345 Exam Questions for 2016-FRR Updated Versions With Test Engine
Pass 2016-FRR Exam with Updated 2016-FRR Exam Dumps PDF 2022
Get to know about the requirements for taking GARP 2016-FRR?
The requirements to take the GARP FRR Certification are not strict because it is an open examination. Variable requirements for the 2016-FRR are by the organizer and the region. Chapters are structured according to the country you are studying. Message the organizer email before submitting the application for GARP 2016-FRR Certification, If edits are required.
NEW QUESTION 60
To estimate the forward price of oil, a commodity trader would most likely use the following pricing
relationship:
- A. Oil forward price = Expected future oil price ± Oil market risk premium
- B. Oil forward price = Expected future oil price ± storage cost + Oil market risk premium
- C. Oil forward price = Expected future oil price ± Oil storage cost + (1 + Oil market risk premium)
- D. Oil forward price = Expected future oil price ± Oil storage cost + (1 - Oil market risk premium)
Answer: A
NEW QUESTION 61
Alpha Bank determined that Delta Industrial Machinery Corporation has 2% change of default on a one-year
no-payment of USD $1 million, including interest and principal repayment. The bank charges 3% interest rate
spread to firms in the machinery industry, and the risk-free interest rate is 6%. Alpha Bank receives both
interest and principal payments once at the end the year. Delta can only default at the end of the year. If Delta
defaults, the bank expects to lose 50% of its promised payment. Hence, the loss rate in this case will be
- A. 1%
- B. 10%
- C. 3%
- D. 5%
Answer: A
NEW QUESTION 62
Unico Delta stock is trading at $20 per share, its annualized dividend yield is 5% and the 12-month LIBOR is
3%. Given these statistics, the 12-month futures contact will trade at:
- A. $20.04
- B. $30.04
- C. $40.08
- D. $10.08
Answer: A
NEW QUESTION 63
To estimate the interest charges on the loan, an analyst should use one of the following four formulas:
- A. Loan interest = Risk-free rate + Probability of default x Loss given default + Spread
- B. Loan interest = Risk-free rate + Probability of default x Loss given default - Spread
- C. Loan interest = Risk-free rate - Probability of default x Loss given default - Spread
- D. Loan interest = Risk-free rate - Probability of default x Loss given default + Spread
Answer: A
NEW QUESTION 64
To hedge a foreign exchange exposure on behalf of a client, a small regional bank seeks to enter into an
offsetting foreign exchange transaction. It cannot access the large and liquid interbank market open primarily
to larger banks. At which one of the following exchanges can the smaller bank trade the currency futures
contracts?
I. The Tokyo Futures Exchange
II. The Euronext-Liffe Exchange
III. The Chicago Mercantile Exchange
- A. II, III
- B. I
- C. I, II, III
- D. III
Answer: C
NEW QUESTION 65
Which of the activities represent examples of market manipulation?
- A. Stop-loss order
- B. Market gap
- C. Short squeeze
- D. Crowded trades
Answer: C
NEW QUESTION 66
Which one of the following four statements regarding bank's exposure to credit and default risk is
INCORRECT?
- A. Default risk cannot be hedged away fully, and it will always exist for the holder of the credit or for the
person insuring against the credit or default event. - B. The more the bank diversifies its credit portfolio, the better spread its credit risks become.
- C. In debt management, the goal is to minimize the effect of any defaults.
- D. In debt management, the value of any loan exposure will change typically in a fashion similar the same
way that an equity investment can.
Answer: D
NEW QUESTION 67
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 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 generally less risky investment than CDOs.
Answer: C
NEW QUESTION 68
Which of the following statements about the interest rates and option prices is correct?
- A. As interest rates rise, all options will rise in value.
- B. If rho is positive, rising interest rates increase option prices.
- C. If rho is positive, rising interest rates decrease option prices.
- D. As interest rates fall, all options will rise in value.
Answer: B
NEW QUESTION 69
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, debt holders, shareholders.
- C. Depositors, shareholders, depositors.
