FINANCIAL RISK AND REGULATION (FRR) SERIES TEST QUESTIONS AND ANSWERS ARE EASY TO UNDERSTAND - REAL4DUMPS

Financial Risk and Regulation (FRR) Series Test Questions and Answers are Easy to Understand - Real4dumps

Financial Risk and Regulation (FRR) Series Test Questions and Answers are Easy to Understand - Real4dumps

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Tags: New 2016-FRR Dumps Questions, 2016-FRR Dumps Collection, Test 2016-FRR Score Report, 2016-FRR Exam Cram Questions, Exam 2016-FRR Duration

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The FRR Series consists of two levels of certification: the FRM (Financial Risk Manager) and the ERP (Energy Risk Professional). The FRM certification focuses on financial risk management in banking, insurance, and asset management, while the ERP certification is geared towards professionals working in the energy industry. Both certifications require passing two exams, and candidates must have a certain amount of relevant work experience to be eligible to take the exams.

>> New 2016-FRR Dumps Questions <<

2016-FRR Dumps Collection | Test 2016-FRR Score Report

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The FRR Series Exam is designed to equip professionals with the necessary knowledge and skills to navigate the complex and rapidly changing landscape of financial risk management and regulation. It covers a wide range of topics, including risk governance, risk measurement and management, regulatory and ethical issues, and financial markets and products. 2016-FRR Exam is divided into two parts, each comprising of 80 multiple-choice questions, and is conducted over a period of four hours. Passing the GARP 2016-FRR Exam is a testament to a professional's knowledge and expertise in the field of financial risk management and regulation.

GARP Financial Risk and Regulation (FRR) Series Sample Questions (Q307-Q312):

NEW QUESTION # 307
Which of the following statements explain how securitization makes the retail assets highly liquid and the
balance sheet easier to manage?
I. By securitizing assets any lack of capital can be accommodated by selling the securitized bonds.
II. Any need to diversify credit risk can be achieved by selling bank's own securitized bonds and buying other
bonds that increase diversification.
III. Securitization could be used to promote hedging by using limited market instruments.

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

Answer: C


NEW QUESTION # 308
An organization's enterprise risk management framework defines its risk profile and typically reflects the organization's
I. Market and credit risks
II. Operational and liquidity risks
III. Strategic and geopolitical risks
IV. Structural developments and industry position

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

Answer: B

Explanation:
An organization's enterprise risk management framework typically reflects its risk profile, which includes market and credit risks (I), operational and liquidity risks (II), and strategic and geopolitical risks (III). These categories encompass the broad spectrum of risks that an organization needs to manage as part of its enterprise risk management framework.


NEW QUESTION # 309
According to Basel II what constitutes Tier 2 capital?

  • A. Core capital excluding undisclosed reserves and general reserves that the bank may make against its expected loan losses.
  • B. Debt that is not subordinated to equity and innovative capital products that would count as Tier 1 capital and excluding perpetual non-cumulative preference shares.
  • C. Equity capital and debt together.
  • D. Debt that is subordinate to equity.

Answer: D

Explanation:
Under Basel II, Tier 2 capital, also known as supplementary capital, includes:
* Subordinated Debt: This type of debt ranks below other debts with respect to claims on assets or earnings. It is considered Tier 2 capital because it can absorb losses in the event of a winding-up of the bank.
* Other Instruments: This category can also include hybrid instruments, undisclosed reserves, revaluation reserves, and general provisions/general loan-loss reserves.
These components enhance the bank's ability to absorb losses beyond the protection provided by Tier 1 capital.References: How Finance Works, sections explaining the structure and components of Tier 2 capital under Basel II.


NEW QUESTION # 310
Bank Omega is using futures contracts on a well capitalized exchange to hedge its market risk exposure.
Which of the following could be reasons that expose the bank to liquidity risk?
I. The bank may not be able to unwind the futures contracts before expiration.
II. Prices may move such that a loss results on the hedge.
III. Since futures require margins which are settled every day, the bank could find itself scrambling for funds.
IV. Exchange margin requirements could change unexpectedly.

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

Answer: D

Explanation:
When a bank uses futures contracts on a well-capitalized exchange to hedge its market risk exposure, it can still be exposed to liquidity risks due to several reasons:
I: The bank may not be able to unwind the futures contracts before expiration: This can happen if there is a lack of market participants willing to take the opposite position, making it difficult to close out the position.
II: Prices may move such that a loss results on the hedge: Although this is a risk related to the performance of the hedge, it is not directly related to liquidity risk but more to market risk.
III: Since futures require margins which are settled every day, the bank could find itself scrambling for funds:
Futures contracts require daily settlement of gains and losses (mark-to-market), which means the bank must have sufficient liquidity to cover margin calls, potentially causing liquidity strain if large movements in the futures prices occur.
IV: Exchange margin requirements could change unexpectedly: If the exchange increases margin requirements, the bank would need to post additional collateral, which could strain its liquidity if it does not have sufficient liquid assets readily available.
References: The verified details are aligned with the context given in "How Finance Works" regarding the liquidity risks associated with futures contracts.


NEW QUESTION # 311
Which one of the following four regulatory drivers for operational risk management includes risk and control requirements for financial statements in the United States?

  • A. The Markets in Financial Instruments Directive
  • B. Basel II Accord
  • C. Solvency II
  • D. The Sarbanes-Oxley Act

Answer: D

Explanation:
The Sarbanes-Oxley Act includes risk and control requirements for financial statements in the United States. It mandates strict reforms to improve financial disclosures from corporations and prevent accounting fraud. This Act directly impacts operational risk management by setting standards for all U.S. public company boards, management, and public accounting firms.


NEW QUESTION # 312
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