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2016-FRR exam training vce & 2016-FRR dumps pdf & 2016-FRR torrent practice

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With our 2016-FRR study materials, all your agreeable outcomes are no longer dreams for you. And with the aid of our Financial Risk and Regulation (FRR) Series 2016-FRR exam preparation to improve your grade and change your states of life and get amazing changes in career, everything is possible. It all starts from our GARP 2016-FRR learning questions.

Preparing for the GARP 2016-FRR Certification Exam requires a significant investment of time and effort. Candidates are encouraged to study the exam syllabus in detail and to review relevant textbooks, articles, and other resources. Many candidates also choose to attend training courses or workshops offered by GARP or other training providers. In addition, candidates are advised to practice exam-style questions and to develop a strong understanding of the exam format and structure.

The Global Association of Risk Professionals (GARP) is a non-profit organization that focuses on the education and advancement of risk management professionals. One of GARP's primary initiatives is the creation of certification programs that validate individuals' knowledge and expertise in various aspects of risk management. The Financial Risk and Regulation (FRR) Series is one such certification program that focuses on financial risk management and regulatory compliance.

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GARP 2016-FRR Certification Exam is divided into two parts: Part I and Part II. Part I covers foundational knowledge in risk management, while Part II focuses on more advanced topics such as risk measurement, modeling, and regulatory frameworks. Candidates are required to pass both parts of the exam to earn the certification.

GARP Financial Risk and Regulation (FRR) Series Sample Questions (Q229-Q234):

NEW QUESTION # 229
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. 13%
B. 20.5%
C. 10%
D. 16.5%

Answer: B

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 # 230
Counterparty credit risk assessment differs from traditional credit risk assessment in all of the following features EXCEPT:

A. Collateral arrangements are typically static in nature
B. Counterparty risk creates a two-way credit exposure
C. Exposure at default may be negatively correlated to the probability of default
D. Exposures can often be netted

Answer: A

Explanation:
Counterparty credit risk assessment differs from traditional credit risk assessment primarily in the features of exposures being netted, the possibility of negative correlation between exposure at default and the probability of default, and the two-way nature of credit exposure. Collateral arrangements in counterparty credit risk management are typically dynamic, not static, as they can change based on market conditions and the credit quality of the counterparty. Therefore, the feature that does not differ is that collateral arrangements are typically static in nature.

NEW QUESTION # 231
Which one of the following four alternatives correctly identifies the purpose of a clearinghouse in trading activities?

A. Reduction of basis risk and mark-to-market risk
B. Reduction of counterparty risk and liquidity risk
C. Reduction of operational risk and credit risk
D. Reduction of market risk and credit risk

Answer: B

Explanation:
A clearinghouse serves several vital functions in trading activities, mainly focusing on reducing various types of risk:
* Counterparty Risk:
* The clearinghouse acts as an intermediary between buyers and sellers, ensuring that each party fulfills its contractual obligations. This reduces the risk that one party will default.
* Liquidity Risk:
* By centralizing and standardizing transactions, the clearinghouse enhances market liquidity, making it easier to buy and sell without causing significant price changes.
* Operational Risk:
* The clearinghouse standardizes and streamlines the clearing and settlement processes, reducing the risk of errors and delays.
* Credit Risk:
* The clearinghouse requires margin deposits and marks positions to market daily, minimizing credit risk.
Thus, the primary purpose of a clearinghouse is to reduce counterparty and liquidity risk.
ReferencesSource: How Finance Works

NEW QUESTION # 232
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. Seasonality risk
B. Correlation risk
C. Term risk
D. Basis risk

Answer: D

NEW QUESTION # 233
A customer asks a broker employed by AlphaBank to buy Eureka Corporation bonds for her account. While
this trade was executed correctly and the bonds were bought, the trade was mistakenly accounted for as a sell
order. If the price of Eureka Corporation bonds goes up, this trade would result in a significantly larger loss
than if the market had remained stable. However, if the market drops, the customer will benefit from the
incorrect accounting and gain from this trade. This trading scenario can serve as an example that

A. Market risk in this transaction can magnify operational risk.
B. Credit risk in this transaction can magnify operational risk.
C. Strategic risk in this transaction can magnify operational risk.
D. Liquidity risk in this transaction can magnify operational risk.

Answer: A

NEW QUESTION # 234
......

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