[Dec 03, 2023] Get to the Top with 2016-FRR Practice Exam Questions
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Advantages of the GARP 2016-FRR
There are numerous advantages of the GARP 2016-FRR Certification.
- One of the most attractive advantages is the fact that it provides you with international recognition.
- It will also enable you to easily secure business with firms in overseas markets. 2016-FRR exam dumps have gathered the results of the GARP 2016-FRR question and answer, so candidates can get certified more quickly.
- If you are not able to survive the examination on your first try, you can simply schedule another date. But by doing this, you will still be able to access all of your study materials for up to 12 months after your first attempt. Machine learning and Sono mock tests are available online for this 2016-FRR. You can download them and make your preparation easier.
- As a certified professional, you will be able to apply for jobs or promotions within companies across borders.
- The importance of the GARP 2016-FRR Certification cannot be denied. Successfully achieving it will give you the confidence that your knowledge and performance are the best they can be.
The Global Association of Risk Professionals (GARP) is a non-profit organization that was established in 1996 to promote sound risk management practices in the financial industry. One of the ways GARP achieves its mission is by offering certification programs to financial professionals who want to demonstrate their expertise in risk management. The Financial Risk and Regulation (FRR) Series is one such program, which covers topics such as financial risk management, regulation, and compliance.
GARP 2016-FRR Certification Exam is a rigorous and comprehensive exam that covers a wide range of topics related to financial risk management and regulation. 2016-FRR exam consists of two parts: Part I covers topics such as risk management, financial markets and products, and valuation and risk models, while Part II focuses on topics such as regulatory frameworks, compliance, and ethics. 2016-FRR exam is designed to test the knowledge, skills, and abilities of risk professionals who work in a variety of roles, including risk managers, traders, quantitative analysts, and compliance officers.
NEW QUESTION # 189
Which one of the following four statements about preferred shares is INCORRECT?
- A. Preferred shares represent residual of a corporation after its other liabilities have been paid.
- B. Preferred shares refer to a class of securities that is a cross between equity and debt.
- C. Preferred shares can be perpetual or have maturities far exceeding debt maturities.
- D. Preferred shares are subordinated to debt.
Answer: A
NEW QUESTION # 190
Which one of the following is a reason for a bank to keep a commercial loan in its portfolio until maturity?
I. Commercial loans usually have attractive risk-return profile.
II. Commercial loans are difficult to sell due to non standard features.
III. Commercial loans could be used to maintain good relations with important customers.
IV. The credit risk in commercial loans is low.
- A. II and IV
- B. III and IV
- C. I, II and III
- D. IV only
Answer: C
NEW QUESTION # 191
Which of the following are among the main uses of risk reports?
I. Identification of exceptional situations that require managerial attention.
II. Display the relative risk among different trades.
III. Specify how RAROC will be maximized within the bank.
IV. Estimate the overall risk levels of the bank.
- A. II and IV
- B. I, II and IV
- C. II, III, and IV
- D. II and III
Answer: B
NEW QUESTION # 192
A trader for EtaBank wants to take a leveraged position in Collateralized Debt Obligations. These CDOs can
be used in a repurchase transaction at a 20% haircut. Starting with $100 worth of CDOs, which one of the
following four positions would completely utilize the available leverage?
- A. The trader can buy $100 in CDO's, and repo the CDO's to get back $60, plus interest.
- B. The trader can buy $100 in CDO's, and repo the CDO's to get back $100, less interest.
- C. The trader can buy $100 in CDO's, and repo the CDO's to get back $20, plus interest.
- D. The trader can buy $100 in CDO's, and repo the CDO's to get back $80, less interest.
Answer: D
NEW QUESTION # 193
The skewness of ABC company's stock returns equal -1.5. What is the correct interpretation of this?
- A. It indicates lower probability of extreme negative events compared to the normal distribution.
- B. It indicates higher relative probability of extreme events than non-extreme events compared to estimates
from a normal distribution. - C. It indicates higher relative probability of negative returns compared to estimates derived from a normal
distribution. - D. It indicates that the returns are indeed normally distributed.
Answer: C
NEW QUESTION # 194
Which one of the following statements regarding collateralized mortgage obligations (CMO) is incorrect?
- A. CMOs are pools of mortgages that are divided according to the timing of cash flows.
- B. CMOs are generally less risky investment than CDOs.
- C. CMOs have senior tranches which are considered short-term, low-risk instruments by banks
- D. CMOs are asset-backed securities that have pools of collateralized debt obligations (CDOs) as
underlying collateral.
