The Best Valid 2016-FRR Dumps for Helping Passing 2016-FRR Exam!
UPDATED GARP 2016-FRR Exam Questions & Answer
GARP 2016-FRR exam is one of the most important exams in the FRR Series. 2016-FRR exam covers a wide range of topics related to financial risk and regulation, including risk management, financial markets and institutions, and regulatory compliance. 2016-FRR exam is designed to test the candidate's understanding of these topics and their ability to apply this knowledge in real-world scenarios.
Who can take GARP 2016-FRR Certification
2016-FRR exam dumps recommend that individuals with three to five years' work experience in financial management. Bachelor's degree in finance, economics, administration, computer science, or mathematics and who received a GPA of 3.0 or higher. A valid GARP membership is required to take the Financial Risks and Regulation Certification. To return your GARP certification status to active, you must become a GARP member. Names of individuals who have passed the 2016-FRR Certification are provided to interested parties on a confidential basis.
NEW QUESTION # 42
An asset-sensitive bank will have a ___ cumulative gap and will benefit from ___ interest rates.
- A. Positive; rising
- B. Positive; dropping
- C. Negative; rising
- D. Negative; dropping
Answer: A
NEW QUESTION # 43
Bank G has a 1-year VaR of USD 20 million at 99% confidence level while bank H has a 1-year VaR of USD
10 million at 95% confidence level. Which bank is in a more risky position as measured by VaR?
- A. Bank H is taking twice the risk of bank G as measured by VaR.
- B. Since the confidence levels are not the same we cannot make any conclusions.
- C. Both banks are equally risky since the measurements are with the same confidence level.
- D. Bank G is taking twice the risk of bank H as measured by VaR.
Answer: B
NEW QUESTION # 44
Present value of a basis point (PVBP) is one of the ways to quantify the risk of a bond, and it measures:
- A. The percentage change in bond price when the yields change by 1%.
- B. The percentage change in bond price when yields change by 1 basis point.
- C. The change in value of a bond when yields increase by 0.01%.
- D. The present value of the future cash flows of a bond calculated at a yield equal to 1%.
Answer: C
NEW QUESTION # 45
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 assets?
- A. $250 million
- B. $150 million
- C. $100 million
- D. $200 million
Answer: A
NEW QUESTION # 46
Which of the following statements about a bank's behavior regarding Risk Adjusted Return on Capital
(RAROC) is correct?
I. A bank should always seek to maximize their overall RAROC.
II. A bank should consider investing in a business even with negative RAROC if it increases the RAROC of
the bank as a whole.
III. A bank should minimize its overall RAROC by controlling the absolute and relative amount of risk of its
businesses.
IV. A bank should maximize its RAROC by always investing in a new business that maximizes the RAROC
for that business unit.
- A. II and IV
- B. I, II and III
- C. I and II
- D. II, III, and IV
Answer: C
NEW QUESTION # 47
Which one of the following statements accurately describes market risk tolerance?
- A. Market risk tolerance is the maximum likely gain in the market value of portfolios over a given period
of time. - B. Market risk tolerance is the maximum loss the bank is willing to bear due to fluctuations in market
prices and rates. - C. Market risk tolerance is the maximum loss in the market value of financial instruments caused by the
failure of the counterparty to meet its obligations. - D. Market risk tolerance is the minimum loss the bank is willing to bear due to fluctuations in market prices
and rates.
Answer: B
NEW QUESTION # 48
A proprietary trading desk for a large bank hedges an Arab light OTC forward position with Brent crude oil
forwards. The trading desk benefits from using the most liquid OTC market to hedge, the market for the Brent
crude, but hedging its using the Brent contract, exposes itself to the following type of risk:
- A. Term risk
- B. Basis risk
- C. Correlation risk
- D. Seasonality risk
Answer: B
NEW QUESTION # 49
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. $700 million
- B. $710 million
- C. $650 million
- D. $712 million
Answer: B
NEW QUESTION # 50
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
- A. III, IV
- B. I
- C. I, II
- D. II
Answer: A
NEW QUESTION # 51
A risk manager is analyzing a call option on the GBP with a vega of 0.02. When the perceived future volatility
increases by 1%, the call option
- A. Increases in value by 2.
- B. Increases in value by 0.02.
- C. Decreases in value by 0.02.
- D. Decreases in value by 2.
Answer: B
NEW QUESTION # 52
A credit risk analyst is evaluating factors that quantify credit risk exposures. The risk that the borrower would
fail to make full and timely repayments of its financial obligations over a given time horizon typically refers
to:
- A. Duration of default.
- B. Probability of default.
- C. Exposure at default.
- D. Loss given default.
Answer: B
NEW QUESTION # 53
Which one of the following four statements regarding floating rate bonds is incorrect?
- A. Floating rate bonds typically have less price risk than fixed rate bonds.
- B. Floating rate bonds are very sensitive to changes in interest rates.
- C. Floating rate bonds have coupon payments tied to floating interest rates or floating interest rate indexes.
- D. Floating rate bonds only have a small degree of interest rate risk.
Answer: B
NEW QUESTION # 54
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. 2.64%.
- B. 2.81%.
- C. 2.90%.
- D. 3.15%.
Answer: A
NEW QUESTION # 55
When looking at the distribution of portfolio credit losses, the shape of the loss distribution is ___ , as the
likelihood of total losses, the sum of expected and unexpected credit losses, is ___ than the likelihood of no
credit losses.
- A. Symmetric; less
- B. Asymmetric; less
- C. Symmetric; greater
- D. Asymmetric; greater
Answer: D
NEW QUESTION # 56
Foreign exchange rates are determined by various factors. Considering the drivers of exchange rates, which
one of the following changes would most likely strengthen the value of the USD against other foreign
currencies?
- A. The US current account surplus increases
- B. The economic performance in the US weakens
- C. The expected US inflation rate increases
- D. The global demand for US products decreases
Answer: A
NEW QUESTION # 57
The main building blocks of an operational risk framework include all of the following options EXCEPT:
- A. Compliance document preparation
- B. Loss data collection
- C. Scenario analysis
- D. Risk and control self-assessment
Answer: A
NEW QUESTION # 58
The Treasury function of a bank typically manages all of the following components EXCEPT:
- A. Bank's liquidity
- B. Bank's capital
- C. Bank's performance estimates
- D. Bank's assets and liabilities
Answer: C
NEW QUESTION # 59
Which one of the following four statements correctly defines credit risk?
- A. Credit risk is the risk that summarizes the exposures a company or firm assumes when it attempts to
operate within a given field or industry. - B. Credit risk is the risk that complements market and liquidity risks.
- C. Credit risk is a form of performance risk in contractual relationship.
- D. Credit risk is the risk arising from execution of a company's strategy.
Answer: C
NEW QUESTION # 60
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GARP 2016-FRR (Financial Risk and Regulation) Series Certification Exam is a globally recognized certification program aimed at financial risk and regulation professionals. 2016-FRR exam is designed to test the knowledge and skills of candidates in the areas of financial risk management, regulatory compliance, and governance.
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