Using market risk management (MRM) to identify the potential return per unit of risk in different areas by comparing returns to market risk so that more capital and resources can be directed to preferred trading areas is considered to be which of the following?
A)Regulation.
B)Resource allocation.
C)Management information.
D)Setting limits.
E)Performance evaluation.

Question

Quizplus · Accepted Answer

Market risk management (MRM) is used for resource allocation, as it helps to identify areas where capital and resources can be directed for greater return per unit of risk. Regulation pertains to compliance with government laws and rules, management information is about collecting and analyzing data for decision making, setting limits is concerned with restricting risk-taking within set parameters, and performance evaluation involves analyzing past performance to improve future results.

Using Market Risk Management (MRM) to Identify the Potential Return