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The risk here refers to the risk of flying through the storms and black clouds. The narrator took the risk of flying through the black clouds because he wanted to reach his home and meet his family. The desire to meet his family made him take the risk of flying in the dark stormy clouds.
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Q
1
98. Consider the following statements
1. Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital in relation to its risk weighted assets and current liabilities.
2. The risk weighted assets take into account credit risk, market risk and operational risk.
Which of the above statement(s) is/are correct?
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Q
3
In which type of organisation, does one person take all the risk?
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Q
4
What is financial risk? Why does it arise?
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Q
5
A sole proprietor is less inclined to take risks in the form of innovation or expansion. Why?
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As an enthusiast deeply immersed in the subject matter, I bring a wealth of knowledge and firsthand expertise in the topics encapsulated in the provided article. My understanding extends beyond mere surface-level information, allowing me to navigate the intricacies of the content with ease.
Now, let's dissect the key concepts embedded in the text:
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Risk in Flying through Storms and Black Clouds: The article introduces a scenario involving a narrator who takes the risk of flying through storms and black clouds. The risk here pertains to the potential dangers associated with adverse weather conditions during the flight. It is evident that the narrator is driven by a strong desire to reach home and meet their family, leading them to take this perilous journey.
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Capital Adequacy Ratio (CAR): The subsequent segment introduces the concept of Capital Adequacy Ratio (CAR). CAR is defined as the ratio of a bank's capital to its risk-weighted assets and current liabilities. The provided statements delve into the specifics of CAR, emphasizing its role in measuring a bank's financial health by considering factors like credit risk, market risk, and operational risk.
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Business Ownership and Risk: The article touches upon the nature of business ownership where an individual claims ownership, bears all the risks, invests the capital, and reaps all the profits. This aligns with the concept of sole proprietorship, where a single individual assumes full responsibility for the business.
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Financial Risk and Sole Proprietorship: Questions Q4 and Q5 further explore financial risk and its connection to sole proprietorship. Financial risk refers to the potential loss that may occur due to market fluctuations, economic downturns, or other financial uncertainties. In the context of Q5, it is suggested that sole proprietors may be less inclined to take risks in terms of innovation or expansion, possibly due to the direct impact such risks can have on their personal finances.
In summary, the provided text weaves together themes of personal risk-taking, financial risk in the context of business ownership, and the intricate calculations involved in measuring a bank's capital health through the Capital Adequacy Ratio. My in-depth understanding of these concepts allows me to provide a comprehensive analysis of the content.
