{"id":95702,"date":"2024-12-31T02:00:40","date_gmt":"2024-12-31T02:00:40","guid":{"rendered":"https:\/\/www.dumpsbase.com\/freedumps\/?p=95702"},"modified":"2024-12-31T02:00:40","modified_gmt":"2024-12-31T02:00:40","slug":"garp-2016-frr-dumps-v8-02-reliable-study-materials-for-earning-the-financial-risk-and-regulation-frr-series-certification","status":"publish","type":"post","link":"https:\/\/www.dumpsbase.com\/freedumps\/garp-2016-frr-dumps-v8-02-reliable-study-materials-for-earning-the-financial-risk-and-regulation-frr-series-certification.html","title":{"rendered":"GARP 2016-FRR Dumps (V8.02) &#8211; Reliable Study Materials for Earning the Financial Risk and Regulation (FRR) Series Certification"},"content":{"rendered":"<p>The Financial Risk and Regulation (FRR) Series (2016-FRR) is ideal for finance professionals working in risk management, auditing, accounting, consulting, compliance, IT, and insurance. It illustrates how financial risk impacts assets, institutions, systems, and the global financial infrastructure. Are you preparing for the Financial Risk and Regulation (FRR) Series certification exam to advance your career? DumpsBase offers GARP 2016-FRR dumps (V8.02) as an efficient study solution. These dumps include authentic 2016-FRR exam questions with accurate answers, helping you practice with real-world scenarios and familiarize yourself with the exam format. Our 2016-FRR dumps are designed to help you prepare effectively and increase your chances of exam success. Whether you&#8217;re pursuing the FRR Series certification or expanding your knowledge, DumpsBase&#8217;s GARP 2016-FRR dumps (V8.02) provide the tools you need. With these exam dumps, you can pass the exam confidently and enhance your professional opportunities.<\/p>\n<h2>Financial Risk and Regulation (FRR) Series <em><span style=\"background-color: #00ff00;\">2016-FRR Free Dumps are Below<\/span><\/em>:<\/h2>\n<script>\n\t  window.fbAsyncInit = function() {\n\t    FB.init({\n\t      appId            : '622169541470367',\n\t      autoLogAppEvents : true,\n\t      xfbml            : true,\n\t      version          : 'v3.1'\n\t    });\n\t  };\n\t\n\t  (function(d, s, id){\n\t     var js, fjs = d.getElementsByTagName(s)[0];\n\t     if (d.getElementById(id)) {return;}\n\t     js = d.createElement(s); js.id = id;\n\t     js.src = \"https:\/\/connect.facebook.net\/en_US\/sdk.js\";\n\t     fjs.parentNode.insertBefore(js, fjs);\n\t   }(document, 'script', 'facebook-jssdk'));\n\t<\/script><script type=\"text\/javascript\" >\ndocument.addEventListener(\"DOMContentLoaded\", function(event) { \nif(!window.jQuery) alert(\"The important jQuery library is not properly loaded in your site. Your WordPress theme is probably missing the essential wp_head() call. You can switch to another theme and you will see that the plugin works fine and this notice disappears. If you are still not sure what to do you can contact us for help.\");\n});\n<\/script>  \n  \n<div  id=\"watupro_quiz\" class=\"quiz-area single-page-quiz\">\n<p id=\"submittingExam9324\" style=\"display:none;text-align:center;\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.dumpsbase.com\/freedumps\/wp-content\/plugins\/watupro\/img\/loading.gif\" width=\"16\" height=\"16\"><\/p>\n\n<div class=\"watupro-exam-description\" id=\"description-quiz-9324\"><\/div>\n\n<form action=\"\" method=\"post\" class=\"quiz-form\" id=\"quiz-9324\"  enctype=\"multipart\/form-data\" >\n<div class='watu-question ' id='question-1' style=';'><div id='questionWrap-1'  class='   watupro-question-id-371842'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>1. <\/span>According to a Moody's study, the most important drivers of the loss given default historically have been all of the following EXCEPT: <br \/>\r<br>I. Debt type and seniority <br \/>\r<br>II. Macroeconomic environment <br \/>\r<br>III. Obligor asset type <br \/>\r<br>IV. Recourse<\/div><input type='hidden' name='question_id[]' id='qID_1' value='371842' \/><input type='hidden' id='answerType371842' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371842[]' id='answer-id-1447563' class='answer   answerof-371842 ' value='1447563'   \/><label for='answer-id-1447563' id='answer-label-1447563' class=' answer'><span>I<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371842[]' id='answer-id-1447564' class='answer   answerof-371842 ' value='1447564'   \/><label for='answer-id-1447564' id='answer-label-1447564' class=' answer'><span>II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371842[]' id='answer-id-1447565' class='answer   answerof-371842 ' value='1447565'   \/><label for='answer-id-1447565' id='answer-label-1447565' class=' answer'><span>I, II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371842[]' id='answer-id-1447566' class='answer   answerof-371842 ' value='1447566'   \/><label for='answer-id-1447566' id='answer-label-1447566' class=' answer'><span>III, IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-2' style=';'><div id='questionWrap-2'  class='   watupro-question-id-371843'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>2. <\/span>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. <br \/>\r<br>What interest rate should Alpha Bank charge on the no-payment loan to Delta Industrial Machinery Corporation?