Pass Your Exam Easily! 2016-FRR Real Question Answers Updated on Mar 17, 2024
Actual Questions Answers Pass With Real 2016-FRR Exam Dumps
The Global Association of Risk Professionals (GARP) is a leading organization that is committed to providing financial risk professionals around the world with valuable education and training opportunities. One of the key ways GARP achieves this is through its certification programs which are designed to equip financial risk professionals with the knowledge and skills they need to manage risk in their organizations. Launched in 1996, the Financial Risk and Regulation (FRR) series is one of the most respected certifications offered by GARP.
GARP 2016-FRR Certification Exam is an important credential for professionals who work in the field of risk management. It is recognized globally and is highly valued by employers in the financial industry. Earning this certification demonstrates a commitment to professional development and a deep understanding of financial risk and regulation.
NEW QUESTION # 94
Nijenhaus Bruch is currently creating a program of operational loss data collection at a bank with a large
branch network. Which minimal data standards should this collection approach include to meet minimum loss
data collecting standards?
- A. Reports should capture the date of the event, the amount of loss, and recoveries of gross loss amounts.
- B. Reports should be designed to be shared with external data loss consortia recipients.
- C. Reports should capture both the date of the event and the amount of loss.
- D. Reports should only include the actual loss date.
Answer: A
NEW QUESTION # 95
Which one of the following four statements does identify correctly the relationship between the value of an
option and perceived exchange rate volatility?
- A. Option values can only change due to the factors related to the demand for specific options
- B. With increases in perceived future foreign exchange volatility, the value of all foreign exchange
- C. As the perceived future foreign exchange volatility increases, the value of all options increases.
- D. As the perceived future foreign exchange volatility decreases, the value of all options increases.
Answer: C
NEW QUESTION # 96
Which one of the four following statements about a minimal loss threshold in operational loss data collection
is incorrect?
- A. The operational loss data collection program has to capture all losses regardless of their size.
- B. Setting an operational loss data collection threshold depends on the risk appetite of the firm and
regulatory requirements it needs to meet. - C. The operational loss data collection program must include all material losses that are above minimal
gross loss threshold. - D. A company can have differing operational loss data collection and reporting thresholds for different
departments.
Answer: A
NEW QUESTION # 97
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?
- A. The 1-year treasury markets
- B. Foreign exchange markets
- C. Overnight interbank markets
- D. The 6-month LIBOR markets
Answer: C
NEW QUESTION # 98
In the United States, during the second quarter of 2009, transactions in foreign exchange derivative contracts
comprised approximately what proportion of all types of derivative transactions between financial institutions?
- A. 7%
- B. 2%
- C. 25%
- D. 43%
Answer: A
NEW QUESTION # 99
In hedging transactions, derivatives typically have the following advantages over cash instruments:
I. Lower credit risk
II. Lower funding requirements
III. Lower dealing costs
IV. Lower capital charges
- A. I, II, III, IV
- B. II, IV
- C. I, III
- D. I, II
Answer: A
NEW QUESTION # 100
Which one of the following four factors typically drives the pricing of wholesale products?
- A. Marketing considerations
- B. Long-term competitiveness
- C. Prevailing market price
- D. Overall risk exposure
Answer: C
NEW QUESTION # 101
A bank has a large number of auto loans and would prefer to sell them to raise cash for more funding.
However, selling individual auto loans is difficult. What could the bank do?
- A. Merge with another bank.
- B. Set up a marketing team to sell individual loans to investors.
- C. Package the loans into a securitized vehicle and sell the low risk portion of the portfolio.
- D. Obtain a stronger credit rating so that the bank could borrow at a cheaper rate.
Answer: C
NEW QUESTION # 102
To estimate a partial change in option price, a risk manager will use the following formula:
- A. Partial change in option price = Delta x Change in underlying price
- B. Partial change in option price = Delta x (1+ Change in underlying price)
- C. Partial change in option price = Delta x Gamma x (1+ Change in underlying price)
- D. Partial change in option price = Delta x Gamma x Change in underlying price
Answer: A
NEW QUESTION # 103
A large energy company has a recurring foreign currency demands, and seeks to use options with a pay-off
based on the average price of the underlying asset on either a few specific chosen dates or all dates within a
specific pricing window. Which one of the following four option types would most likely meet these specific
foreign currency demands?
- A. Chooser options
- B. Asian options
- C. European options
- D. American options
Answer: B
NEW QUESTION # 104
On January 1, 2010 the TED (treasury-euro dollar) spread was 0.4%, and on January 31, 2010 the TED spread
is 0.9%. 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. Increase in credit risk on T-bills.
- C. Increase in interest rates on both interbank loans and T-bills.
- D. The decrease in the TED spread indicates an increase in credit risk on interbank loans.
Answer: D
NEW QUESTION # 105
According to the principles of the Basel II Accord, the implementation and relative weights of the elements of
the operational risk framework depend on:
I. The culture of the financial institution
II. Regulatory drivers
III. Business drivers
IV. The bank's reporting currency
- A. II, III
- B. I, II, III
- C. I, IV
- D. II, IV
Answer: B
NEW QUESTION # 106
All of the four following exotic options are path-independent options, EXCEPT:
- A. Basket options
- B. Power options
- C. Chooser options
- D. Asian options
Answer: D
NEW QUESTION # 107
Which one of the following four statements correctly identifies the Basel II Accord's definition of operational
risk?
- A. Operational risk is a risk arising from execution of a company's business functions.
- B. Operational risk is all the risk that is not captured by market and credit risks.
- C. Operational risk is a form of risk that summarizes the risks a company or firm undertakes when it
attempts to operate within a given field or industry. - D. Operational risk is the risk of loss resulting from inadequate or failed processes, people and systems or
from external events.
Answer: D
NEW QUESTION # 108
A corporate bond gives a yield of 6%. A same maturity government bond yields 2%. The probability of the
corporate bond defaulting is 2.5%. In case of default, investors expect to lose 60% of their investment. The
risk premium in the credit spread is:
- A. 4.5%
- B. 0.5%
- C. 1.5%
- D. 2.5%
Answer: D
NEW QUESTION # 109
Returns on two assets show very strong positive linear relationship. Their correlation should be closest to
which of the following choices?
- A. 60%
- B. 45%
- C. 100%
- D. 15%
Answer: C
NEW QUESTION # 110
Gamma Bank provides a $100,000 loan to Big Bath retail stores at 5% interest rate (paid annually). The loan is
collateralized with $55,000. The loan also has an annual expected default rate of 2%, and loss given default at
50%. In this case, what will the bank's exposure at default (EAD) be?
- A. $25,000
- B. $75,000
- C. $50,000
- D. $105,000
Answer: C
NEW QUESTION # 111
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The Global Association of Risk Professionals (GARP) is a non-profit organization that is committed to promoting and advancing the risk profession worldwide. One of the primary ways that GARP accomplishes this goal is through its certification program, which includes the Financial Risk and Regulation (FRR) Series. The FRR Series is designed to provide professionals with a deep understanding of financial risk management and regulatory requirements.
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