2016-FRR Exam Torrent - Financial Risk and Regulation (FRR) Series Actual Test & 2016-FRR Prep Torrent

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The FRR Series Exam is recognized as a leading certification in the risk management field, and is highly valued by employers around the world. It is ideal for risk professionals who are looking to advance their careers, as well as for those who are just starting out in the field. 2016-FRR exam is rigorous and challenging, but it is also highly rewarding, as it provides risk professionals with the knowledge and skills needed to effectively manage financial risk in today's rapidly changing business environment.

GARP 2016-FRR Certification Exam is a rigorous and challenging exam that requires a strong understanding of financial risk management concepts and regulatory frameworks. To prepare for the exam, candidates are encouraged to study the GARP 2016-FRR Study Guide, which provides an in-depth review of the exam topics and includes practice questions and exercises. Candidates may also attend GARP-sponsored training courses or use other study materials to prepare for the exam.

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GARP Financial Risk and Regulation (FRR) Series Sample Questions (Q191-Q196):

NEW QUESTION # 191
Which of the following statements depicts a difference between funding liquidity risks and trading liquidity risks?

A. Funding liquidity risks are concerned with the ability of the bank to fund deposits withdrawals while trading liquidity risks are concerned with the change in bid-offer spreads of asset values.
B. Funding liquidity risks are short term risks while trading liquidity risks are longer term risks.
C. Funding liquidity risks are associated with how fast prices move in the market while trading liquidity risks originate out of bank trades.
D. Funding liquidity risks are associated only with the bank assets while trading liquidity risks are associated with both assets and liabilities of the bank.

Answer: A

Explanation:
Funding liquidity risk and trading liquidity risk are two distinct types of liquidity risks faced by financial institutions, particularly banks.
* Funding Liquidity Risk: This type of risk pertains to a bank's ability to meet its financial obligations as they come due without incurring unacceptable losses. It primarily concerns the bank's ability to fund withdrawals, meet depositor demands, and other liabilities when they come due. If a bank cannot manage its funding liquidity, it may be forced to sell assets at fire sale prices, which can further deteriorate its financial condition.
* Trading Liquidity Risk: This risk, on the other hand, deals with the market liquidity of the bank's assets.
It involves the risk of being unable to buy or sell assets at or near their market value due to inadequate market depth or market disruptions. It is more concerned with the bid-offer spreads and the ability to execute trades without significantly impacting the market price of the asset.
References: Based on the information provided in "How Finance Works" document, funding liquidity risks are concerned with the ability of the bank to fund deposit withdrawals while trading liquidity risks are concerned with the change in bid-offer spreads of asset values.

NEW QUESTION # 192
Which of the following factors can cause obligors to default at the same time?
I. Obligors may be harmed by exposures to similar risk factors simultaneously.
II. Obligors may exhibit herd behavior.
III. Obligors may be subject to the sampling bias.
IV. Obligors may exhibit speculative bias.

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

Answer: D

Explanation:
* Obligers may default simultaneously if they are harmed by exposure to similar risk factors, which means that an economic downturn or industry-specific issue affects multiple obligors at once.
* Herd behavior can lead to simultaneous defaults as obligors might follow the same trend, leading to a cascading effect of defaults.
* Sampling bias and speculative bias are not directly related to simultaneous defaults in the context of credit risk.
References:
* How Finance Works: "Obligors may be harmed by exposures to similar risk factors simultaneously.
Obligors may exhibit herd behavior."

NEW QUESTION # 193
Which one of the following four statements describes the advantage of using delta-gamma method of mapping
options positions over delta-normal method?
Delta-gamma method

A. Approximates more accurately the non-linear relationship of option values and risk.
B. Converts options into underlying factor risks according to their deltas and the gammas to those factors.
C. Overstates the risk of long option positions, but understate the risk of short option positions.
D. Fully captures option price risk, particularly for extreme price movements.

Answer: A

NEW QUESTION # 194
Which one of the following four statements about market risk is correct? Market risk is

A. The maximum likely loss in the market value of portfolios and financial instruments caused by the failure of the counterparty to meet its obligations.
B. The maximum likely loss in the market value of portfolios and financial instruments over a given period of time.
C. The exposure to an adverse change in the credit quality in portfolios or of financial instruments.
D. The exposure to an adverse change in the market value of portfolios and financial instruments caused by a change in market prices or rates.

Answer: D

Explanation:
Market risk is the exposure to an adverse change in the market value of portfolios and financial instruments caused by a change in market prices or rates. This definition encompasses the variability in market prices, such as interest rates, foreign exchange rates, and equity prices, which can impact the value of financial instruments and portfolios.

NEW QUESTION # 195
If a bank is long £500 million pounds, short £300 million in delta-equivalent pound options, and long £100 million in pound-denominated stocks, what is the amount of pound exposure that would be shown in the aggregated risk reports?

A. £900 million pounds
B. £300 million pounds
C. £800 million pounds
D. £500 million pounds

Answer: B

NEW QUESTION # 196
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