<\/div><input type='hidden' name='question_id[]' id='qID_2' value='371843' \/><input type='hidden' id='answerType371843' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371843[]' id='answer-id-1447567' class='answer   answerof-371843 ' value='1447567'   \/><label for='answer-id-1447567' id='answer-label-1447567' class=' answer'><span>8%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371843[]' id='answer-id-1447568' class='answer   answerof-371843 ' value='1447568'   \/><label for='answer-id-1447568' id='answer-label-1447568' class=' answer'><span>9%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371843[]' id='answer-id-1447569' class='answer   answerof-371843 ' value='1447569'   \/><label for='answer-id-1447569' id='answer-label-1447569' class=' answer'><span>10%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371843[]' id='answer-id-1447570' class='answer   answerof-371843 ' value='1447570'   \/><label for='answer-id-1447570' id='answer-label-1447570' class=' answer'><span>12%<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-3' style=';'><div id='questionWrap-3'  class='   watupro-question-id-371844'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>3. <\/span>Which one of the following four features is NOT a typical characteristic of futures contracts?<\/div><input type='hidden' name='question_id[]' id='qID_3' value='371844' \/><input type='hidden' id='answerType371844' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371844[]' id='answer-id-1447571' class='answer   answerof-371844 ' value='1447571'   \/><label for='answer-id-1447571' id='answer-label-1447571' class=' answer'><span>Fixed notional amount per contract<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371844[]' id='answer-id-1447572' class='answer   answerof-371844 ' value='1447572'   \/><label for='answer-id-1447572' id='answer-label-1447572' class=' answer'><span>Fixed dates for delivery<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371844[]' id='answer-id-1447573' class='answer   answerof-371844 ' value='1447573'   \/><label for='answer-id-1447573' id='answer-label-1447573' class=' answer'><span>Traded Over-the-counter only<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371844[]' id='answer-id-1447574' class='answer   answerof-371844 ' value='1447574'   \/><label for='answer-id-1447574' id='answer-label-1447574' class=' answer'><span>Daily margin calls<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-4' style=';'><div id='questionWrap-4'  class='   watupro-question-id-371845'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>4. <\/span>A credit associate extending a loan to an obligor suspects that the obligor may change his behavior after the loan has been originated. The obligor in this case may use the loan proceeds for purposes not sanctioned by the lender, thereby increasing the risk of default. Hence, the credit associate must estimate the probability of default based on the assumptions about the applicability of the following tendency to this lending situation:<\/div><input type='hidden' name='question_id[]' id='qID_4' value='371845' \/><input type='hidden' id='answerType371845' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371845[]' id='answer-id-1447575' class='answer   answerof-371845 ' value='1447575'   \/><label for='answer-id-1447575' id='answer-label-1447575' class=' answer'><span>Speculation<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371845[]' id='answer-id-1447576' class='answer   answerof-371845 ' value='1447576'   \/><label for='answer-id-1447576' id='answer-label-1447576' class=' answer'><span>Short bias<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371845[]' id='answer-id-1447577' class='answer   answerof-371845 ' value='1447577'   \/><label for='answer-id-1447577' id='answer-label-1447577' class=' answer'><span>Moral hazard<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371845[]' id='answer-id-1447578' class='answer   answerof-371845 ' value='1447578'   \/><label for='answer-id-1447578' id='answer-label-1447578' class=' answer'><span>Adverse selection<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-5' style=';'><div id='questionWrap-5'  class='   watupro-question-id-371846'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>5. <\/span>Which one of the following four statements about hedging is INCORRECT?<\/div><input type='hidden' name='question_id[]' id='qID_5' value='371846' \/><input type='hidden' id='answerType371846' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371846[]' id='answer-id-1447579' class='answer   answerof-371846 ' value='1447579'   \/><label for='answer-id-1447579' id='answer-label-1447579' class=' answer'><span>Traders can hedge their risks by taking an appropriate position in the underlying instrument.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371846[]' id='answer-id-1447580' class='answer   answerof-371846 ' value='1447580'   \/><label for='answer-id-1447580' id='answer-label-1447580' class=' answer'><span>Traders can hedge their portfolio risks by taking a position in a different instrument.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371846[]' id='answer-id-1447581' class='answer   answerof-371846 ' value='1447581'   \/><label for='answer-id-1447581' id='answer-label-1447581' class=' answer'><span>For a fully hedged portfolio, any changes in markets prices will typically produce significant changes in the market value of the portfolio.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371846[]' id='answer-id-1447582' class='answer   answerof-371846 ' value='1447582'   \/><label for='answer-id-1447582' id='answer-label-1447582' class=' answer'><span>A large number of hedge positions is generally required to match the underlying transaction \r\ncompletely.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-6' style=';'><div id='questionWrap-6'  class='   watupro-question-id-371847'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>6. <\/span>Which one of the following four statements regarding bank's exposure to credit and default risk is INCORRECT?