I. I.Stress-testing is a key risk management process, which includes (1) scenario analysis, (2) stressing models, volatilities, and correlations, and (3) developing policy responses
II. II.Stress-testing is a statistical risk measure
III. III.The drawback of Stress testing is that it’s highly subjective.
IV. IV.VaR analysis should be complemented by stress testing because stress testing Identifies losses that go beyond the normal losses measured by VaR
Choose one answer.