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ASSIGNMENT INTRODUCTION
*Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing.
* Mention the question number clearly in their answer.
* make the work clear and well-presented.
– The Question Details:
Q.1. Write a critical analysis of the 2007-2008 financial crisis that hit the United State
financial market and severely affected powerful economies of the world. Please
include the following points in your writing.
Introduction of the crisis
Causes of the crisis
Whom is to blame for the crisis?
Conclusion
Q.2. How is market risk measured? Describe the common methods of estimating VaR.
Discuss the advantages and disadvantages of each method.
Q.3. Describe stress testing and scenario analysis in risk management. Discuss the benefits and Limitations.
HOW TO WORK ON THIS ASSIGNMENT ( EXAMPLE ESSAY/ DRAFT)
Q.1 Write a critical analysis of the 2007-2008 financial crisis that hit the United States financial market and severely affected powerful economies of the world. Please include the following points in your writing.
Introduction:
- Briefly introduce the 2007-2008 financial crisis, mentioning its impact on the US financial market and the powerful economies of the world.
- Provide a background on why the crisis is important to study and analyze.
Causes of the crisis:
- Identify and discuss the key factors that led to the financial crisis.
- Mention the role of mortgage-backed securities, the housing market bubble, and the subprime mortgage crisis.
Whom to blame for the crisis:
- Discuss different viewpoints on who should be held responsible for the financial crisis.
- Mention the role of government regulators, financial institutions, and consumers in the crisis.
Conclusion:
- Summarize the key points of the essay.
- Conclude with the significance of the 2007-2008 financial crisis and its lessons for the future.
Q.2. How is market risk measured? Describe the common methods of estimating VaR. Discuss the advantages and disadvantages of each technique.
Introduction:
- Define market risk and why it is important to measure.
- Briefly introduce Value-at-Risk (VaR) and its role in market risk measurement.
Standard methods of estimating VaR:
- Describe the most commonly used methods for estimating VaR, such as historical simulation, Monte Carlo simulation, and variance-covariance method.
- Explain how each method works and what kind of information they require.
Advantages and disadvantages of each method:
- Discuss the strengths and weaknesses of each method.
- Mention the trade-off between accuracy and computational ease.
Conclusion:
- Summarize the key points of the essay.
- Conclude with the importance of choosing the right method for market risk measurement based on a situation’s specific requirements and limitations.
Q.3. Describe stress testing and scenario analysis in risk management. Discuss the benefits and Limitations.
Introduction:
- Define stress testing and scenario analysis in the context of risk management.
- Briefly introduce the purpose of these techniques and why they are important.
Stress testing and scenario analysis in risk management:
- Explain how stress testing and scenario analysis work and what kind of information they require.
- Discuss the different types of scenarios that can be analyzed, such as market stress scenarios, credit stress scenarios, and operational stress scenarios.
Benefits and limitations:
- Discuss the advantages of stress testing and scenario analysis in risk management, such as improved risk identification, better risk assessment, and better risk management.
- Mention the limitations, such as the subjectivity of scenario selection, the difficulty of accurately modeling complex financial systems, and the time and resources required for effective stress testing and scenario analysis.
Conclusion:
- Summarize the key points of the essay.
- Conclude with the importance of incorporating stress testing and scenario analysis into the overall risk management framework.
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