Download Free GARP 2016-FRR Exam Questions & Answer
Online VALID 2016-FRR Exam Dumps File Instantly
Because the GARP 2016-FRR Exam covers a broad range of topics, it requires thorough preparation and a deep level of understanding of financial risk assessment, management, and regulatory compliance concepts. Those candidates who wish to sit for the exam should be prepared to spend many hours studying and reviewing the exam material, which includes textbooks, case studies, and real-world scenarios. However, earning the FRR credential can help increase your professional credibility and open doors to new career opportunities in the financial services industry.
Who can take GARP 2016-FRR Certification
2016-FRR exam dumps recommend that individuals with three to five years' work experience in financial management. Bachelor's degree in finance, economics, administration, computer science, or mathematics and who received a GPA of 3.0 or higher. A valid GARP membership is required to take the Financial Risks and Regulation Certification. To return your GARP certification status to active, you must become a GARP member. Names of individuals who have passed the 2016-FRR Certification are provided to interested parties on a confidential basis.
NEW QUESTION # 43
According to the principles of the Basel II Accord, the implementation and relative weights of the elements of
the operational risk framework depend on:
I. The culture of the financial institution
II. Regulatory drivers
III. Business drivers
IV. The bank's reporting currency
- A. II, III
- B. II, IV
- C. I, II, III
- D. I, IV
Answer: C
NEW QUESTION # 44
Which of the following factors would typically increase the credit spread?
I. Increase in the probability of default of the issuer.
II. Decrease in risk premium.
III. Decrease in loss given default of the issuer.
IV. Increase in expected loss.
- A. I, II, and IV
- B. II and III
- C. I
- D. I and IV
Answer: D
NEW QUESTION # 45
Which one of the following four statements regarding counterparty credit risk is INCORRECT?
- A. The exposure at default can be negatively correlated to probability of default.
- B. Dynamic collateral provisions often increase counterparty risk considerably.
- C. Counterparty credit risk refers to the inability to realize gains in a contract with a counterparty due to its
default. - D. The exposure at default is variable due to fluctuations in swap valuations.
Answer: D
NEW QUESTION # 46
A risk manager is analyzing a call option on the GBP with a vega of 0.02. When the perceived future volatility
increases by 1%, the call option
- A. Decreases in value by 2.
- B. Increases in value by 2.
- C. Decreases in value by 0.02.
- D. Increases in value by 0.02.
Answer: D
NEW QUESTION # 47
Why is economic capital across market, credit and operational risks simply added up to arrive at an estimate of
aggregate economic capital in practice?
- A. Regulators require banks to add up economic capital across market, credit and operational risks.
- B. In practice, it is very difficult to estimate the correlations between the risk categories and as a result a
conservative estimate is obtained by adding up the risks. - C. Market, credit and operational risks are perfectly correlated which justifies adding up their associated
economic capital. - D. Since market, credit and operational risks are significantly different measures of risk, there is no
diversification benefit to computing economic capital to banks across types of risks.
Answer: B
NEW QUESTION # 48
Which one of the following four model types would assign an obligor to an obligor class based on the risk
characteristics of the borrower at the time the loan was originated and estimate the default probability based on
the past default rate of the members of that particular class?
- A. Credit rating models
- B. Dynamic models
- C. Historical frequency models
- D. Causal models
Answer: C
NEW QUESTION # 49
Which of the following risk types are historically associated with credit derivatives?
I. Documentation risk
II. Definition of credit events
III. Occurrence of credit events
IV. Enterprise risk
- A. I, II
- B. I, II, III
- C. I, IV
- D. II, III, IV
Answer: B
NEW QUESTION # 50
Which of the following statements are reasons for mathematical valuation and risk assessment models to be
misleading or inaccurate?
I. There could be missing factors in models.
II. The data used as input for the model could be bad or wrong.
III. Model results could be misinterpreted.
IV. There could be errors in the derivation of the model.
- A. I, III, and IV
- B. I, II, III IV
- C. III and IV
- D. I, II, and III
Answer: B
NEW QUESTION # 51
A customer asks a broker employed by AlphaBank to buy Eureka Corporation bonds for her account. While
this trade was executed correctly and the bonds were bought, the trade was mistakenly accounted for as a sell
order. If the price of Eureka Corporation bonds goes up, this trade would result in a significantly larger loss
than if the market had remained stable. However, if the market drops, the customer will benefit from the
incorrect accounting and gain from this trade. This trading scenario can serve as an example that
- A. Liquidity risk in this transaction can magnify operational risk.
