When should you start a new thread on this forum?

[Nicole Seaman]

60.2 At current, the Basel II IMA green zone refers to four or fewer exceptions, the red zone
refers to 10 or more, and the yellow zone refers to five through nine (i.e., green <=4, 5 <= yellow
<=9, red >=10). If the Committee increased the green zone from four to five (5) exceptions and
both yellow or red were to signify “reject the VaR model,” the probability of a Type I error
changes from 10.8% to what (assume 250 days)?
a) 4.1%
b) 8.2%
c) 10.8%
d) 12.6%

This is one of David's problem and I am having a really hard time solving this..

Please David can you help? How did you get 10.8% in the first place..?

Similar problem is

Assume a bad 99% VaR model has a true level of coverage of 97%; i.e., losses exceed
VaR 3%*250 days instead of 1%*250 days. Further assume that either a yellow or red zone
outcome signifies rejection of the model. If the Committee were to decrease the green zone
from four exceptions to three exceptions or fewer (green <= 3 exceptions), the probability of a
Type II error would change from 12.8% to what (assume 250 days)?
a) 1.9%
b) 5.7%
c) 10.8%
d) 12.8%

How do you calculate probability of Type 2 error..?

I know probability of type 1 error is 1- CL.

Thanks,
Kavita

@Kavita.bhangdia

When referencing practice questions, please always make sure to post in the original question thread. These two questions are located here in the forum: https://forum.bionicturtle.com/threads/l2-t5-60-basel-ima-backtest.3610/#post-9662. There is a lengthy discussion in the original thread, as is the case with most practice questions, so you may find that many times your question will be answered already. This also helps to cut down on numerous threads being created in the forum about the same questions.

Thank you,

Nicole

 

[Mkaim]

@Kavita.bhangdia

When referencing practice questions, please always make sure to post in the original question thread. These two questions are located here in the forum: https://forum.bionicturtle.com/threads/l2-t5-60-basel-ima-backtest.3610/#post-9662. There is a lengthy discussion in the original thread, as is the case with most practice questions, so you may find that many times your question will be answered already. This also helps to cut down on numerous threads being created in the forum about the same questions.

Thank you,

Nicole

Several times, I've personally had to go through multiple threads to understand 1 concept because some people just start a new thread every time they have a question (and people respond). From my perspective, the site becomes inefficient when people do that (from a learning standpoint).

 

[Nicole Seaman]

Hello @Mkaim

I know that must be frustrating, and I try my hardest to catch those posts and redirect them to the correct forum thread before there are too many comments. I always recommend that our members use the search function, inputting the first sentence of the question, if they do not have the original forum link. I am happy to remind new members though, as they may not realize that this is the most efficient way to ask questions

Nicole

 

[David Harper CFA FRM]

@Mkaim @Nicole Manley But there are two different cases:

1. Like this thread, when somebody starts a new thread rather than appending the question to the source. Personally, I do not see the huge deal with this case. This thread is in the general FRM boards, not the source Q&A threads (below). Sure, it's not as good as being located in the source, but I'm not sure that I see how it's a distraction. Somebody going to the source will just miss it.
   
2. The other case is when somebody appends a question to the wrong source question, in the lower source Q&A boards. This is more of a problem. In this case, lately I have explicitly MOVED the question because, under the wrong source question, it's clearly a distraction.

 

[Nicole Seaman]

@Mkaim @Nicole Manley But there are two different cases:

1. Like this thread, when somebody starts a new thread rather than appending the question to the source. Personally, I do not see the huge deal with this case. This thread is in the general FRM boards, not the source Q&A threads (below). Sure, it's not as good as being located in the source, but I'm not sure that I see how it's a distraction. Somebody going to the source will just miss it.
   
2. The other case is when somebody appends a question to the wrong source question, in the lower source Q&A boards. This is more of a problem. In this case, lately I have explicitly MOVED the question because, under the wrong source question, it's clearly a distraction.

I really do think it is frustrating for many users because we've always said that if there is an original source thread, that is the best place to post questions. I don't think that users should be posting new threads when there is already a thread regarding that specific question.

(1) their question may already be answered saving you (David) and other members time;
(2) other members may have the same question and when everything is discussed under one thread, they don't have to search around the forum for different answers; and
(3) it doesn't clutter the forum with a ton of threads.

Thanks,

Nicole

 

[Mkaim]

@Mkaim @Nicole Manley But there are two different cases:

1. Like this thread, when somebody starts a new thread rather than appending the question to the source. Personally, I do not see the huge deal with this case. This thread is in the general FRM boards, not the source Q&A threads (below). Sure, it's not as good as being located in the source, but I'm not sure that I see how it's a distraction. Somebody going to the source will just miss it.
   
2. The other case is when somebody appends a question to the wrong source question, in the lower source Q&A boards. This is more of a problem. In this case, lately I have explicitly MOVED the question because, under the wrong source question, it's clearly a distraction.

Perhaps I should provide different perspectives. I can see this causing frustration to several parties and not just someone who is trying to better understand concepts.

* The enquirer: Didn't realize that the question may have already been answered and proceeds to spend time writing the question out (and waiting for a response)
* The responder: Didn't realize that the question may have already been answered and proceeds to spend time answering it out of generosity.
* Original responder: Frustrated that he/she (or someone else) has already answered the question and proceeds to spend time finding the forum link to share. I don't think this frustrates everyone (depends on the person), but I've seen a lot of links flying around in the past few months and it has to frustrate at least a few people.

I'm sure I've made the same mistake in the past, but I've learned to use the search function which has made my life much easier. I just wanted to express my view in order to help all parties.

Just my view, please feel free to ignore it.

 

[Nicole Seaman]

Perhaps I should provide different perspectives. I can see this causing frustration to several parties and not just someone who is trying to better understand concepts.

* The enquirer: Didn't realize that the question may have already been answered and proceeds to spend time writing the question out (and waiting for a response)
* The responder: Didn't realize that the question may have already been answered and proceeds to spend time answering it out of generosity.
* Original responder: Frustrated that he/she (or someone else) has already answered the question and proceeds spend time finding the forum link to share. I don't think this frustrates everyone (depends on the person), but I've seen a lot of links flying around in the past few months and it has to frustrate at least a few people.

I'm sure I've made the same mistake in the past, but I've learned to use the search function which has made my life much easier. I just wanted to express my view in order to help all parties.

Just my view, please feel free to ignore it.

Hello @Mkaim,

Yes, your response is basically what I responded with above, which means we are on the same page. We know that it is frustrating, and that is why we try to move threads to the correct area whenever we can. We do like your suggestion that you wrote HERE and we will be working on correcting this issue. Obviously, exam prep has been our top priority lately, but right after the exams, we usually try to make improvements where we can. Thank you for your feedback

Nicole

 

[Mkaim]

Hello @Mkaim,

Yes, your response is basically what I responded with above, which means we are on the same page. We know that it is frustrating, and that is why we try to move threads to the correct area whenever we can. We do like your suggestion that you wrote HERE and we will be working on correcting this issue. Obviously, exam prep has been our top priority lately, but right after the exams, we usually try to make improvements where we can. Thank you for your feedback

Nicole

Thanks @Nicole Manley . There is no urgency from my end, please feel free to address it when you see fit.