Use the best ways of preparing for 2016-FRR Exam Dumps with Exam4Labs GARP 2016-FRR dump PDF [2021]
GARP 2016-FRR exam candidates will surely pass the Exam if they consider the 2016-FRR dumps learning material presented by Exam4Labs.
NEW QUESTION 126
Normally, commercial banking can be viewed as a fixed income carry trade since
- A. Short-term fixed-rate deposits are used to fund short-term floating rate loans.
- B. Short-term floating-rate deposits are used to fund short-term floating rate loans.
- C. Short-term floating-rate deposits are used to fund long-term fixed rate loans.
- D. Short-term fixed rate deposits are used to fund long-term floating rate loans.
Answer: C
NEW QUESTION 127
To reduce the variability of net interest income, Gamma Bank can swap positions that make its duration gap
equal to
- A. 0
- B. 1
- C. 2
- D. 0.5
Answer: C
NEW QUESTION 128
BetaFin has decided to use the hybrid RCSA approach because it believes that it fits its operational
framework. Which of the following could be reasons to use the hybrid RCSA method?
I. BetaFin has previously created series of RCSA workshops, and the results of these workshops can be used to
design the questionnaires.
II. BetaFin believes that using the questionnaire approach should be more useful.
III. BetaFin had used the questionnaire approach successfully for certain businesses and the workshop
approach for others.
IV. BetaFin had already implemented a sophisticated RCSA IT-system.
- A. I and II
- B. I and III
- C. III and IV
- D. II, III, and IV
Answer: B
NEW QUESTION 129
Which one of the following statements regarding collateralized mortgage obligations (CMO) is incorrect?
- A. CMOs are generally less risky investment than CDOs.
- B. CMOs have senior tranches which are considered short-term, low-risk instruments by banks
- C. CMOs are asset-backed securities that have pools of collateralized debt obligations (CDOs) as
underlying collateral. - D. CMOs are pools of mortgages that are divided according to the timing of cash flows.
Answer: C
NEW QUESTION 130
To estimate the responsiveness of a particular equity portfolio to the overall market, a trader should use the
portfolio's
- A. CVaR
- B. Beta
- C. VaR
- D. Alpha
Answer: B
NEW QUESTION 131
Company A needs to provide a risk probability/frequency score for its RCSA program. If the event is likely to
happen once in 2 years, then the frequency score will be equal to:
- A. 0
- B. 1
- C. 0.2
- D. 0.5
Answer: D
NEW QUESTION 132
After entering the securitization business, Delta Bank increases its cash efficiency by selling off the lower risk
portions of the portfolio credit risk. This process ___ risk on the residual pieces of the credit portfolio, and as a
result it ___ return on equity for the bank.
- A. Increases; increases;
- B. Increases; decreases;
- C. Decreases; increases;
- D. Decreases; increases;
Answer: A
NEW QUESTION 133
For two variables, which of the following is equal to the average product of the deviations from their
respective means?
- A. Correlation
- B. Standard deviation
- C. Kurtosis
- D. Covariance
Answer: D
NEW QUESTION 134
Which one of the following four statements does identify correctly the relationship between the value of an
option and perceived exchange rate volatility?
- A. As the perceived future foreign exchange volatility increases, the value of all options increases.
- B. Option values can only change due to the factors related to the demand for specific options
- C. As the perceived future foreign exchange volatility decreases, the value of all options increases.
- D. With increases in perceived future foreign exchange volatility, the value of all foreign exchange
Answer: A
NEW QUESTION 135
Short-selling is typically associated with the following risks:
I. Potential for extreme losses
II. Risk associated with the availability of shares to borrow
III. Market behavior risk
IV. Liquidity risk
- A. II, IV
- B. I, III
- C. I, II, III, IV
- D. I, II
Answer: C
NEW QUESTION 136
Which of the following factors can cause obligors to default at the same time?
I. Obligors may be harmed by exposures to similar risk factors simultaneously.
II. Obligors may exhibit herd behavior.
III. Obligors may be subject to the sampling bias.
IV. Obligors may exhibit speculative bias.
- A. I
- B. III, IV
- C. I, II
- D. II, III
Answer: C
NEW QUESTION 137
Which among the following are shortfalls of the static liquidity ladder model?
I. The static model gives a liquidity estimate only after the bank faces the liquidity problem.
II. The static model can only make projections over a few days.
III. The static model does not incorporate uncertainty in the analysis.
- A. I, II, III
- B. I, III
- C. III
- D. I, II
Answer: C
NEW QUESTION 138
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 a decrease in credit risk on interbank loans.
