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NEW QUESTION: 1
Which of the following statements are true:
I. Heavy tailed parametric distributions are a good choice for severity modeling in operational risk.
II. Heavy tailed body-tail distributions are a good choice for severity modeling in operational risk.
III. Log-likelihood is a means to estimate parameters for a distribution.
IV. Body-tail distributions allow modeling small losses differently from large ones.
A. I and IV
B. II, III and IV
C. II and III
D. All of the above
Answer: D
Explanation:
Explanation
When modeling for operational risk, we are generally concerned with tail losses - this is because the horizon for operational risk is 1 year at the 99.9th percentile. Since the 99.9th percentile is in the tail region, we would like to ensure that the tails are modeled as accurately as possible. Operational risk distributions are modeled using heavy tailed distributions.
Heavy tailed parametric distributions such as log-normal, pareto and others are therefore a good choice for modeling risk severity, therefore statement I is correct.
Body-tail distributions are combinations of parametric distributions, with different types of distributions being used to model the body and the tail - this provides flexibility because small and medium losses upto a threshold can be modeled using one distribution, and losses beyond the threshold can be modeled using a different distribution that is a better estimate of the tail. Statement II is therefore correct.
A log-likelihood function simplifies the optimization of a regular likelihood function. We generally maximize (or minimize the risk functional) a likelihood function with a view to estimating the parameters of the underlying distribution. If the likelihood function is complex, it may sometimes make it mathematically easier to optimize the log of the function - as that changes exponents and multiplications to additions, while behaving in the same way as the underlying function. Therefore statement III is correct, log-likelihood is a means to estimate parameters for a distribution.
Statement IV is correct as body-tail distributions allow modeling different parts of the distribution differently from each other.

NEW QUESTION: 2
Which process is responsible for providing the right to use an IT Service?
A. Access Management
B. Request Fulfilment
C. Change Management
D. Incident Management
Answer: A

NEW QUESTION: 3
The Pega Business Architect's main focus is on which of the following? (Choose three)
A. Business benefits
B. Business value assessment
C. Design integrations with external applications
D. Communications with project sponsors and stakeholders
E. Rule re-usability
F. Portal design and implementation
Answer: B,E,F

NEW QUESTION: 4

A. Option B
B. Option C
C. Option A
D. Option D
Answer: D