1. Credit risk that is related to pervasive, economy-wide factors, would be termed.
A. Off balance sheet risk    
B. Country risk
C. Systematic risk
D. Firm specific risk

2. Which of the following is a goal of enterprise risk management?
A. Deciding how to petition the Government for financial help
B. Assigning risk management to a lobbyist
C. Refining the business plan for risk management
D. Defining which risks the program will manage

3. Which risk involves a chance of either profit or loss?
A. Insurable    
B. Speculative
C. Indemnified
D. Pure

4. Which of the following does the most to reduce default risk for futures contracts?
A. Marking to market
B. Flexible delivery arrangements
C. High liquidity
D. Credit checks for both buyers and sellers.

5. Using futures contracts to transfer price risk is called
A. Hedging.    
B. Speculating.
C. Arbitrage.
D. Diversifying.

Answers:      1 (C), 2 (D), 3 (B), 4 (A), 5 (A)