- D. Depositors, shareholders, debt holders.
Answer: B
NEW QUESTION 70
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 expected loss be?
- A. $1,000
- B. $750
- C. $500
- D. $1,300
Answer: C
NEW QUESTION 71
The Basel II Accord's operational risk definition excludes all of the following items EXCEPT:
- A. Strategic risk
- B. Legal risk
- C. Geopolitical risk
- D. Reputational risk
Answer: B
NEW QUESTION 72
Which one of the following four statements about planning for the operational risk framework is
INCORRECT?
- A. Once the elements of an operational risk framework are up and running, they need to be monitored to
ensure they maintain their integrity and do not deteriorate over time. - B. Planning for the operational risk framework suggests that short-term planning and focus on immediate
benefits is strongly preferred to the long-term planning approach. - C. Planning for the operational risk framework involves setting clear goals, realistic milestones and
achievable deliverables that add value. - D. An operational risk framework is a complex and evolving challenge, and to keep its development under
control it is important to apply strong project management skills to the design and implementation of
each new element.
Answer: B
NEW QUESTION 73
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. Symmetric; greater
- C. Asymmetric; less
- D. Asymmetric; greater
Answer: D
NEW QUESTION 74
According to the largest global poll of foreign exchange market participants, which one of the following four
global financial institutions was the most active participant in the global foreign exchange market?
- A. Citibank
- B. UBS AG
- C. Deutsche Bank
- D. Barclays Capital
Answer: C
NEW QUESTION 75
The data available to estimate the statistical distribution of bank losses is difficult to assemble for which of the
following reasons?
I. The needed data is vast in quantity.
II. The data requires bringing together significantly different measures of risk.
III. Some risks are difficult to quantify and hence the data might involve subjective elements.
- A. II, III
- B. I, III
- C. I, II, III
- D. I, II
Answer: A
NEW QUESTION 76
Which of the following statements regarding bonds is correct?
I. Interest rates on bonds are typically stated on an annualized rate.
II. Bonds can pay floating coupons that are directly linked to various interest rate indices.
III. Convertible bonds have an element of prepayment risk.
IV. Callable bonds have an element of equity risk.
- A. I only
- B. I and II
- C. I, II, and III
- D. II, III, and IV
Answer: B
NEW QUESTION 77
A customer asks a broker employed by AlphaBank to buy Eureka Corporation bonds for her account. While
this trade was executed correctly and the bonds were bought, the trade was mistakenly accounted for as a sell
order. If the price of Eureka Corporation bonds goes up, this trade would result in a significantly larger loss
than if the market had remained stable. However, if the market drops, the customer will benefit from the
incorrect accounting and gain from this trade. This trading scenario can serve as an example that
- A. Credit risk in this transaction can magnify operational risk.
- B. Strategic risk in this transaction can magnify operational risk.
- C. Market risk in this transaction can magnify operational risk.
- D. Liquidity risk in this transaction can magnify operational risk.
Answer: C
NEW QUESTION 78
Which one of the following four interest rate related yield curves is used to revalue loan and deposit positions
in banks?
- A. Basis
- B. Derivative
- C. Cash
- D. Bond
Answer: C
NEW QUESTION 79
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Topics covered by the GARP 2016-FRR
Here is a list of the main subjects that will be covered in the 2016-FRR:
- Financial Services: 15%
- Risk Management: 50%
- Emerging Markets: 15%
- Regulation, Supervision, Reporting, and Management: 20%
Where can you take the GARP 2016-FRR
You can take it at any Pearson VUE center worldwide. GARP works with Pearson VUE on a global basis to provide delivery services. You can find any center on the PearsonVUE website. Mark your calendar with the date and remember to apply in advance to schedule your 2016-FRR at your selected location. 2016-FRR exam dumps have been offering an examination for many years and have a large network of centers across the world. Security measures have been established at each testing center, which includes entering your personal identification number, a PIN, voice verification, and biometric authentication. Trading in your allotted time for another appointment will be considered an invalid score.
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