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Stress Testing Principles... Exam Relevance High/Low?


New Member
Are they important w.r.t exam questions. coz there are around 21 principles and i still have much more to do with Book 4. so just want to confirm about the exam relevance of this topic, is it high or low??

Thankx in advance


Well-Known Member
The opening of Til Schuerman's paper states the following:

"Capital adequacy addresses the right side of the balance sheet (net worth), and liquidity the left side (share of assets that are “liquid”, however defined). If all goes well, both economic and regulatory capital/liquidity are less than the required regulatory minimum, and their difference (between economic and regulatory) is small, namely that regulatory models do not deviate substantially from internal model results."

I am confused by the "if all goes well, both the EC and RC are LESS than the required minimum."

Should this say greater than the required minimum? And if not, then I am afraid that my entire understanding may be flawed!