Best 2016-FRR Exam Dumps for the Preparation of Latest Exam Questions
2016-FRR Actual Questions 100% Same Braindumps with Actual Exam!
To prepare for the GARP 2016-FRR exam, candidates are encouraged to use a variety of study materials, including textbooks, online courses, and practice exams. Many candidates also participate in study groups or attend review courses to help them prepare for the exam. 2016-FRR exam is challenging, but those who pass the exam will be well-equipped to manage financial risk and navigate the complex regulatory landscape of the financial industry.
The most recent FRR exam, GARP 2016-FRR, was released in 2016 and covers a wide range of topics related to financial risk management and regulation. 2016-FRR exam is divided into two parts: Part I covers topics such as quantitative analysis, financial markets and products, and valuation and risk models, while Part II focuses on regulatory and ethical issues, including global regulatory frameworks, risk governance, and professional conduct.
NEW QUESTION # 145
Which of the following statements about a bank's behavior regarding Risk Adjusted Return on Capital
(RAROC) is correct?
I. A bank should always seek to maximize their overall RAROC.
II. A bank should consider investing in a business even with negative RAROC if it increases the RAROC of
the bank as a whole.
III. A bank should minimize its overall RAROC by controlling the absolute and relative amount of risk of its
businesses.
IV. A bank should maximize its RAROC by always investing in a new business that maximizes the RAROC
for that business unit.
- A. II, III, and IV
- B. I and II
- C. II and IV
- D. I, II and III
Answer: B
NEW QUESTION # 146
A credit portfolio manager analyzes a large retail credit portfolio. Which of the following factors will represent
typical disadvantages of market-linked credit risk drivers?
I. Need to supply a large number of input parameters to the model
II. Slow computation speed due to higher simulation complexity
III. Non-linear nature of the model applicable to a specific type of credit portfolios
IV. Need to estimate a large number of unknown variable and use approximations
- A. II, III
- B. I, II
- C. III, IV
- D. I
Answer: B
NEW QUESTION # 147
Which one of the four following statements about a minimal loss threshold in operational loss data collection
is incorrect?
- A. The operational loss data collection program must include all material losses that are above minimal
gross loss threshold. - B. A company can have differing operational loss data collection and reporting thresholds for different
departments. - C. The operational loss data collection program has to capture all losses regardless of their size.
- D. Setting an operational loss data collection threshold depends on the risk appetite of the firm and
regulatory requirements it needs to meet.
Answer: C
NEW QUESTION # 148
Which of the following statements depicts a difference between funding liquidity risks and trading liquidity
risks?
- A. Funding liquidity risks are concerned with the ability of the bank to fund deposits withdrawals while
trading liquidity risks are concerned with the change in bid-offer spreads of asset values. - B. Funding liquidity risks are associated only with the bank assets while trading liquidity risks are
associated with both assets and liabilities of the bank. - C. Funding liquidity risks are associated with how fast prices move in the market while trading liquidity
risks originate out of bank trades. - D. Funding liquidity risks are short term risks while trading liquidity risks are longer term risks.
Answer: A
NEW QUESTION # 149
An asset manager just bought a coupon paying bond with principal value $100,000 for $87,000 with a current
yield of 4.7%. He assumes that if the yields change to 5.7% the price of the bond would be $84,500. Based on
this assumption what is the modified duration of the bond?
- A. 2,507.
- B. 97.12.
- C. 2.97.
- D. 2.88.
Answer: D
NEW QUESTION # 150
Present value of a basis point (PVBP) is one of the ways to quantify the risk of a bond, and it measures:
- A. The change in value of a bond when yields increase by 0.01%.
- B. The percentage change in bond price when the yields change by 1%.
- C. The percentage change in bond price when yields change by 1 basis point.
- D. The present value of the future cash flows of a bond calculated at a yield equal to 1%.
Answer: A
NEW QUESTION # 151
Gamma Bank provides a $100,000 loan to Big Bath retail stores at 5% interest rate (paid annually). The loan is
collateralized with $55,000. The loan also has an annual expected default rate of 2%, and loss given default at
50%. In this case, what will the bank's exposure at default (EAD) be?
- A. $25,000
- B. $50,000
- C. $105,000
- D. $75,000
Answer: B
NEW QUESTION # 152
Most loans and deposits in the interbank market have a maturity of:
- A. Less than one year
- B. More than 5 years but less than 10 years
- C. More than 10 years
- D. More than 3 years but less than 5 years
Answer: A
NEW QUESTION # 153
Which one of the following changes would typically increase the price of a fixed income instrument, such as a
bond?
- A. Increase in risk premium.
- B. Decrease in inflation rates in a country.
- C. Increase in demand for goods and services.
- D. Increase in time to maturity.
Answer: B
NEW QUESTION # 154
On January 1, 2010 the TED (treasury-euro dollar) spread was 0.9%, and on January 31, 2010 the TED spread
is 0.4%. As a risk manager, how would you interpret this change?
- A. The decrease in the TED spread indicates an increase in credit risk on interbank loans.
- B. The decrease in the TED spread indicates a decrease in credit risk on interbank loans.
- C. Increase in credit risk on T-bills.
- D. Increase in interest rates on both interbank loans and T-bills.
Answer: B
NEW QUESTION # 155
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. Hence, the loss rate in this case will be
- A. 5%
- B. 3%
- C. 1%
- D. 10%
Answer: C
NEW QUESTION # 156
A hedge fund trader buys options to establish an exposure in the currency market, thereby effectively
removing the risk of being able to participate in a gapping market. In this case the options premium represents
the price paid for eliminating the execution risk of
- A. The theta-hedging strategy.
- B. The delta-hedging strategy.
- C. The vega-hedging strategy.
- D. The gamma-hedging strategy.
Answer: B
NEW QUESTION # 157
Which one of the following four statements represents the advantages of the historical sim-ulation method
when calculating VaR?
- A. Solve the problem caused by incorrectly assuming that asset returns are normally distributed.
- B. Are only using loss probabilities that can be found in tables of the standard normal distribution.
- C. Are believed to be superior in accuracy predicting future levels of realized volatility.
- D. Rely on current market data to describe the distribution of returns and determine volatilities.
Answer: A
NEW QUESTION # 158
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. II
- B. I
- C. II, III
- D. III, IV
Answer: B
NEW QUESTION # 159
When trading exotic options, one needs to consider the following risks:
I. Spot foreign exchange risks
II. Forward foreign exchange risks
III. Plain vanilla options risks
IV. Option-specific risks
- A. II, III, IV
- B. I, II, III, IV
- C. I, II, IV
- D. I, III
Answer: B
NEW QUESTION # 160
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