- B. The decrease in the TED spread indicates an increase 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: A
NEW QUESTION 139
Which one of the four following statements regarding minimum loss data standards is not correct?
- A. The loss data entry may include descriptive information about the drivers or causes of the loss event.
- B. The loss data entry must include the actual loss amount.
- C. The loss data entry should only include the date when the event was reported.
- D. The loss data program must comprehensively capture all material activities.
Answer: C
NEW QUESTION 140
Banks duration match their assets and liabilities to manage their interest risk in their banking book. Currently,
the bank's assets and liabilities both have a duration of 10. To hedge against the risk of decreasing interest
rates, the bank should
I. Increase the duration of the liabilities
II. Increase the duration of the assets
III. Decrease the duration of the liabilities
IV. Decrease the duration of the assets
- A. I only.
- B. II and III.
- C. I and IV
- D. I and II.
Answer: C
NEW QUESTION 141
James Johnson bought a 3-year plain vanilla bond that has yield of 4.7% and 4% coupon paid annually, for
$87,139. Macauley's duration of the bond is 2.94 years. Rate volatility is 20% of the yield. The bond's
annualized volatility is therefore:
- A. 3.15%.
- B. 2.81%.
- C. 2.64%.
- D. 2.90%.
Answer: C
NEW QUESTION 142
In analyzing market option pricing dynamics, a risk manager evaluates option value changes throughout the
entire trading day. Which of the following factors would most likely affect foreign exchange option values?
I. Change in the value of the underlying
II. Change in the perception of future volatility
III. Change in interest rates
IV. Passage of time
- A. I, II, III
- B. I, II, III, IV
- C. II, III
- D. I, II
Answer: B
NEW QUESTION 143
Oliver McCarthy owns a portfolio of bonds. Which of the following choices equals the modified duration of
Oliver's portfolio?
- A. Minimum of the modified durations of the component bonds
- B. Value-weighted average modified duration of the component bonds
- C. Maximum of the modified durations of component bonds
- D. Coupon-weighted average modified duration of the component bonds
Answer: B
NEW QUESTION 144
In its VaR calculations, JPMorgan Chase uses an expected tail-loss methodology which approximates losses at
the 99% confidence level. This methodology consists of two subsequent steps to estimate the VaR. Which of
the following explains this two-step methodology?
- A. After VaR is computed at the 99% confidence level, the expected tail loss in excess of that confidence
level is determined, which is then compared with the VaR estimate at the 98% confidence level. - B. After VaR is computed at the 99% confidence level, the expected tail loss in excess of that confidence
level is determined, which is then compared with the VaR estimate at the 99% confidence level. - C. After VaR is computed at the 97% confidence level, the expected tail loss in excess of that confidence
level is determined, which is then compared with the VaR estimate at the 99% confidence level. - D. After VaR is computed at the 1% confidence level, the expected tail loss in excess of that confidence
level is determined, which and is then compared with the VaR estimate at the 98% confidence level.
Answer: C
NEW QUESTION 145
Mega Bank holds a $250 million mortgage loan portfolio, which reprices every 5 years at LIBOR + 10%. The
bank also has $150 million in deposits that reprices every month at LIBOR + 3%. What is the amount of Mega
Bank's rate sensitive liabilities?
- A. $150 million
- B. $200 million
- C. $100 million
- D. $250 million
Answer: A
NEW QUESTION 146
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. I, III
- B. I, II, IV
- C. I, II, III, IV
- D. II, III, IV
Answer: C
NEW QUESTION 147
What is the order in which creditors and shareholders get repaid in the event of a bank liquidation?
- A. Debt holders, depositors, shareholders.
- B. Depositors, shareholders, depositors.
- C. Depositors, debt holders, shareholders.
- D. Depositors, shareholders, debt holders.
Answer: C
NEW QUESTION 148
Which type of risk does a bank incur on loans that are in the "pipeline", i.e loans that are in the process of
origination but not yet originated?
- A. Credit Risk only
- B. Interest rate risk only
- C. The bank does not incur any risk since the loan is not yet originated
- D. Interest rate risk and credit risk
Answer: B
NEW QUESTION 149
......
Full 2016-FRR Practice Test and 345 unique questions with explanations waiting just for you, get it now: https://drive.google.com/open?id=1P8EnFRWV9L6b1UZp-kuVn5O7WAH_6I7Y
Accurate & Verified Answers As Seen in the Real Exam here: https://www.exam4labs.com/2016-FRR-practice-torrent.html