Pass Guaranteed 2025 Reliable GARP 2016-FRR: Financial Risk and Regulation (FRR) Series Test Question

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GARP 2016-FRR Certification Exam is a rigorous and comprehensive exam that covers a wide range of topics related to financial risk management and regulation. 2016-FRR exam consists of two parts: Part I covers topics such as risk management, financial markets and products, and valuation and risk models, while Part II focuses on topics such as regulatory frameworks, compliance, and ethics. 2016-FRR Exam is designed to test the knowledge, skills, and abilities of risk professionals who work in a variety of roles, including risk managers, traders, quantitative analysts, and compliance officers.

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Financial Risk and Regulation (FRR) Series practice vce dumps & 2016-FRR latest exam guide & Financial Risk and Regulation (FRR) Series test training torrent

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GARP Financial Risk and Regulation (FRR) Series Sample Questions (Q287-Q292):

NEW QUESTION # 287
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 passive hedging strategy that allows the traders to price transactions with customers and other banks, at the relevant bid price on the market.
B. 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.
C. A covering strategy that manages positions in the product by executing covering deals or hedging deal at the discretion of the trading des.
D. 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.

Answer: D

Explanation:
A matched book strategy involves matching every position with an offsetting position, effectively minimizing market risk. This strategy ensures that the bank's exposure to market fluctuations is neutralized, which is ideal for limiting risk exposure.

NEW QUESTION # 288
Which one of the four following statements about the Risk Adjusted Return on Capital (RAROC) is correct?
RAROC is the ratio of:

A. Value-at-risk to the profitability of a trading portfolio or a business unit.
B. Profitability to the risk of a trading portfolio or bank business unit.
C. Profitability to the expected return of a trading portfolio or bank business unit.
D. Risk to the profitability of a trading portfolio or a business unit within the bank.

Answer: B

Explanation:
Risk Adjusted Return on Capital (RAROC) is the ratio of profitability to the risk of a trading portfolio or bank business unit. This measure helps in assessing how much return is generated per unit of risk, allowing banks to compare the performance of different business units and investment opportunities on a risk-adjusted basis.

NEW QUESTION # 289
Which one of the following statements about futures contracts is correct?
I. Futures contracts are subject to the same risks as the underlying instruments.
II. Futures contracts have additional interest rate risk die to the future delivery date.
III. Futures contracts traded in a clearinghouse system are exposed to credit risk with numerous counterparties.

A. II, III
B. I
C. I, III
D. I, II, III

Answer: B

NEW QUESTION # 290
All of the following performance statistics typically benefit country's creditworthiness EXCEPT:

A. Low inflation
B. Low unemployment
C. Low degrees of savings
D. High degrees of investment

Answer: C

NEW QUESTION # 291
Which of the following factors would typically increase the credit spread?
I. Increase in the probability of default of the issuer.
II. Decrease in risk premium.
III. Decrease in loss given default of the issuer.
IV. Increase in expected loss.

A. I
B. II and III
C. I, II, and IV
D. I and IV

Answer: D

Explanation:
The credit spread reflects the additional yield over the risk-free rate that investors demand to compensate for the risk of default. An increase in the probability of default of the issuer (I) would directly increase the credit spread as investors require more return for higher risk. Similarly, an increase in expected loss (IV) would increase the credit spread since the potential loss in the event of default is greater. On the other hand, a decrease in risk premium (II) or a decrease in loss given default (III) would typically lower the credit spread, not increase it.

NEW QUESTION # 292
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