Free GARP 2016-FRR Exam Questions
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GARP 2016-FRR Exam Questions
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Provided By: GARP
- Exam: Financial Risk and Regulation (FRR) Series
- Certification: GARP Certification
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Total Questions: 345
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Updated On: Apr 30, 2025
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Rated: 4.9 |
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Online Users: 690
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Question 1
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An options trader for a large institutional investor takes a long equity option position. Whichof the following risks need to be considered when taking this position?I. All the risks of underlying equitiesII. Perceived volatility changesIII. Future dividends yieldsIV. Risk-free interest rates
Answer: D
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Question 2
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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.
What may happen to the Delta's initial credit parameter and the value of its loan if the
machinery industry experiences adverse structural changes?
Answer: D
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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.
What may happen to the Delta's initial credit parameter and the value of its loan if the
machinery industry experiences adverse structural changes?
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Question 3
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A bank customer can use either a plain vanilla option or an option contract with volumetricflexibility to reduce the following risks:I. Market RiskII. Basis RiskIII. Operational Risk
Answer: C
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A bank customer can use either a plain vanilla option or an option contract with volumetric
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Question 4
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Which one of the following four options is NOT a typical component of a currency swap?
Answer: B
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Which one of the following four options is NOT a typical component of a currency swap?
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Question 5
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An endowment asset manager with a focus on long/short equity strategies is evaluating therisks of an equity portfolio. Which of the following risk types does the asset manager needto consider when evaluating her diversified equity portfolio?I. Company-specific projected earnings and earnings riskII. Aggregate earnings expectationsIII. Market liquidityIV. Individual asset volatility
Answer: C
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