📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!
  • google app store apple app store
    • ✖

      Question

      Legal risk in a bank can lead to which of the

      following?                       I.        claims against institution,                     II.        fines, penalties, punitive damages,                    III.        unenforceable contracts resulting from defective documentation
      A Only I Correct Answer Incorrect Answer
      B I and II Correct Answer Incorrect Answer
      C I and III Correct Answer Incorrect Answer
      D II and III Correct Answer Incorrect Answer
      E All of the above Correct Answer Incorrect Answer

      Solution

      The legal risks primarily arise either due to lack of clarity of the documentation of the product or the act of the counterparty. Change in legal environment due to legislative changes and Court interpretations/proceedings also result in legal risk. Legal risk includes risk of non-enforceability of contract or in-correct documentation resulting in the increased probability of loss. Broadly, legal risks may result in (i)      claims against institution, (ii)     fines, penalties, punitive damages, (iii)    unenforceable contracts resulting from defective documentation, and (iv)   loss of institutional reputation

      Practice Next
      More Financial Management Questions

      Relevant for Exams:

      ask-question