Garp dumpskey financial Risk And Regulation 2016-frr Full Course Free by Madina q171 vce pdf

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Exam Name:	Financial Risk and Regulation (FRR) Series
Exam Code:	2016-FRR Dumps
Vendor:	GARP	Certification:	Financial Risk and Regulation
Questions:	342 Q&A's	Shared By:	madina

Question 20

Which one of the following statements correctly identifies risks in foreign exchange forwards?

Options:

Short-term forward price fluctuations are driven by changes in the spot exchange rate, since most inter-country interest rates differentials are significant, and the effect of compounding is large for short periods of time.

Short-term forward price fluctuations are driven by changes in the spot exchange rate, since most inter-country interest rates differentials are small, and the effect of compounding is small for short periods of time.

Long-term forward price fluctuations are driven by changes in the spot exchange rate, since most inter-country interest rates differentials are small, and the effect of compounding is large for short periods of time.

Long-term forward price fluctuations are driven by changes in the spot exchange rate, since most inter-country interest rates differentials are significant, and the effect of compounding is small for short periods of time.

Discussion

Question 21

Which one of the following four formulas correctly identifies the expected loss for all credit instruments?

Options:

Expected Loss = Probability of Default x Loss Given Default x Exposure at Default

Expected Loss = Probability of Default x Loss Given Default + Exposure at Default

Expected Loss = Probability of Default x Loss Given Default - Exposure at Default

Expected Loss = Probability of Default x Loss Given Default / Exposure at Default

Discussion

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Question 22

Which one of the following four statements does identify correctly the relationship between the value of an option and perceived exchange rate volatility?

Options:

With increases in perceived future foreign exchange volatility, the value of all foreign exchange

As the perceived future foreign exchange volatility decreases, the value of all options increases.

As the perceived future foreign exchange volatility increases, the value of all options increases.

Option values can only change due to the factors related to the demand for specific options

Discussion

Question 23

Which one of the following four statements regarding counterparty credit risk is INCORRECT?

Options:

Counterparty credit risk refers to the inability to realize gains in a contract with a counterparty due to its default.

The exposure at default is variable due to fluctuations in swap valuations.

The exposure at default can be negatively correlated to probability of default.