LATEST 2016-FRR EXAM MATERIALS - 2016-FRR NEW DUMPS PDF

Latest 2016-FRR Exam Materials - 2016-FRR New Dumps Pdf

Latest 2016-FRR Exam Materials - 2016-FRR New Dumps Pdf

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Tags: Latest 2016-FRR Exam Materials, 2016-FRR New Dumps Pdf, Dumps 2016-FRR Guide, Free 2016-FRR Download Pdf, 2016-FRR Reliable Test Simulator

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GARP 2016-FRR Certification Exam is the latest version of this certification program. It is a comprehensive exam that covers a broad range of topics related to financial risk and regulation. 2016-FRR Exam is designed to test the knowledge and skills of candidates in areas such as risk governance, market risk, credit risk, operational risk, and regulatory compliance.

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All these three 2016-FRR exam question formats contain the real, updated, and error-free 2016-FRR exam practice test. These GARP 2016-FRR exam questions give you an idea about the final GARP 2016-FRR exam questions formats, exam question structures, and best possible answers, and you will also enhance your exam time management skills. Finally, at the end of GARP 2016-FRR Exam Practice test you will be ready to pass the final GARP 2016-FRR exam easily. Best of luck in GARP 2016-FRR exam and professional career!!!

GARP 2016-FRR exam is one of the most important exams in the FRR Series. 2016-FRR exam covers a wide range of topics related to financial risk and regulation, including risk management, financial markets and institutions, and regulatory compliance. 2016-FRR Exam is designed to test the candidate's understanding of these topics and their ability to apply this knowledge in real-world scenarios.

GARP Financial Risk and Regulation (FRR) Series Sample Questions (Q84-Q89):

NEW QUESTION # 84
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. Six months after Alpha Bank provides USD
$1 million loan to the Delta Industrial Machinery Corporation, a new competitor enters the machinery industry, causing Delta to adjust its prices and mark down the value of its inventory. Hence, the probability of default increases from 2% to 10% and the loss given default increases from 50% to 75%. If Alpha Bank can reprice the loan, what should the new rate be?

  • A. 16.5%
  • B. 10%
  • C. 13%
  • D. 20.5%

Answer: D

Explanation:
* Initial Data:
* Principal: $1,000,000
* Initial Probability of Default (PD): 2%
* Initial Loss Given Default (LGD): 50%
* Risk-Free Rate: 6%
* Interest Rate Spread: 3%
* New Data:
* New PD: 10%
* New LGD: 75%
* Expected Loss Calculation:
* Initial Expected Loss: 2%×50%=1%2%×50%=1%
* New Expected Loss: 10%×75%=7.5%10%×75%=7.5%
* Interest Rate Adjustment:
* The initial interest rate was: 6%+3%=9%6%+3%=9%
* To compensate for the increased expected loss, the new interest rate needs to reflect the higher risk.
* New Interest Rate = Risk-Free Rate + Spread + Compensation for Additional Risk
* New Spread: 7.5%1%=6.5%7.5%1%=6.5%
* New Interest Rate = 6%+6.5%=12.5%6%+6.5%=12.5%
* New Total Rate: 12.5%+3%()=15.5%12.5%+3%(initialspread)=15.5%
Thus, considering the new conditions, the bank must adjust the interest rate to 20.5% to cover the increased risk.


NEW QUESTION # 85
US based Alpha Bank holds European corporate bonds and US inflation-indexed Treasury notes in its investment portfolio. This investment portfolio is not exposed to changes in which of the following?

  • A. European interest rates
  • B. Equity values
  • C. Credit spread on the corporate bonds
  • D. Foreign exchange rates

Answer: B

Explanation:
US-based Alpha Bank holding European corporate bonds and US inflation-indexed Treasury notes in its investment portfolio would not be exposed to changes in equity values. This is because the investment portfolio consists of bonds and notes, which are fixed income securities and not related to equity market movements.


NEW QUESTION # 86
Operational risk team for a large international bank is implementing business continuity planning (BCP).
Which of the following BCP activities fall within the definition of operational risk and represent Basel II Accord's operational risk categories:
I. Damage to Physical Assets
II. Business Disruption and System Failures
III. Social Distancing Requirements
IV. Potential for Extreme Losses

  • A. I and II
  • B. III
  • C. III and IV
  • D. I and IV

Answer: A

Explanation:
According to Basel II Accord's operational risk categories, Business Continuity Planning (BCP) activities that fall within operational risk include:
* Damage to Physical Assets: This covers risks related to the physical destruction or damage to bank assets.
* Business Disruption and System Failures: This includes risks associated with operational disruptions and failures in systems that support business activities.


NEW QUESTION # 87
A bank owns a portfolio of bonds whose composition is shown below.

What is the modified duration of the portfolio?

  • A. 1.30
  • B. 2.30
  • C. 0.5
  • D. 8.5

Answer: A


NEW QUESTION # 88
On January 1, 2010 the TED (treasury-euro dollar) spread was 0.9%, and on January 31, 2010 the TED spread
is 0.4%. As a risk manager, how would you interpret this change?

  • A. Increase in credit risk on T-bills.
  • B. The decrease in the TED spread indicates an increase in credit risk on interbank loans.
  • C. The decrease in the TED spread indicates a decrease in credit risk on interbank loans.
  • D. Increase in interest rates on both interbank loans and T-bills.

Answer: C


NEW QUESTION # 89
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2016-FRR New Dumps Pdf: https://www.dumpexam.com/2016-FRR-valid-torrent.html

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