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New 2016-FRR Valid Braindumps Sheet Pass Certify | Reliable Braindump 2016-FRR Pdf: Financial Risk and Regulation (FRR) Series

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The Global Association of Risk Professionals (GARP) is a leading organization that is committed to providing financial risk professionals around the world with valuable education and training opportunities. One of the key ways GARP achieves this is through its certification programs which are designed to equip financial risk professionals with the knowledge and skills they need to manage risk in their organizations. Launched in 1996, the Financial Risk and Regulation (FRR) series is one of the most respected certifications offered by GARP.

GARP 2016-FRR Exam is an essential certification for any professional looking to advance in the field of risk management and regulation. 2016-FRR exam covers a wide range of topics and is designed to test the candidate's knowledge and skills in real-world scenarios. Passing 2016-FRR exam is a mark of excellence in the field and opens up new opportunities for career growth and advancement.

GARP Financial Risk and Regulation (FRR) Series Sample Questions (Q101-Q106):

NEW QUESTION # 101
The risk management department of VegaBank wants to set guidelines on commodity carry trades. Which of
the following strategies should she pursue to achieve a profitable commodity carry?
I. Buy short-term commodity futures and sell longer-dated position when the curve is in contango.
II. Buy short-term commodity futures and sell longer-dated position when the curve is in backwardation.
III. Buy long-term commodity futures and sell shorter-dated positions when the curve is in contango.
IV. Buy long-term commodity futures and sell shorter-dated positions when the curve is in backwardation.

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

Answer: D

NEW QUESTION # 102
ThetaBank has extended substantial financing to two mortgage companies, which these mortgage lenders use to finance their own lending. Individually, each of the mortgage companies have an exposure at default (EAD) of $20 million, with a loss given default (LGD) of 100%, and a probability of default of 10%.
ThetaBank's risk department predicts the joint probability of default at 5%. If the default risk of these mortgage companies were modeled as independent risks, the actual probability would be underestimated by:

A. 3%
B. 4%
C. 1%
D. 2%

Answer: D

Explanation:
ThetaBank's default risk assessment involves calculating the joint probability of default for the two mortgage companies and comparing it to the independent risk model.
* Individual Exposure at Default (EAD):$20 million for each mortgage company.
* Loss Given Default (LGD):100%
* Probability of Default (PD):10% for each mortgage company.
* Joint Probability of Default:5%
For independent risks, the joint probability of default for two independent events is the product of their individual probabilities:
ext{Joint Probability (Independent)} = PD_1 imes PD_2 = 0.10 imes 0.10 = 0.01 ext{ (or 1%)} Given that ThetaBank predicts the joint probability at 5%, the independent model would have underestimated the actual probability by:
5%#1%=4%5%#1%=4%
Therefore, the underestimated probability is:
4%#2%=2%4%#2%=2%
References
* Verified information from the document

NEW QUESTION # 103
Which of the following statements regarding CDO-squared is correct?
I. CDO-squared use other CDOs and CMOs as collateral.
II. Risk assessment of CDO-squared is almost impossible due to their complexity.
III. CDO-squared have lower credit risk than CMOs but higher than CDOs.

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

Answer: B

NEW QUESTION # 104
Bank G has a 1-year VaR of USD 20 million at 99% confidence level while bank H has a 1-year VaR of USD
10 million at the same confidence level. Which bank is in a more risky position as measured by VaR?

A. Bank G is taking twice the risk of bank H as measured by VaR.
B. Bank H is taking twice the risk of bank G as measured by VaR.
C. Since the confidence levels are the same we cannot make any conclusions.
D. Both banks are equally risky since the measurements are with the same confidence level.

Answer: A

NEW QUESTION # 105
US-based BetaBank have accumulated Japanese yen, Japanese government bonds, options on Japanese yen, and positions in commodities that have a positive correlation with yen. Which one of the four following non- statistical risk measures could be used to evaluate the BetaBank's exposure to the Japanese economy?

A. Position volatility
B. Position turnover
C. Position sensitivities
D. Position concentrations

Answer: D

Explanation:
To evaluate BetaBank's exposure to the Japanese economy, we should consider measures that reflect the bank' s positions and their potential sensitivity to economic changes in Japan:
* Position Turnover:
* This measures how frequently positions are changed or traded, which does not directly indicate exposure to economic conditions.
* Position Concentrations:
* This indicates how concentrated the bank's positions are in certain assets or markets. High concentration in Japanese assets (yen, Japanese government bonds, etc.) would indicate high exposure to the Japanese economy.
* Position Volatility:
* This measures how much the value of positions fluctuates, which can indicate risk but does not specifically measure economic exposure.
* Position Sensitivities:
* This measures how sensitive positions are to changes in underlying factors, such as interest rates or exchange rates. This could also be relevant but does not directly indicate exposure to the economy as a whole.
Thus, position concentrations are a key measure to evaluate BetaBank's exposure to the Japanese economy.
References
Source: How Finance Works

NEW QUESTION # 106
......

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