Answer: D
NEW QUESTION # 195
Which one of the following four statements represents the advantages of the historical sim-ulation method
when calculating VaR?
- A. Rely on current market data to describe the distribution of returns and determine volatilities.
- B. Are believed to be superior in accuracy predicting future levels of realized volatility.
- C. Solve the problem caused by incorrectly assuming that asset returns are normally distributed.
- D. Are only using loss probabilities that can be found in tables of the standard normal distribution.
Answer: C
NEW QUESTION # 196
The main building blocks of an operational risk framework include all of the following options EXCEPT:
- A. Loss data collection
- B. Scenario analysis
- C. Risk and control self-assessment
- D. Compliance document preparation
Answer: D
NEW QUESTION # 197
A portfolio consists of two floating rate bonds and one fixed rate bond.
Based on the information below, modified duration of this portfolio is
- A. 4.28
- B. 2.64
- C. 4.44
- D. 3.00
Answer: B
NEW QUESTION # 198
A bank customer expecting to pay its Brazilian supplier BRL 100 million asks Alpha Bank to buy Australian
dollars and sell Brazilian reals. Alpha bank does not hold Brazilian reals so it asks for a quote to buy Brazilian
reals in the market. The market rate is 100. The bank quotes a selling rate of 101 to its customer, sells the
reals, and receives AUD 1,010,000. To perform foreign exchange matched position trading, the banks should
- A. Immediately sell the real at the market rate of 100 and receive AUD 1,000,000.
- B. Immediately buy the real at the market rate of 100 and pay AUD 1,000,000.
- C. Immediately buy the real above the market rate of 105 and pay AUD 1,050,050.
- D. Immediately sell the real above the market rate of 105 and receive AUD 1,050,050.
Answer: B
NEW QUESTION # 199
A multinational bank just bought two bonds each worth $10,000. One of the bonds pays a fixed interest of 5%
semi-annually and the other pays LIBOR semi-annually. The six month LIBOR is at 5% currently. The risk
manager of the bank is concerned about the sensitivity to interest rates. Which of the following statements are
true?
- A. Both bond prices are equally sensitive to interest rates.
- B. The given information is not enough to determine the sensitivity of the bond prices.
- C. The price of the bond paying fixed interest is more sensitive to interest rates than the bond paying
floating interest. - D. The price of the bond paying floating interest is more sensitive to interest rates than the bond paying
fixed interest.
Answer: C
NEW QUESTION # 200
When considering the advantages of operational risk function owned by the Chief Compliance Officer in a
financial institution, an operational risk manager consultant suggests that this governance approach will have
all of the following advantages except:
- A. The operational risk function is closely linked in a partnership with the compliance function to leverage
data and assessment activities. - B. In accordance with Basel II Accord, the operational risk function should report directly into the audit
function and strengthen that function. - C. The operational risk function quickly inherits an existing reporting structure, established meeting
schedules and functional reporting cycles from the compliance function. - D. This governance structure maintains an independent operational risk function.
Answer: B
NEW QUESTION # 201
Bank Zilo has $2 million in cash and $10 million in loans coming due tomorrow with an expected default rate
of 1%. The proceeds will be deposited overnight. The bank owes $ 10 million on a securities purchase that
settles in two days and pays off $9 million in commercial paper in three days that is not expected to renew.
How much money should the bank plan to raise so as to avoid a liquidity problem?
- A. $710 million
- B. $700 million
- C. $712 million
- D. $650 million
Answer: A
NEW QUESTION # 202
A bank customer can use either a plain vanilla option or an option contract with volumetric flexibility to
reduce the following risks:
I. Market Risk
II. Basis Risk
III. Operational Risk
- A. I
- B. II, III
- C. II
- D. I, II
Answer: D
NEW QUESTION # 203
A credit analyst wants to determine if her bank is taking too much credit risk. Which one of the following four
strategies will typically provide the most convenient approach to quantify the credit risk exposure for the
bank?
- A. Assessing aggregate exposure at default at various time points and at various confidence levels
- B. Analyzing distribution of bank's credit losses and mapping credit risks at various statistical levels
- C. Using stress testing techniques to forecast underlying macroeconomic factors and bank's idiosyncratic
risks - D. Simplifying individual credit exposures so that they can be combined into a simplified expression of
portfolio risk for the bank
Answer: A
NEW QUESTION # 204
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