Which of the following is NOT an approach used to allocate economic capital to underlying business units:

Which of the following is NOT an approach used to allocate economic capital to underlying business units:
A . Stand alone economic capital contributions
B . Marginal economic capital contributions
C . Fixed ratio economic capital contributions
D . Incremental economic capital contributions

View Answer

Answer: C

Explanation:

Other than Choice ‘c’, all others represent valid approaches to allocate economic capital to underlying business units. There is no such thing as ‘fixed ratioeconomic capital contribution’