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Independent Events In probability, two events (\(A\) and \(B\)) are said to be independent if the fact that one event (\(A\)) occurred does not affect the probability that the other event (\(B\)) will occur Consider the experiment rolling a die…

Addition Rule of Probability $$ P\left( A\cup B \right) =P\left( A \right) +P\left( B \right) -P\left( A\cap B \right) $$ The addition rule of probability states that the probability of event \(A\) or event \(B\) occurring is the probability of…

\(A\) and \(B\) are mutually exclusive events if \(A\) and \(B\) cannot both occur at the same time. Example: When flipping a coin, the coin cannot land on head and tails at the same time so we consider the events…

In order to understand the concept of probability, it is useful to think about an experiment with a known set of possible outcomes. This set of all possible outcomes is called the sample space \((S)\). Sample space \((S)\) –set of…

FRM Part I Foundations of Risk Management 1. Risk Management: A Helicopter View 2. Corporate Risk Management: A Primer 3. Corporate Governance and Risk Management 4. What is ERM? 5. Risk Management, Governance, Culture, and Risk Taking in Banks 6. Financial Disasters 7. Deciphering the Liquidity and…

After completing this reading, the candidate should be able to: Explain the elements of the new standardized approach to measure operational risk capital, including the business indicator, internal loss multiplier, and loss component, and calculate the operational risk capital requirement…

After completing this reading, the candidate should be able to: Explain best practices recommended by the Basel Committee for the assessment, management, mitigation and monitoring of money laundering and financial terrorism (ML/FT) risks. Describe recommended practices for the acceptance, verification…

After completing this reading, the candidate should be able to: Explain the motivations for revising the Basel III framework and the goals and impacts of the December 2017 reforms to the Basel III framework. Summarize the December 2017 revisions to…

The key focus areas of this chapter will be the features of hedge funds. The chapter will also do a comparison between mutual funds and hedge funds. Biases that are often prevalent in hedge funds’ databases will be studied. We…

Foundations of Risk Management 1. Risk Management: A Helicopter View 2. Corporate Risk Management: A Primer 3. Corporate Governance and Risk Management 4. What is ERM? 5. Risk Management, Governance, Culture, and Risk Taking in Banks 6. Financial Disasters 7. Deciphering the Liquidity and…