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Rick works as the Network Administrator of Baby Blue Inc. He wants to upgrade the existing network to the Active Directory based Windows 2000 network.
He configures a DNS on the network. Which of the following is the primary reason that the DNS is required in an Active Directory environment?
A. The Active Directory uses the DNS zone transfer protocol during replication.
B. Without installing the DNS, you cannot install the Active Directory in the network.
C. Netlogon uses the DNS to find a domain controller in the network.
D. The Active Directory is stored within the DNS database.
Answer: C

Which of the following statements are true:
I. Credit VaR often assumes a one year time horizon, as opposed to a shorter time horizon for market risk as credit activities generally span a longer time period.
II. Credit losses in the banking book should be assessed on the basis of mark-to-market mode as opposed to the default-only mode.
III. The confidence level used in the calculation of credit capital is high when the objective is to maintain a high credit rating for the institution.
IV. Credit capital calculations for securities with liquid markets and held for proprietary positions should be based on marking positions to market.
A. I and III
B. I, III and IV
C. II and III
D. I and II
Answer: B
Statement I is correct as credit VaR calculations often use a one year time horizon. This is primarily because the cycle in respect of credit related activities, such as loan loss reviews, accounting cycles for borrowers etc last a year.
Statement II is false. There are two ways in which loss assessments in respect of credit risk can be made:
default mode, where losses are considered only in respect of default, and no losses are recognized in respect of the deterioration of the creditworthiness of the borrower (which is often expressed through a credit rating transition matrix); and the mark-to-market mode, where losses due to both defaults and credit quality are considered. The default mode is used for the loan book where the institution has lent moneys and generally intends to hold the loan on its books till maturity. The mark to market mode is used for traded securities which are not held to maturity, or are held only for trading.
Statement III is correct. The confidence interval, or the quintile of losses used for maintaining credit ratings tends to be very high as the possibility of the institution's default needs to be remote.
Statement IV is correct too, for the reasons explained earlier.

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