Question

When a bank chooses the wrong strategy or follow a long-term business strategy which might lead to its
failure, it is called
(A) Credit risk
(B) Operational risk
(C) Market risk
(D) Business risk
Ans-?

Answer 1

Answer:

Option (A)

when the customer show their inability to pay the loan amounts taken from bank is called credit risk.

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Answer 2

Option (d) is the correct option.

Explanation:

Option (d) i.e. Business risk is the correct option because

• When a bank chooses the wrong strategy or follow a long-term business strategy which might lead to its failure, it is called Business risk.
• When a bank borrower, or counter party, fails to meet its payment obligations regarding the terms agreed with the bank, it is called Credit Risk.
• When there is a risk of loss resulting from inadequate or failed internal processes, people and systems or from external event, it is called Operational risk.
• When the risk of losses in on- or off-balance sheet positions arise from movement in market prices, it is called Market Risk.