GARP 2016-FRR Exam Dumps [2021] Practice Valid Exam Dumps Question
2016-FRR Dumps - Grab Out For [NEW-2021] GARP Exam
NEW QUESTION 95
Beta Insurance Company is only allowed to invest in investment grade bonds. To maximize the interest
income, Beta Insurance Company should invest in bonds with which of the following ratings?
- A. A
- B. B
- C. AA
- D. AAA
Answer: A
NEW QUESTION 96
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 97
A credit associate extending a loan to an obligor suspects that the obligor may change his behavior after the
loan has been originated. The obligor in this case may use the loan proceeds for purposes not sanctioned by the
lender, thereby increasing the risk of default. Hence, the credit associate must estimate the probability of
default based on the assumptions about the applicability of the following tendency to this lending situation:
- A. Speculation
- B. Adverse selection
- C. Short bias
- D. Moral hazard
Answer: D
NEW QUESTION 98
10 basis points are equal to:
- A. 0.1%
- B. 10%
- C. 0.01%
- D. 1%
Answer: A
NEW QUESTION 99
Which one of the four following statements about Basis point values is correct?
Basis point value:
- A. Provides a quick estimate of the sensitivity of the bank's banking book, to increasing volatility in interest
rates. - B. Refers to the change in the value of a fixed income position for a very small change yields.
- C. Is a risk sensitivity measure used to measure the point spread risk in the banking book.
- D. Is a widely used statistical tool used to measure market risk.
Answer: B
NEW QUESTION 100
Gamma Bank is operating in a highly volatile interest rate environment and wants to stabilize its net income
by shifting the sources of its earnings from interest rate sensitive sources to less interest rate sensitive sources.
All of the following strategies can help achieve this objective EXCEPT:
- A. Provide trust, asset management, and trading services to customers
- B. Charge bank fees for underwriting loans
- C. Originate more floating interest rate loans
- D. Extend different types of credit
Answer: C
NEW QUESTION 101
An options trader for a large institutional investor takes a long equity option position. Which of the following
risks need to be considered when taking this position?
I. All the risks of underlying equities
II. Perceived volatility changes
III. Future dividends yields
IV. Risk-free interest rates
- A. III, IV
- B. II, III
- C. I, II, III, IV
- D. I, II
Answer: C
NEW QUESTION 102
Which one of the following changes would typically increase the price of a fixed income instrument, such as a
bond?
- A. Increase in demand for goods and services.
- B. Increase in time to maturity.
- C. Decrease in inflation rates in a country.
- D. Increase in risk premium.
Answer: C
NEW QUESTION 103
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. 3.00
- B. 4.28
- C. 4.44
- D. 2.64
Answer: D
NEW QUESTION 104
ThetaBank has extended substantial financing to two mortgage companies, which these mortgage lenders use
to finance their own lending. Individually, each of the mortgage companies has an exposure at default (EAD)
of $20 million, with a loss given default (LGD) of 100%, and a probability of default of 10%. ThetaBank's risk
department predicts the joint probability of default at 5%. If the default risk of these mortgage companies were
modeled as independent risks, what would be the probability of a cumulative $40 million loss from these two
mortgage borrowers?
- A. 10%
- B. 0.01%
- C. 0.1%
- D. 1%
Answer: D
NEW QUESTION 105
Which one of the following four statements correctly defines an option's delta?
- A. Delta measures the effect of 1 bp in interest rate change on the option price.
- B. Delta measures the expected decline in option with time and is usually expressed in years.
- C. Delta measures the impact of volatility on the price of an option.
- D. Delta is the multiplier that best approximates the short-term change in the value of an option.
Answer: D
NEW QUESTION 106
A risk analyst at EtaBank wants to estimate the risk exposure in a leveraged position in Collateralized Debt
Obligations. These particular CDOs can be used in a repurchase transaction at a 20% haircut. If the VaR on a
$100 unleveraged position is estimated to be $30, what is the VaR for the final, fully leveraged position?
- A. $100
- B. $20
- C. $150
- D. $50
Answer: C
NEW QUESTION 107
To quantify the aggregate average loss for the credit portfolio and its possible constituent subportfolios, a
credit portfolio manager should use the following metric:
- A. Expected loss
- B. Credit VaR
- C. Unexpected loss
- D. Factor sensitivity
Answer: A
NEW QUESTION 108
A risk manager has a long forward position of USD 1 million but the option portfolio decreases JPY 0.50 for
every JPY 1 increase in his forward position. At first approximation, what is the overall result of the options
positions?
- A. The option positions hedge the forward position by 75%.
- B. The option positions hedge the forward position by 50%.
- C. The options positions hedge the forward position by 25%.
- D. The option positions hedge the forward position by 100%.
Answer: B
NEW QUESTION 109
Unico Bank, concerned with managing the risk of its trading strategies, wants to implement the trading
strategy that exposes the bank to the lowest market risk. Which one of the following four strategies should
Unico take to limit its risk exposure?
- A. A market-maker strategy that allows the traders to quote a buy and sell price to customers and other
banks and to trade at the relevant price on the sell side of the market. - B. A passive hedging strategy that allows the traders to price transactions with customers and other banks,
at the relevant bid price on the market. - C. A matched book strategy that allows the trading desk to match all customer positions immediately with
an equal and opposite position by trading internally or with another bank. - D. A covering strategy that manages positions in the product by executing covering deals or hedging deal at
the discretion of the trading des.
Answer: C
NEW QUESTION 110
DeltaFin wants to develop a control scoring method for its RCSA program. Which of the following statements
regarding scoring methods are correct?
I. DeltaFin can develop a control scoring method that assesses both the design and the performance of the
control.
II. DeltaFin can combine the design and performance scores for each control to produce an overall control
effectiveness score.
III. DeltaFin can use the control performance scores to compute an overall risk severity score.
IV. DeltaFin can determine its own appropriate control scoring method.
- A. II and III
- B. I only
- C. I, II and IV
- D. II, III, and IV
Answer: C
NEW QUESTION 111
......
2016-FRR Exam Dumps PDF Guaranteed Success with Accurate & Updated Questions: https://www.validbraindumps.com/2016-FRR-exam-prep.html
Pass 2016-FRR Exam - Real Test Engine PDF with 345 Questions: https://drive.google.com/open?id=15HPHARjdLDlmF7b1I1Av33bV2vf57swh