ANSWER THE TRUE OR FALSE QUESTION

Name: Professor: Course: Date: True or False Questions QUESTION 1 The MBS that Dime Bank invests in are risk free because credit risk is financed by Federally Sponsored Agencies.
 False 

 QUESTION 2 Creditors view the economic capital of a borrower as a cushion that protects their own balance sheets from unexpected losses suffered by the borrower.
 True 

 QUESTION 3 LAM argues that EIC is a better metric for decisions regarding the allocation of capital than RAROC.
 True QUESTION 4 According to Lam the work by the department of defense on cyber-security offers many conclusions that private companies can use to enhance their own security. One of these conclusions is that management should continuously test and monitor existing information technology systems.
 True 
 

 QUESTION 5 Enterprise risk management should help managers allocate capital within in a firm from projects that destroy value to those that create value. Sometimes this will mean financing a project that higher absolute risk but has a higher “risk-adjusted return on capital”.
 True 
 QUESTION 6 Rating agencies that rate the quality of a firm’s debt are not stakeholders in the company because they do not receive dividends or interest payments.
 False 

 QUESTION 7 The Democratic National Committee (DNC) was a victim of a cyber-attack during the 2016 election cycle. This is an example a poor operational management on the part of the DNC.
 False 

 QUESTION 8 The concentration of credit risk should be managed with exposure limits. If credit risk is too concentrated a single error in judgment in granting credit can wipe out a firm’s