Free GARP FRM-Part-2 Exam Questions
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GARP FRM-Part-2 Exam Questions
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Provided By: GARP
- Exam: FRM Exam Part II
- Certification: GARP Certification
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Total Questions: 503
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Updated On: Apr 30, 2025
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Rated: 4.9 |
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Online Users: 1006
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Question 1
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Liz Parker is a junior quantitative analyst who is preparing a report dealing with credit migration. An excerpt of her report contains the following statements:I. Future default probability will likely increase over time, especially for periods far into the future.II. When computing the default probability of a counterparty under a risk-neutral measure, we need to first determine the actual default probability.Which of Parker’s statements is (are) correct?
Answer: A
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Liz Parker is a junior quantitative analyst who is preparing a report dealing with credit migration. An excerpt of her report contains the following statements:I. Future default probability will likely increase over time, especially for periods far into the future.II. When computing the default probability of a counterparty under a risk-neutral measure, we need to first determine the actual default probability.Which of Parker’s statements is (are) correct?
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Question 2
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Which of the following statements describes the best approach for liquidity transfer pricing?
Answer: A
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Which of the following statements describes the best approach for liquidity transfer pricing?
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Question 3
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Which of the following statements is not a motivation for pricing counterparty risk?
Answer: D
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Which of the following statements is not a motivation for pricing counterparty risk?
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Question 4
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The head of the fixed-income department of a bank asks a risk analyst to review anoutstanding bond issued by Company GRN, a livestock producer. The bondcurrently trades at a spread of 250 bps over the risk-free interest rate and has arecovery rate of 75%. Senior management of the bank has expressed concernabout the slowdown in business activities in the livestock industry, which isexpected to last for the next 3 years. The analyst applies the constant hazard rateprocess in estimating default probability and assumes that, under a stressed marketscenario, the bond would trade at a spread of 480 bps over the risk-free interest ratecurve, and its recovery rate would decrease to 40%. Assuming the stress scenarioprevails, what would be the correct estimate of the probability that Company GRNwould not default on its bond over the next 3 years?
Answer: D
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The head of the fixed-income department of a bank asks a risk analyst to review anoutstanding bond issued by Company GRN, a livestock producer. The bondcurrently trades at a spread of 250 bps over the risk-free interest rate and has arecovery rate of 75%. Senior management of the bank has expressed concernabout the slowdown in business activities in the livestock industry, which isexpected to last for the next 3 years. The analyst applies the constant hazard rateprocess in estimating default probability and assumes that, under a stressed marketscenario, the bond would trade at a spread of 480 bps over the risk-free interest ratecurve, and its recovery rate would decrease to 40%. Assuming the stress scenarioprevails, what would be the correct estimate of the probability that Company GRNwould not default on its bond over the next 3 years?
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Question 5
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In which of the New Initiative Risk Assessment Process (NIRAP) business case topics would you most likely find an analysis of project costs and funding arrangements?
Answer: A
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In which of the New Initiative Risk Assessment Process (NIRAP) business case topics would you most likely find an analysis of project costs and funding arrangements?