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GARP 2016-FRR Paper: Financial Risk and Regulation (FRR) Series - DumpsKing Precise Valid Exam Camp Pdf for your free downloading

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The Global Association of Risk Professionals (GARP) is known for providing the highest quality education and certification programs in the field of risk management. The Financial Risk and Regulation (FRR) Series is one of the most popular and respected certifications offered by GARP. Financial Risk and Regulation (FRR) Series certification is designed to equip professionals with the knowledge and skills required to navigate the constantly changing financial environment.

GARP 2016-FRR Exam covers a wide range of topics related to financial risk and regulation, including market risk, credit risk, operational risk, liquidity risk, and regulatory frameworks and compliance requirements. 2016-FRR exam is designed to be challenging and requires candidates to have a deep understanding of financial risk management and regulation.

GARP Financial Risk and Regulation (FRR) Series Sample Questions (Q87-Q92):

NEW QUESTION # 87
The potential failure of a manufacturer to honor a warranty might be called ____, whereas the potential failure of a borrower to fulfill its payment requirements, which include both the repayment of the amount borrowed, the principal and the contractual interest payments, would be called ___.

A. Market risk; credit risk
B. Performance risk; credit risk
C. Credit risk; performance risk
D. Credit risk; market risk

Answer: B

Explanation:
The potential failure of a manufacturer to honor a warranty is a type of performance risk because it relates to the manufacturer's performance under the terms of the warranty contract. Conversely, the potential failure of a borrower to fulfill its payment requirements, including both the repayment of the amount borrowed (principal) and the contractual interest payments, is known as credit risk. Credit risk specifically deals with the likelihood of a borrower defaulting on their debt obligations.

NEW QUESTION # 88
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. Basel II Accord
B. The Markets in Financial Instruments Directive
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 # 89
Which of the following correctly identifies reasons for collecting internal operational risk event and loss
information?
I. Assessing the risk of specific areas of concern.
II. Evaluating risk events and outcomes.
III. Collecting data for capital modeling.
IV. Getting insight into risk events in other firms in the industry.

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

Answer: D

NEW QUESTION # 90
For non-retail exposures, which one of the following factors must be determined by a bank when using the Foundation Internal Ratings-Based Approach?

A. PD (Probability of Default)
B. LGD (Loss Given Default)
C. M (Maturity)
D. EAD (Exposure at Default)

Answer: A

Explanation:
Comprehensive and Detailed In-Depth Explanation:
Under Basel II's Foundation Internal Ratings-Based (FIRB) Approach for non-retail exposures (e.g., corporate loans), banks are required to estimate the Probability of Default (PD) internally, while the Basel framework provides supervisory estimates for Loss Given Default (LGD), Exposure at Default (EAD), and Maturity (M). PD represents the likelihood of an obligor defaulting within a year and is a key input into the risk-weighted asset (RWA) calculation. The FIRB approach balances bank-specific inputs with standardized parameters, distinguishing it from the Advanced IRB approach, where banks also estimate LGD and EAD.
Reference:BCBS, "Basel II: International Convergence of Capital Measurement and Capital Standards," June
2006, para. 245-250; GARP FRR Study Notes, Credit Risk Section.

NEW QUESTION # 91
A risk manager is considering how to best quantify option price dynamics using mathematical option pricing models. Which of the following variables would most likely serve as an input in these models?
I. Implicit parameter estimate based on observed market prices
II. Estimates of sensitivity of option prices to parameter changes
III. Theoretical option determination based on assumptions

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

Answer: B

Explanation:
Mathematical option pricing models typically use the following variables as inputs:
* I. Implicit parameter estimate based on observed market prices: These are derived from market data to infer parameters such as volatility.
* II. Estimates of sensitivity of option prices to parameter changes: These include Greeks like Delta, Gamma, Theta, etc., which measure the sensitivity of the option's price to various factors.
* III. Theoretical option determination based on assumptions: This involves theoretical calculations based on models like Black-Scholes, which use assumptions about market behavior and asset dynamics.
References:The inputs and methodologies for option pricing models are well-documented in financial literature and can be referenced in the "How Finance Works" document.

NEW QUESTION # 92
......

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