Get Ready with 2016-FRR Exam Dumps (2024) [Q156-Q177]

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Get Ready with 2016-FRR Exam Dumps (2024)

Realistic 2016-FRR Dumps are Available for Instant Access

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.

GARP 2016-FRR (Financial Risk and Regulation) series exam is a highly specialized certification exam designed for financial risk management professionals. 2016-FRR exam is administered by the Global Association of Risk Professionals (GARP) and is recognized worldwide as a benchmark for risk management professionals. The GARP 2016-FRR exam covers a wide range of topics, including financial risk management, regulatory compliance, and governance.

NEW QUESTION 156
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

NEW QUESTION 157
Altman’s Z-score incorporates all the following variables that are predictive of bankruptcy EXCEPT:

Return on total assets

Sales to total assets

Equity to debt

Return on equity

NEW QUESTION 158
Operational risk team for a large international bank is implementing business continuity planning (BCP).
Which of the following BCP activities fall within the definition of operational risk and represent Basel II
Accord’s operational risk categories:
I. Damage to Physical Assets
II. Business Disruption and System Failures
III. Social Distancing Requirements
IV. Potential for Extreme Losses

I and II

III

I and IV

III and IV

NEW QUESTION 159
Which one of the following four statements correctly identifies disadvantages of using the economic capital?

The economic capital models used by banks may be subject to significant model risk.

Economic capital may do not take into consideration the regulatory requirements.

Since banks are putting their money at risk they have an incentive to increase economic capital.

Economic capital estimates the level of expected losses.

NEW QUESTION 160
From the bank’s point of view, repricing the retail debt portfolio will introduce risks of fluctuations in:
I. Duration
II. Loss given default
III. Interest rates
IV. Bank spreads

I, II

III, IV

NEW QUESTION 161
When the cost of gold is $1,100 per bullion and the 3-month forward contract trades at $900, a commodity
trader seeks out arbitrage opportunities in this relationship. To capitalize on any arbitrage opportunities, the
trader could implement which one of the following four strategies?

Short-sell physical gold and take a long position in the futures contract

Take a long position in physical gold and short-sell the futures contract

Short-sell both physical gold and futures contract

Take long positions in both physical gold and futures contract

NEW QUESTION 162
What is a difference between currency swaps and interest rate swaps?

Currency swaps do not require the exchange of notional principal on maturity.

Currency swaps allow banks and customers to obtain the risk/reward profile of long-term interest rates without having to use long-term funding.

Currency swaps are OTC derivative contracts.

Currency swaps generate foreign exchange rate risk in addition to interest rate risk.

NEW QUESTION 163
Normally, commercial banking can be viewed as a fixed income carry trade since

Short-term floating-rate deposits are used to fund long-term fixed rate loans.

Short-term fixed rate deposits are used to fund long-term floating rate loans.

Short-term fixed-rate deposits are used to fund short-term floating rate loans.

Short-term floating-rate deposits are used to fund short-term floating rate loans.

NEW QUESTION 164
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.
What may happen to the Delta’s initial credit parameter and the value of its loan if the machinery industry experiences adverse structural changes?

Probability of default and loss at default may decrease simultaneously, while duration rises causing the loan value to decrease.

Probability of default and loss at default may decrease simultaneously, while duration falls causing the loan value to decrease.

Probability of default and loss at default may increase simultaneously, while duration rises causing the loan value to decrease.

Probability of default and loss at default may increase simultaneously, while duration falls causing the loan value to decrease.

NEW QUESTION 165
Which of the following are conclusions that could be drawn from the shape of the statistical distribution of losses that a bank might incur over a future time period?
I. In most years a bank would look more profitable than it will be on average.
II. Most of the time a sufficiently well capitalized bank will appear over-capitalized.
III. Bad years do not come along very often, but when they do they lead to enormous losses.

I, II

I, III

II, III

I, II, III

NEW QUESTION 166
The market risk manager of SigmaBank is concerned with the value of the assets in the bank’s trading book.
Which one of the four following positions would most likely be not included in that book?

10,000 shares of IBM worth $10,000,000.

$10,000,000 loan to IBM worth $9,800,000.

$10,000,000 bond issued by IBM worth $11,000,000.

300,000 options on IBM shares worth $10,000,000.

NEW QUESTION 167
To estimate the responsiveness of a particular equity portfolio to the overall market, a trader should use the portfolio’s

Alpha

Beta

CVaR

VaR

NEW QUESTION 168
What is the role of market risk management function within a bank?
I. Control and minimize the risks the bank should take.
II. Establish a comprehensive market risk policy framework.
III. Define, approve and monitor risk limits.
IV. Perform stress tests and other qualitative risk assessments.

I and III

II and IV

I, II and III

II, III, and IV

NEW QUESTION 169
Which one of the following four relationships should be used to price equity forwards or futures?

Equity forward or futures price = market equity price + (1 + risk-free rate – expected dividend rate)t

Equity forward or futures price = market equity price x (1 – risk-free rate – expected dividend rate)t

Equity forward or futures price = market equity price x (1 + risk-free rate – expected dividend rate)t

Equity forward or futures price = market equity price + (1 + risk-free rate + expected dividend rate)t

NEW QUESTION 170
Which one of the four following non-statistical risk measures are typically not used to quantify market risk?

Option sensitivities

Net closed positions

Convexity

Basis point values

NEW QUESTION 171
Bank Alpha is making a decision about lending 10-year loans in a sector that is fairly illiquid and is looking at various options to fund the loans. Which of the following options to fund the loans exhibits the most exogenous liquidity risk?

Overnight interbank markets

The 6-month LIBOR markets

The 1-year treasury markets

Foreign exchange markets

NEW QUESTION 172
Alpha Bank, a small bank,has a long position with larger BetaBank and has an identical short position with
another larger bank GammaBank. Each large bank requires a 20% initial collateral to support the trade. As
prices fluctuate in either direction, one large bank will require additional collateral from the small bank, while
the risk of loss to the other large bank will increase. By running the trades through a clearinghouse, the small
bank can achieve all of the following objectives EXCEPT:

Eliminating the collateral requirement

Protecting itself against increases in future collateral demands

Protecting against the risk of the failure of one of the large banks

Mitigating option hedging risks and altering margin requirement

NEW QUESTION 173
According to a Moody’s study, the most important drivers of the loss given default historically have been all of the following EXCEPT:
I. Debt type and seniority
II. Macroeconomic environment
III. Obligor asset type
IV. Recourse

I, II

III, IV

NEW QUESTION 174
Of all the risk factors in loan pricing, which one of the following four choices is likely to be the least significant?

Probability of default

Duration of default

Loss given default

Exposure at default

NEW QUESTION 175
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

I, II

II, III

III, IV

NEW QUESTION 176
What is the order in which creditors and shareholders get repaid in the event of a bank liquidation?

Depositors, shareholders, debt holders.

Debt holders, depositors, shareholders.

Depositors, debt holders, shareholders.

Depositors, shareholders, depositors.

NEW QUESTION 177
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

Which documents are required, on the day of the GARP 2016-FRR Certification

Documents required of the day of the GARP 2016-FRR Certification are a GARP member card and your government-issued identification (Passport/Driver’s license/National ID card), as elaborated by 2016-FRR exam dumps. A dump of GARP FRR certification queries with answers and the right answers will be posted here before you take it. Please remember to study them. Existing users like the Saien, lib, più, Che, Regex, Cosa, Httrack, and UNA have uploaded the full guides on GARP 2016-FRR Certification for candidates taking it online.

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