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
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’
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