LATEST 2016-FRR EXAM QUESTIONS 100% PASS | HIGH-QUALITY 2016-FRR: FINANCIAL RISK AND REGULATION (FRR) SERIES 100% PASS

Latest 2016-FRR Exam Questions 100% Pass | High-quality 2016-FRR: Financial Risk and Regulation (FRR) Series 100% Pass

Latest 2016-FRR Exam Questions 100% Pass | High-quality 2016-FRR: Financial Risk and Regulation (FRR) Series 100% Pass

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Tags: Latest 2016-FRR Exam Questions, Questions 2016-FRR Exam, Test 2016-FRR Lab Questions, Dumps 2016-FRR PDF, New Exam 2016-FRR Braindumps

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As the financial industry continues to grow and expand, so too does the need for qualified professionals who possess specialized knowledge in financial risk and regulation. The Global Association of Risk Professionals (GARP) recognizes this need and has developed the GARP 2016-FRR (Financial Risk and Regulation Series) certification exam to ensure that those working in the industry possess the necessary skills and knowledge.

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Questions 2016-FRR Exam & Test 2016-FRR Lab Questions

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GARP Financial Risk and Regulation (FRR) Series Sample Questions (Q320-Q325):

NEW QUESTION # 320
Which of the following would a bank resort to as a "lender of last resort" in the event of an extreme liquidity crisis?

  • A. LIBOR markets
  • B. Futures Markets
  • C. U.S treasury markets
  • D. Discount window

Answer: D

Explanation:
In the event of an extreme liquidity crisis, a bank would resort to the "discount window" as a lender of last resort. This facility is provided by central banks (like the Federal Reserve) to offer loans to banks facing liquidity shortages, thereby stabilizing the financial system.
ReferencesStandard financial practice and the role of central banks in providing emergency liquidity.


NEW QUESTION # 321
A proprietary trading desk for a large bank hedges an Arab light OTC forward position with Brent crude oil forwards. The trading desk benefits from using the most liquid OTC market to hedge, the market for the Brent crude, but hedging its using the Brent contract, exposes itself to the following type of risk:

  • A. Correlation risk
  • B. Term risk
  • C. Seasonality risk
  • D. Basis risk

Answer: D

Explanation:
When a proprietary trading desk hedges an Arab light OTC forward position with Brent crude oil forwards, they face basis risk. This is because the underlying commodities (Arab light and Brent crude oil) are different and may not move perfectly in sync, leading to a potential mismatch in the hedge.
ReferencesVerified based on the discussion of basis risk in commodity trading provided in the book "How Finance Works".


NEW QUESTION # 322
To estimate the interest charges on the loan, an analyst should use one of the following four formulas:

  • A. Loan interest = Risk-free rate + Probability of default x Loss given default - Spread
  • B. Loan interest = Risk-free rate - Probability of default x Loss given default + Spread
  • C. Loan interest = Risk-free rate - Probability of default x Loss given default - Spread
  • D. Loan interest = Risk-free rate + Probability of default x Loss given default + Spread

Answer: D


NEW QUESTION # 323
In early March, an energy trader takes a long position in natural gas futures for delivery in June, and hedges this exposure by taking a position in futures for July delivery. These trades were executed on the expectation that over time, the relative prices of the June and July contracts will come into alignment, the movement in these two contracts will largely mirror each other, and as a result of this, the net exposure is minimized and the position is protected against absolute price movements. However, if the two relative prices do not come into alignment with each other due to the scarcity of any of the two traded contracts in the futures market, the trader is likely to become exposed to the

  • A. Calendar spreads basis
  • B. Quality basis
  • C. Location basis
  • D. Product basis

Answer: A

Explanation:
The situation described involves a trader taking positions in futures contracts for different delivery months (June and July). If the prices of these contracts do not align due to the scarcity of either contract, the trader is exposed to calendar spread basis risk. This risk arises from the price difference between futures contracts with different expiration dates.
ReferencesVerified from the comprehensive details on calendar spreads and basis risks in the book "How Finance Works".


NEW QUESTION # 324
Alpha Bank determined that Delta Industrial Machinery Corporation has 2% change of default on a one-year no-payment of USD $1 million, including interest and principal repayment. The bank charges 3% interest rate spread to firms in the machinery industry, and the risk-free interest rate is 6%. Alpha Bank receives both interest and principal payments once at the end the year. Delta can only default at the end of the year. If Delta defaults, the bank expects to lose 50% of its promised payment. What interest rate should Alpha Bank charge on the no-payment loan to Delta Industrial Machinery Corporation?

  • A. 12%
  • B. 10%
  • C. 9%
  • D. 8%

Answer: B

Explanation:
To determine the appropriate interest rate to charge, Alpha Bank needs to cover the risk-free rate, the spread, and the expected loss due to default. The formula used is: Risk-free rate + Spread + (Probability of Default x Loss Given Default). Substituting the given values: 6% (risk-free rate) + 3% (spread) + (0.02 x 0.50) = 6% +
3% + 1% = 10%.


NEW QUESTION # 325
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