ACF 380 Practice Guide 2023/2024.
2 types of risks - correct answer Idiosyncratic risk (diversifiable) - risk to an individual asset that can be removed through diversification Systematic risk (Non-diversifiable) - Risk that arises from economic-wide phenomena What is arbitrage - correct answer The ability to buy and sell securities simultaneously when a pricing imbalance exists to profit What is the law of one price - correct answer Identical assets must have the same prices in all markets What is Nash Equilibrium - correct answer No player can gain by unilaterally altering their plan of action Definition of a bank by the regulators - correct answer Institution whose current operations consist in granting loans and receiving deposits from the public They act as a financial intermediary between savers and borrowers
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