Question #19
Reading: Reading 37 Measuring and Managing Market Risk
PDF File: Reading 37 Measuring and Managing Market Risk.pdf
Page: 7
Status: Correct
Correct Answer: A
Question
A firm's economic capital is most accurately described as:
Answer Choices:
A. capital needed to overcome severe losses in the business
B. assets minus VaR
C. fair value of plan assets less fair value of liabilities
Explanation
Economic capital is the capital needed for a firm to survive if severe losses are
experienced based on the risk the business is exposed to.