REVIEW 2016-FRR GUIDE - 2016-FRR VALID TEST CAMP

Review 2016-FRR Guide - 2016-FRR Valid Test Camp

Review 2016-FRR Guide - 2016-FRR Valid Test Camp

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GARP 2016-FRR (Financial Risk and Regulation) Certification Exam is a globally recognized certification program in the field of financial risk management. Financial Risk and Regulation (FRR) Series certification is designed to provide professionals with the knowledge and skills necessary to navigate the complex regulatory landscape and effectively manage financial risks in their organizations. The GARP 2016-FRR Certification Exam is offered by the Global Association of Risk Professionals (GARP), a leading professional association for risk management practitioners.

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Don't let the Financial Risk and Regulation (FRR) Series exam stress you out! Prepare with our 2016-FRR exam dumps and boost your confidence in the 2016-FRR exam. We guarantee your road toward success by helping you prepare for the 2016-FRR exam. Use the best GARP 2016-FRR practice questions to pass your 2016-FRR Exam with flying colors! In this way, the Financial Risk and Regulation (FRR) Series certified professionals can not only validate their skills and knowledge level but also put their careers on the right track. By doing this you can achieve your career objectives.

GARP 2016-FRR exam covers a wide range of topics related to financial risk and regulation, including market risk, credit risk, operational risk, liquidity risk, and regulatory frameworks and compliance requirements. 2016-FRR Exam is designed to be challenging and requires candidates to have a deep understanding of financial risk management and regulation.

GARP Financial Risk and Regulation (FRR) Series Sample Questions (Q147-Q152):

NEW QUESTION # 147
Gamma Bank has $300 million in loans and $200 million in deposits. If the modified duration of the loans is
estimated to be 2, and the modified duration of the deposits is estimated to be 1, then the change in Gamma
Bank's equity value per 1% change in yield will be:

  • A. -$2 million
  • B. -$1 million
  • C. -$4 million
  • D. -$3 million

Answer: C


NEW QUESTION # 148
Which one of the four following activities is NOT a component of the daily VaR computing process?

  • A. Updating factor interrelationships.
  • B. Updating individual risk factor models.
  • C. Producing the VaR report.
  • D. Computing portfolio risk by delta-normal or delta-gamma method.

Answer: A

Explanation:
The daily VaR (Value at Risk) computing process typically involves several key steps, including updating individual risk factor models, computing portfolio risk (often using methods like delta-normal or delta-gamma), and producing the VaR report. Updating factor interrelationships, which involves recalibrating how different risk factors correlate or interact with each other, is not necessarily a daily requirement and is usually performed less frequently as part of broader risk model adjustments. Therefore, updating factor interrelationships is not a core component of the daily VaR computation process.


NEW QUESTION # 149
What is a common implicit assumption that is made when computing VaR using parametric methods?

  • A. The mean and standard deviation of returns change periodically in response to crises.
  • B. The expected returns are constant, but the standard deviation changes over time.
  • C. The standard deviations of returns are constant, but the mean changes over time.
  • D. The mean of and the standard deviations of returns are both constant.

Answer: D

Explanation:
When computing VaR using parametric methods, a common implicit assumption is that both the mean and standard deviation of returns are constant over time.
* Constant Mean: The expected return of the asset or portfolio does not change over the time period considered.
* Constant Standard Deviation: The volatility of returns, which measures the dispersion of returns from the mean, is assumed to be constant.
This assumption simplifies the calculations as it allows the use of historical data to estimate future risks.
However, it may not always hold true in real-world scenarios where markets can exhibit changing volatility and return patterns.
References
* How Finance Works.pdf, p. 201


NEW QUESTION # 150
Which of the following are conclusions that could be drawn from the shape of the statistical distribution of losses that a bank might incur over a future time period?
I. In most years a bank would look more profitable than it will be on average.
II. Most of the time a sufficiently well capitalized bank will appear over-capitalized.
III. Bad years do not come along very often, but when they do they lead to enormous losses.

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

Answer: B

Explanation:
From the statistical distribution of bank losses over a future period, several conclusions can be drawn:
* I. In most years a bank would look more profitable than it will be on average: This indicates that most years will show better-than-average profitability because the distribution of losses includes infrequent but severe loss events.
* II. Most of the time a sufficiently well-capitalized bank will appear over-capitalized: Because banks prepare for rare but significant losses, in normal years, their capital reserves may seem excessive.
* III. Bad years do not come along very often, but when they do they lead to enormous losses: This reflects the heavy-tailed nature of the loss distribution, where extreme losses are rare but severe.
All three statements correctly reflect the characteristics of the loss distribution for banks.References: How Finance Works, sections covering statistical analysis of losses and capital adequacy.


NEW QUESTION # 151
Which of the following are the most common methods to increase liquidity in stressed conditions?
I. Selling or securitizing assets.
II. Obtaining additional credit lines.
III. Securing a better credit rating.

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

Answer: C

Explanation:
* I. Selling or securitizing assets:
* This is a common method to quickly generate liquidity during stressed conditions by converting non-liquid assets into cash.
* II. Obtaining additional credit lines:
* This method provides immediate access to additional funds when required, enhancing liquidity.
* III. Securing a better credit rating:
* While important for long-term financial health, this is not a direct method to increase liquidity in stressed conditions.
Thus, the most common methods to increase liquidity in stressed conditions are selling or securitizing assets and obtaining additional credit lines.
References:These methods are standard practices as detailed in the financial risk and regulation documentation, and they are widely recognized strategies for managing liquidity under stress.
Please refer to the provided financial documentation for further verification and detailed explanations .


NEW QUESTION # 152
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