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      Question

      Risk Appetite' is defined

      as: 
      A The total amount of loss an institution can afford before it goes bankrupt. Correct Answer Incorrect Answer
      B The specific amount and type of risk an institution is willing to take to meet its objectives. Correct Answer Incorrect Answer
      C The desire of the employees to work in the risk department. Correct Answer Incorrect Answer
      D The interest rate charged on high-risk loans. Correct Answer Incorrect Answer
      E The percentage of NPAs in the total portfolio. Correct Answer Incorrect Answer

      Solution

      Risk Appetite is a strategic choice made by the Board. It defines the boundaries (e.g., "We will not lend more than 20% to the Power sector") within which the company operates.

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