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GARP Updated 2016-FRR Exam Questions and Answers by ianis

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GARP 2016-FRR Exam Overview :

Exam Name: Financial Risk and Regulation (FRR) Series
Exam Code: 2016-FRR Dumps
Vendor: GARP Certification: Financial Risk and Regulation
Questions: 387 Q&A's Shared By: ianis
Question 92

Suppose Delta Bank enters into a number of long-term commercial and retail loans at fixed rate prevailing at the time the loans are originated. If the interest rates rise:

Options:

A.

The bank will have to pay higher interest rates to its depositors and would have to pay higher rates on its debt to the extent the debt interest rate was linked to floating indices, or to the extent the debt used to fund the loans was of a shorter maturity than the loans.

B.

The bank will have to pay higher interest rates to its depositors and would have to pay lower rates on its debt to the extent the debt interest rate was linked to floating indices, or to the extent the debt used to fund the loans was of a shorter maturity than the loans.

C.

The bank will have to pay lower interest rates to its depositors and would have to pay higher rates on its debt to the extent the debt interest rate was linked to floating indices, or to the extent the debt used to fund the loans was of a shorter maturity than the loans.

D.

The bank will have to pay lower interest rates to its depositors and would have to pay lower rates on its debt to the extent the debt interest rate was linked to floating indices, or to the extent the debt used to fund the loans was of a shorter maturity than the loans.

Discussion
Question 93

Which one of the following four statements regarding floating rate bonds is incorrect?

Options:

A.

Floating rate bonds have coupon payments tied to floating interest rates or floating interest rate indexes.

B.

Floating rate bonds typically have less price risk than fixed rate bonds.

C.

Floating rate bonds are very sensitive to changes in interest rates.

D.

Floating rate bonds only have a small degree of interest rate risk.

Discussion
Question 94

To estimate the required risk-adjusted rate of return on a highly volatile energy stock, a risk associate compiled the following statistics:

Risk-free rate = 5%

Beta = 2.5

Market Risk = 8%

Using the Capital Asset Pricing Model, she estimates the rate of return to be equal:

Options:

A.

10%

B.

15%

C.

25%

D.

40%

Discussion
Question 95

According to Basel II what constitutes Tier 1 capital?

Options:

A.

Equity capital and core capital

B.

Profits to reserves and innovative Tier 1 capital

C.

Equity capital and accrued profits to reserves

D.

Core capital and innovative Tier 1 capital.

Discussion
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