[Q189-Q205] Use Real 2016-FRR - 100% Cover Real Exam Questions [Mar-2024]

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Use Real 2016-FRR – 100% Cover Real Exam Questions [Mar-2024]

Dumps Brief Outline Of The 2016-FRR Exam – Real4dumps

The Global Association of Risk Professionals (GARP) is a non-profit organization that specializes in developing and promoting best practices in the field of risk management. GARP offers a variety of educational programs and certification exams to help professionals develop their skills and advance their careers in the field of risk management. One of the most popular certification exams offered by GARP is the Financial Risk and Regulation (FRR) Series.

Q189. In additional to the commodity-specific risks, which of the following risks represent the main commodity
derivative risks?
I. Basis
II. Term
III. Correlation
IV. Seasonality

I, II

II, III

I, IV

I, II, III, IV

Q190. US based Alpha Bank holds European corporate bonds and US inflation-indexed Treasury notes in its
investment portfolio. This investment portfolio is not exposed to changes in which of the following?

Foreign exchange rates

Credit spread on the corporate bonds

Equity values

European interest rates

Q191. Which one of the following four alternatives correctly identifies the purpose of a clearinghouse in trading
activities?

Reduction of counterparty risk and liquidity risk

Reduction of basis risk and mark-to-market risk

Reduction of operational risk and credit risk

Reduction of market risk and credit risk

Q192. An options trader is assessing the aggregate risk of her currency options exposures. As an options buyer, she
can potentially ___ lose more than the premium originally paid. As an option seller, however, she has a ___
risk on the contract and always receives a premium.

Never, unlimited

Sometimes, unlimited

Never, limited

Sometimes, limited

Q193. Which one of the following four statements regarding floating rate bonds is incorrect?

Floating rate bonds have coupon payments tied to floating interest rates or floating interest rate indexes.

Floating rate bonds typically have less price risk than fixed rate bonds.

Floating rate bonds are very sensitive to changes in interest rates.

Floating rate bonds only have a small degree of interest rate risk.

Q194. Which one of the following statements correctly identifies risks in foreign exchange forwards?

Short-term forward price fluctuations are driven by changes in the spot exchange rate, since most
inter-country interest rates differentials are significant, and the effect of compounding is large for short
periods of time.

Short-term forward price fluctuations are driven by changes in the spot exchange rate, since most
inter-country interest rates differentials are small, and the effect of compounding is small for short
periods of time.

Long-term forward price fluctuations are driven by changes in the spot exchange rate, since most
inter-country interest rates differentials are small, and the effect of compounding is large for short
periods of time.

Long-term forward price fluctuations are driven by changes in the spot exchange rate, since most
inter-country interest rates differentials are significant, and the effect of compounding is small for short
periods of time.

Q195. According to the largest global poll of foreign exchange market participants, which one of the following four
global financial institutions was the most active participant in the global foreign exchange market?

Citibank

UBS AG

Deutsche Bank

Barclays Capital

Q196. 10 basis points are equal to:

10%

0.1%

0.01%

Q197. A customer of EtaBank, Alfred Fall, fell on the marble floors of the bank and sustained substantial injuries.
Subsequently, he won a personal injury claim of $50,000 against EtaBank. How should EtaBank’s operational
loss data event information database categorize this event?

This event would qualify as “Business Disruption and System Failures”.

This event would qualify as “Employment Practices and Workplace Safety”.

This event would not qualify as an operational risk event.

This event would qualify as “Legal Risk”.

Q198. Which one of the following four statements correctly defines credit risk?

Credit risk is the risk that complements market and liquidity risks.

Credit risk is a form of performance risk in contractual relationship.

Credit risk is the risk arising from execution of a company’s strategy.

Credit risk is the risk that summarizes the exposures a company or firm assumes when it attempts to
operate within a given field or industry.

Q199. Using the definitions used by JPMorgan Chase in their annual report, which of the following exposure types
would be considered as a non-trading risk exposure?
I. Short term equity investments
II. Loans held to maturity
III. Mortgage servicing rights
IV. Derivatives used to manage asset/liability exposure.

I and II

II and III

III and IV

II, III, and IV

Q200. James Johnson bought a coupon bond yielding 4.7% for $1,000. Assuming that the price drops to $976 when
yield increases to 4.71%, what is the PVBP of the bond.

$26.

$76.

$870.

$976.

Q201. Bank customers traditionally trade commodity futures with banks in order to achieve which of the following
goals?
I. To express their own price views
II. To reverse undesired short-term exposure created from fixed commodity sales
III. To reach short-term budgetary targets

I, III

I, II, III

Q202. Suppose Delta Bank enters into a number of long-term commercial and retail loans at fixed rate prevailing at
the time the loans are originated. If the interest rates rise:

The bank will have to pay higher interest rates to its depositors and would have to pay higher rates on its
debt to the extent the debt interest rate was linked to floating indices, or to the extent the debt used to
fund the loans was of a shorter maturity than the loans.

The bank will have to pay higher interest rates to its depositors and would have to pay lower rates on its
debt to the extent the debt interest rate was linked to floating indices, or to the extent the debt used to
fund the loans was of a shorter maturity than the loans.

The bank will have to pay lower interest rates to its depositors and would have to pay higher rates on its
debt to the extent the debt interest rate was linked to floating indices, or to the extent the debt used to
fund the loans was of a shorter maturity than the loans.

The bank will have to pay lower interest rates to its depositors and would have to pay lower rates on its
debt to the extent the debt interest rate was linked to floating indices, or to the extent the debt used to
fund the loans was of a shorter maturity than the loans.

Q203. A risk associate evaluating his current portfolio of assets and liabilities wants to determine how sensitive this
portfolio is to changes in interest rates. Which one of the following four metrics is typically used for this
purpose?

Modified duration

Duration of default

Effective duration

Macaulay duration

Q204. Bank Omega is using futures contracts on a well capitalized exchange to hedge its market risk exposure.
Which of the following could be reasons that expose the bank to liquidity risk?
I. The bank may not be able to unwind the futures contracts before expiration.
II. Prices may move such that a loss results on the hedge.
III. Since futures require margins which are settled every day, the bank could find itself scrambling for funds.
IV. Exchange margin requirements could change unexpectedly.

III, IV

I, III, IV

I, II, III, IV

I, IV

Q205. Which one of the following four statements does identify correctly the relationship between the value of an
option and perceived exchange rate volatility?

With increases in perceived future foreign exchange volatility, the value of all foreign exchange

As the perceived future foreign exchange volatility decreases, the value of all options increases.

As the perceived future foreign exchange volatility increases, the value of all options increases.

Option values can only change due to the factors related to the demand for specific options

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[Q189-Q205] Use Real 2016-FRR – 100% Cover Real Exam Questions [Mar-2024]

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