- B. Market risk in this transaction can magnify operational risk.
- C. Strategic risk in this transaction can magnify operational risk.
- D. Credit risk in this transaction can magnify operational risk.
Answer: B
NEW QUESTION # 52
A large energy company has a recurring foreign currency demands, and seeks to use options with a pay-off
based on the average price of the underlying asset on either a few specific chosen dates or all dates within a
specific pricing window. Which one of the following four option types would most likely meet these specific
foreign currency demands?
- A. European options
- B. Chooser options
- C. Asian options
- D. American options
Answer: C
NEW QUESTION # 53
Which one of the four following statements about back testing the VaR models is correct?
Back testing requires
- A. Determining the proportion of daily profits exceeding those predicted by VaR.
- B. Plotting the daily profit and losses along with the ranges predicted by VaR models
- C. Comparing the predictive ability of VaR on a daily basis to the realized daily profits and losses.
- D. Plotting VaR forecasts against the proportion of daily losses exceeding the average loss.
Answer: C
NEW QUESTION # 54
Which one of the following four statements regarding the basic Net Interest Income model is INCORRECT?
- A. Assets and liabilities have the same interest rate sensitivities.
- B. Effective repricing date can be different than contractual repricing.
- C. Net interest income risk does not address the impact of changing interest rates on bank equity value.
- D. The amount of intermediated funds can be a function of interest rate levels.
Answer: A
NEW QUESTION # 55
To estimate the interest charges on the loan, an analyst should use one of the following four formulas:
- A. Loan interest = Risk-free rate - Probability of default x Loss given default - Spread
- B. Loan interest = Risk-free rate - Probability of default x Loss given default + Spread
- C. Loan interest = Risk-free rate + Probability of default x Loss given default - Spread
- D. Loan interest = Risk-free rate + Probability of default x Loss given default + Spread
Answer: D
NEW QUESTION # 56
A trader attempts to hold long positions when markets are rising and hold short positions when markets are
falling. Which one of the following four trading styles is she likely to use?
- A. Technical trading
- B. Contrarian trading
- C. Market timing trading
- D. Black box trading
Answer: C
NEW QUESTION # 57
Alpha Bank determined that Delta Industrial Machinery Corporation has 2% change of default on a one-year
no-payment of USD $1 million, including interest and principal repayment. The bank charges 3% interest rate
spread to firms in the machinery industry, and the risk-free interest rate is 6%. Alpha Bank receives both
interest and principal payments once at the end the year. Delta can only default at the end of the year. If Delta
defaults, the bank expects to lose 50% of its promised payment. Six months after Alpha Bank provides USD
$1 million loan to the Delta Industrial Machinery Corporation, a new competitor enters the machinery
industry, causing Delta to adjust its prices and mark down the value of its inventory. Hence, the probability of
default increases from 2% to 10% and the loss given default increases from 50% to 75%. If Alpha Bank can
reprice the loan, what should the new rate be?
- A. 13%
- B. 16.5%
- C. 10%
- D. 20.5%
Answer: D
NEW QUESTION # 58
In hedging transactions, derivatives typically have the following advantages over cash instruments:
I. Lower credit risk
II. Lower funding requirements
III. Lower dealing costs
IV. Lower capital charges
- A. I, II
- B. II, IV
- C. I, II, III, IV
- D. I, III
Answer: C
NEW QUESTION # 59
A key function of treasuries in commercial/retail banks is:
I. To manage the interest margin of the banks.
II. To focus on underwriting risk.
III. To ensure strong earnings.
IV. To increase profit margins.
- A. III, IV
- B. II, III
- C. I
- D. II
Answer: C
NEW QUESTION # 60
......
2016-FRR Exam Dumps For Certification Exam Preparation: https://www.prep4sureguide.com/2016-FRR-prep4sure-exam-guide.html
100% Pass Guaranteed Download Financial Risk and Regulation Exam PDF Q&A: https://drive.google.com/open?id=1M6zL5fTQ9aCXuQvmvlEwK1pEUSSPVS7j