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FINM7405
Financial Risk Management
Tutorial 1 Questions
Question 1
“Short-selling is equivalent to borrowing money from the bank.” Do you agree with this statement? Why or why not?
Question 2
“Financial markets create a lot of risks due to speculation. They can be compared to the Monte-Carlo/Las-Vegas casinos.” Do you agree with this statement? Why or why not?
Question 3
“Arbitrage activities ensure the financial markets are efficient.” Do you agree with this statement? Why or why not?
Question 4
What is financial risk? What are the four main types of financial risk? Explain each of them.
Question 5
Some investors blamed short-sellers as the ‘evil’ in creating financial crisis (e.g. Asian Financial Crisis 1997, European Sovereign Debt Crisis 2020). Do you agree with this statement? Why or why not?
Question 6
What are the risks involved in short-selling?
Question 7
“Arbitrage profit is the same as speculative profit.” Do you agree with this statement? Why or why not?