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New 2016-FRR Exam Experience & 2016-FRR Valid Braindumps Pdf

The 2016-FRR Certification Exam is one of the top-rated and career-oriented certificates that are designed to validate an GARP professional's skills and knowledge level. These Financial Risk and Regulation (FRR) Series (2016-FRR) practice questions have been inspiring those who want to prove their expertise with the industrial-recognized credential. By cracking it you can gain several personal and professional benefits.

The Global Association of Risk Professionals (GARP) is a non-profit organization that aims to enhance the knowledge and skills of risk professionals worldwide. One of the ways in which GARP achieves this goal is through its certification programs. One of the most popular and well-respected certifications offered by GARP is the Financial Risk and Regulation (FRR) Series.

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The FRR Series Exam is designed to provide risk professionals with a comprehensive understanding of financial risk management and regulation. 2016-FRR Exam covers a wide range of topics, including market risk, credit risk, operational risk, liquidity risk, and regulatory compliance. It also covers emerging risks, such as cyber risk and climate change risk, that are becoming increasingly important in today's environment.

GARP Financial Risk and Regulation (FRR) Series Sample Questions (Q97-Q102):

NEW QUESTION # 97
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, III
D. I, II

Answer: D

Explanation:
Securitization helps banks make their retail assets highly liquid and their balance sheet easier to manage through the following mechanisms:
I: Accommodating Lack of Capital: By securitizing assets, any lack of capital can be accommodated by selling the securitized bonds. This process enables banks to raise funds quickly by selling bonds backed by their assets.
II: Diversifying Credit Risk: Banks can achieve credit risk diversification by selling their own securitized bonds and buying other bonds that increase diversification. This helps spread the risk across different types of assets and reduces the overall credit risk exposure of the bank.
III; Promoting Hedging: Securitization can be used to promote hedging by using limited market instruments.
By securitizing assets, banks can better hedge their positions and manage the risks associated with their assets more effectively.
References: These points align with the principles outlined in the "How Finance Works" document regarding the benefits of securitization for improving liquidity and managing balance sheets.

NEW QUESTION # 98
If a bank is long £500 million pounds, short £300 million in delta-equivalent pound options, and long £100 million in pound-denominated stocks, what is the amount of pound exposure that would be shown in the aggregated risk reports?

A. £800 million pounds
B. £500 million pounds
C. £900 million pounds
D. £300 million pounds

Answer: D

Explanation:
To determine the pound exposure in the aggregated risk reports, we sum the net positions:
* Long £500 million:
* The bank holds a long position of £500 million.
* Short £300 million in delta-equivalent pound options:
* This position reduces the exposure by £300 million.
* Long £100 million in pound-denominated stocks:
* This adds £100 million to the exposure.
Net exposure: 500#300+100=300 million pounds500 - 300 + 100 = 300 , ext{million pounds}
500#300+100=300million pounds
Thus, the pound exposure shown in the aggregated risk reports is £300 million.
References
Source: How Finance Works

NEW QUESTION # 99
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. 8.5
D. 0.5

Answer: D

Explanation:
* Calculate the weighted average of modified durations:
* The modified duration of the portfolio is a weighted average of the durations of the individual bonds, where the weights are the proportions of the total portfolio value.
* Calculate the total value of the portfolio: $200 MM (3-year floater) + $120 MM (5-year floater) +
$50 MM (10-year fixed) = $370 MM.
* Calculate the weights for each bond:
* 3-year floater: $200 MM / $370 MM = 0.5405
* 5-year floater: $120 MM / $370 MM = 0.3243
* 10-year fixed: $50 MM / $370 MM = 0.1351
* Multiply each bond's weight by its modified duration and sum the results:
* (0.5405 * 0.25) + (0.3243 * 0.25) + (0.1351 * 8) = 0.1351 + 0.0811 + 1.081 = 1.297
* Therefore, the weighted average modified duration is approximately 1.30.
ReferencesCalculation based on standard formula and weights derived from the table.

NEW QUESTION # 100
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, II, III
B. I, IV
C. II, IV
D. II, III

Answer: A

Explanation:
According to the principles of the Basel II Accord, the implementation and relative weights of the elements of the operational risk framework depend on the culture of the financial institution (I), regulatory drivers (II), and business drivers (III). The bank's reporting currency (IV) is not relevant to the implementation of the operational risk framework under Basel II.
References:Basel II Accord principles on operational risk.

NEW QUESTION # 101
Which one of the following is a typical reason why a bank's loan loss reserves differ from expected credit losses and normally exceed expected losses?

A. Expected vs. incurred risk
B. Forward-view period
C. Write-down versus financial loss
D. Funded commitments

Answer: A

Explanation:
Comprehensive and Detailed In-Depth Explanation:
Loan loss reserves (LLR) are provisions for expected credit losses (ECL), but under traditional accounting (e.
g., IAS 39), they were based on incurred losses (losses already evident), not forward-looking ECL as per IFRS 9 or CECL. Historically, LLR often exceeded ECL because banks conservatively reserved for incurred losses plus a buffer, reflecting a lag between expected and realized risk. Option C ("expected vs. incurred risk") captures this distinction. Option A (funded commitments) affects exposure, not reserves. Option B (forward-view period) applies to IFRS 9 ECL, not why reserves exceed ECL. Option D (write-down vs.
financial loss) is unrelated to reserve levels. Basel II and GARP clarify this accounting vs. regulatory tension.
Exact Extract from Official Source:
* BCBS, "Basel II: International Convergence of Capital Measurement and Capital Standards," June
2006, para. 43: "Provisions or loan loss reserves are established to cover expected credit losses, but under certain accounting standards, they reflect incurred losses, often leading to higher reserves than purely expected losses to account for uncertainty."
* GARP FRR Study Notes, Credit Risk Section: "Loan loss reserves traditionally exceed expected credit losses due to the incurred loss model, which contrasts with the forward-looking expected loss approach introduced in newer standards like IFRS 9." Reference:BCBS, "Basel II," para.43; GARP FRR Study Notes, Credit Risk Section.

NEW QUESTION # 102
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