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    Question

    Which of the following risk is the bank facing when an

    individual is unable to pay back the overdraft taken by him?
    A Market Risk Correct Answer Incorrect Answer
    B Credit Risk Correct Answer Incorrect Answer
    C Interest Rate Risk Correct Answer Incorrect Answer
    D Operational Risk Correct Answer Incorrect Answer
    E Liquidity Risk Correct Answer Incorrect Answer

    Solution

    ┬а┬а┬а┬а Credit Risk is the risk of non-recovery of loan or risk of default. ┬а┬а┬а┬а Market risk тАУ risk from change in market value of assets Interest rate risk тАУ risk from change in interest rate Liquidity risk тАУ risk of not having enough liquid assets to meet short term obligations Operational risk - from inadequate or failed procedures, systems or policies, employee┬а┬а┬а errors, systems failures, fraud or other criminal activity, any event that disrupts business processes

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