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Guide for Financial Risk and Regulation (FRR) Series

Quiz Financial Risk and Regulation (FRR) Series

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Quiz

1/10
Argument0
Suppose that a regulator deems all corporate debt to have the same risk level. Which of the following behavior of banks would be an example of regulatory arbitrage? (A). Banks increase their exposure to corporate debt. (B). Banks decrease their exposure to corporate debt. (C). Banks shift their exposure to more risky corporate debt. (D). Banks shift their exposure to less risky corporate debt.
Select the answer
1 correct answer
Option C is correct. Explanation:

Quiz

2/10
Argument0
Which one of the following four statements about regulatory capital for a bank is accurate? (A). Regulatory capital is determined by rules imposed by an outside authority, such as a supervisor or central bank. (B). Regulatory capital is the lowest level of economic capital the bank should have to meet regulatory requirement. (C). Regulatory capital reflects the economic tradeoffs of the bank as accurately as the bank can represent them. (D). Regulatory capital is less than the regulatory capital requirement.
Select the answer
1 correct answer
Option A is correct. Explanation:

Quiz

3/10
Argument2
Which one of the following four features is NOT a typical characteristic of futures contracts? (A). Fixed notional amount per contract (B). Fixed dates for delivery (C). Traded Over-the-counter only (D). Daily margin calls
Select the answer
1 correct answer
Option C is correct. Explanation:

Quiz

4/10
Argument3
According to the principles of the Basel II Accord, the implementation and relative weights of the elements of the operational risk framework depend on: ?I: The culture of the financial institution II. Regulatory drivers III. Business drivers IV. The bank's reporting currency (A). I, IV (B). II, III (C). II, IV (D). I, II, III
Select the answer
1 correct answer
The culture of the financial institution II. Regulatory drivers III. Business drivers IV. The bank's reporting currency (A). I, IV (B). II, III (C). II, IV (D). I, II, III

Quiz

5/10
Argument0
The main building blocks of an operational risk framework include all of the following options EXCEPT: (A). Loss data collection (B). Risk and control self-assessment (C). Compliance document preparation (D). Scenario analysis
Select the answer
1 correct answer
Option C is correct. Explanation:

Quiz

6/10
Argument3
According to a Moody's study, the most important drivers of the loss given default historically have been all of the following EXCEPT: ?I: Debt type and seniority II. Macroeconomic environment III. Obligor asset type IV. Recourse (A). I (B). II (C). I, II (D). III, IV
Select the answer
1 correct answer
Debt type and seniority II. Macroeconomic environment III. Obligor asset type IV. Recourse (A). I (B). II (C). I, II (D). III, IV

Quiz

7/10
Argument2
A portfolio manager is interested in computing risk measures for his bond investment portfolio. Which of the following measures the sensitivity of duration to interest rates? (A). Modified duration. (B). Yield curve (C). Convexity. (D). Credit spread.
Select the answer
1 correct answer
Option C is correct. Explanation:

Quiz

8/10
Argument0
Which one of the four following statements about the Risk Adjusted Return on Capital (RAROC) is correct? RAROC is the ratio of: (A). Risk to the profitability of a trading portfolio or a business unit within the bank. (B). Value-at-risk to the profitability of a trading portfolio or a business unit. (C). Profitability to the expected return of a trading portfolio or bank business unit. (D). Profitability to the risk of a trading portfolio or bank business unit.
Select the answer
1 correct answer
Option D is correct. Explanation:

Quiz

9/10
Argument2
Which one of the following four statements correctly defines chooser options? (A). The owner of these options decides if the option is a call or put option only when a predetermined date is reached. (B). These options represent a variation of the plain vanilla option where the underlying asset is a basket of currencies. (C). These options pay an amount equal to the power of the value of the underlying asset above the strike price. (D). These options give the holder the right to exchange one asset for another.
Select the answer
1 correct answer
Option A is correct. Explanation:

Quiz

10/10
Argument0
Nijenhaus Bruch is currently creating a program of operational loss data collection at a bank with a large branch network. Which minimal data standards should this collection approach include to meet minimum loss data collecting standards? Certification Exam Financial Risk and Regulation (FRR) Series GARP GARP-2016-FRR 1-1148747508
Select the answer
1 correct answer
Option C is correct. Explanation:
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  • Quiz name:Financial Risk and Regulation (FRR) Series
  • Total number of questions:345
  • Number of questions for the test:50
  • Pass score:80%

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