On Connection Lost
B. Prolog-After Init
C. On Start of Cycle
D. On No Match
E. On End of Cycle
Answer: B,C
NEW QUESTION: 3
Which of the following statements are correct in relation to the financial system just prior to the current financial crisis:
I. The system was robust against small random shocks, but not against large scale disturbances to key hubs in the network II. Financial innovation helped reduce the complexity of the financial network III. Knightian uncertainty refers to risk that can be quantified and measured IV. Feedback effects under stress accentuated liquidity problems
A. I and IV
B. II and III
C. III and IV
D. I, II and IV
Answer: A
Explanation:
Explanation
Statement I is correct. The financial system proved to be stable against small shocks and disturbances, or shocks of a particular type (eg, the dotcom crash, the wars in the Persian Gulf); but rather fragile against other types of shocks, including disturbances to key market participants caused by a worsening of mortgage defaults.Statement II is incorrect. Financial innovation, in particular the slicing and dicing of 'risk' through securitization, significantly increased interrelationships, dependence on the same risk factors, and the complexity of the system as a whole.Statement III is incorrect. A distinction is sometimes made between risk that is knowable, measureable, and quantifiable through parameters; and uncertainty, where the parameters are not known at all. The latter is called 'Knightian uncertainty' after the name of the scholar who came up with the distinction between the two.Statement IV is correct. Feedback effects had the greatest impact on liquidity which was tended to be hoarded, and on asset prices that tumbled as market participants tried to sell assets to become more liquid.Thus, choice is a the correct answer.
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