RSK2601-Exam Questions & Answers.

Question 1 Which one of the following is a benefit of effective risk and opportunity management? 1) Improved profit certainty 2) Increased shareholder value 3) Increased stakeholder confidence Correct option 3 4) Lower economic returns Explanation Improved cost certainty, sustainable shareholder value, increased stakeholder confidence and higher economic returns are all benefits of effective risk and opportunity management. Question 2 The board’s role should be to steer the corporation towards corporate governance policies that support … 1) long-term sustainable growth in shareholder value Correct option 1 2) short-term sustainable growth in shareholder value 3) short-term sustainable growth in stakeholder value 4) long-term sustainable growth in stakeholder value Explanation The board’s role should be to steer the corporation towards corporate governance policies that support long-term sustainable growth in shareholder value. Question 3 Which one of the following statements is not considered a benefit of Enterprise Risk Management (ERM)? 1) Minimise operational surprises and losses. 2) Enhance corporate governance. 3) Comply with relevant legal and regulatory requirements. 4) Align return appetite and strategy. Correct option 4 Explanation Benefits of Enterprise Risk Management (ERM) include minimisation of operational surprises and losses, enhancing corporate governance, complying with relevant legal and regulatory requirements and aligning risk appetite and strategy. The determination of the risk appetite of a business is vital in the ERM process because it shows how much risk the business is willing to take on. Question 4 The King II report moved away from the … bottom-line principle to a … bottom-line principle. 1) double - triple 2) single - triple Correct option 2 3) single - double 4) double – single RSK2601-Exam Questions & Answers. 2 Explanation The King II report moved away from the single bottom-line principle to a triple bottom-line principle. Question 5 As of June 2010, companies listed on the JSE are expected to comply with … 1) King I 2) King II 3) King III Correct option 3 4) King IV Explanation As of June 2010, companies listed on the JSE are expected to comply with King III. Question 6 King III applies to … a) All listed companies on the JSE b) Banks c) Financial institutions d) Insurance institutions Choose the correct option. 1) a, b, c, d 2) a, b, c 3) a, b, d Correct option 3 4) a, b Explanation King III applies to all listed companies on the JSE, banks, financial and insurance institutions. Question 7 In financial ratio analysis, efficiency ratios … 1) measures the degree of success of the management in achieving their primary purpose of creating wealth for their owners 2) are also known as activity ratios correct option 2 3) examine the relationship between liquid resources held and creditors due for payment in the near future 4) assess the returns and performance of shares held in a particular business Explanation In financial ratio analysis, efficiency ratios are also known as activity ratios. Question 8 A GAP analysis … 1) is used to list all the risks that were identified on previous projects within the business 2) is a list that categorises each risk into a type of area 3) can be used to identify the main risks linked to a certain activity or project of the business Correct option 3 3 4) is a structured checklist to breakdown the risks and opportunities into manageable components Explanation A GAP analysis can be used to identify the main risks linked to a certain activity or project of the business. A risk checklist is used to list all the risks that were identified on previous projects within the business. A risk prompt list is a list that categorises each risk into a type or area. Risk taxonomy is a structured checklist to breakdown the risks and opportunities into manageable components. Question 9 Pareto analysis is used to … 1) identify those risks that will have a dramatic impact on business projects/activities and objectives Correct option 1 2) determine the expected return of an asset in relation to its risk or risk profile 3) structure decisions, uncertain events and values of outcomes 4) identify the causes of any risk Explanation Pareto analysis is used to identify those risks that will have a dramatic impact on business projects/activities and objectives. The CAPM model is used to determine the expected return of an asset in relation to its risk or risk profile. Decision analysis is used to structure decisions, uncertain events and values of outcomes. Casual analysis is used to identify the causes of any risk. Question 10 The attitude towards risk that requires an increase in the return for an increase in the risk is known as risk … 1) neutral 2) seeking 3) averse Correct option 3 4) impartial Explanation The attitude towards risk that requires an increase in the return for an increase in the risk is known as risk averse. Question 11 The … is a method used by a business to evaluate the effect of uncertainty on a planned activity in a range of situations and uses random numbers to sample from a probability distribution. 1) scenario analysis 2) simulation 3) Monte Carlo Simulation Correct option 3 4) latin hypercube sampling Explanation The Monte Carlo simulation is a method used by a business to evaluate the effect of uncertainty on a planned activity in a range of situations and uses random numbers to sample from a probability distribution.