<\/div><input type='hidden' name='question_id[]' id='qID_6' value='371847' \/><input type='hidden' id='answerType371847' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371847[]' id='answer-id-1447583' class='answer   answerof-371847 ' value='1447583'   \/><label for='answer-id-1447583' id='answer-label-1447583' class=' answer'><span>The more the bank diversifies its credit portfolio, the better spread its credit risks become.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371847[]' id='answer-id-1447584' class='answer   answerof-371847 ' value='1447584'   \/><label for='answer-id-1447584' id='answer-label-1447584' class=' answer'><span>In debt management, the value of any loan exposure will change typically in a fashion similar the same way that an equity investment can.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371847[]' id='answer-id-1447585' class='answer   answerof-371847 ' value='1447585'   \/><label for='answer-id-1447585' id='answer-label-1447585' class=' answer'><span>In debt management, the goal is to minimize the effect of any defaults.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371847[]' id='answer-id-1447586' class='answer   answerof-371847 ' value='1447586'   \/><label for='answer-id-1447586' id='answer-label-1447586' class=' answer'><span>Default risk cannot be hedged away fully, and it will always exist for the holder of the credit or for the \r\nperson insuring against the credit or default event.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-7' style=';'><div id='questionWrap-7'  class='   watupro-question-id-371848'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>7. <\/span>Which of the following attributes are typical for early models of statistical credit analysis?<\/div><input type='hidden' name='question_id[]' id='qID_7' value='371848' \/><input type='hidden' id='answerType371848' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371848[]' id='answer-id-1447587' class='answer   answerof-371848 ' value='1447587'   \/><label for='answer-id-1447587' id='answer-label-1447587' class=' answer'><span>These models assumed the default of any obligor was independent of the default of any other.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371848[]' id='answer-id-1447588' class='answer   answerof-371848 ' value='1447588'   \/><label for='answer-id-1447588' id='answer-label-1447588' class=' answer'><span>The underlying default assumptions were analytically inconvenient.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371848[]' id='answer-id-1447589' class='answer   answerof-371848 ' value='1447589'   \/><label for='answer-id-1447589' id='answer-label-1447589' class=' answer'><span>The underlying default assumptions failed to develop relatively simple formulas for the determination of portfolio credit risk.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371848[]' id='answer-id-1447590' class='answer   answerof-371848 ' value='1447590'   \/><label for='answer-id-1447590' id='answer-label-1447590' class=' answer'><span>These models effectively incorporated herd behavior.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-8' style=';'><div id='questionWrap-8'  class='   watupro-question-id-371849'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>8. <\/span>Counterparty credit risk assessment differs from traditional credit risk assessment in all of the following features EXCEPT:<\/div><input type='hidden' name='question_id[]' id='qID_8' value='371849' \/><input type='hidden' id='answerType371849' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371849[]' id='answer-id-1447591' class='answer   answerof-371849 ' value='1447591'   \/><label for='answer-id-1447591' id='answer-label-1447591' class=' answer'><span>Exposures can often be netted<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371849[]' id='answer-id-1447592' class='answer   answerof-371849 ' value='1447592'   \/><label for='answer-id-1447592' id='answer-label-1447592' class=' answer'><span>Exposure at default may be negatively correlated to the probability of default<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371849[]' id='answer-id-1447593' class='answer   answerof-371849 ' value='1447593'   \/><label for='answer-id-1447593' id='answer-label-1447593' class=' answer'><span>Counterparty risk creates a two-way credit exposure<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371849[]' id='answer-id-1447594' class='answer   answerof-371849 ' value='1447594'   \/><label for='answer-id-1447594' id='answer-label-1447594' class=' answer'><span>Collateral arrangements are typically static in nature<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-9' style=';'><div id='questionWrap-9'  class='   watupro-question-id-371850'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>9. <\/span>To quantify the aggregate average loss for the credit portfolio and its possible constituent subportfolios, a credit portfolio manager should use the following metric:<\/div><input type='hidden' name='question_id[]' id='qID_9' value='371850' \/><input type='hidden' id='answerType371850' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371850[]' id='answer-id-1447595' class='answer   answerof-371850 ' value='1447595'   \/><label for='answer-id-1447595' id='answer-label-1447595' class=' answer'><span>Credit VaR<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371850[]' id='answer-id-1447596' class='answer   answerof-371850 ' value='1447596'   \/><label for='answer-id-1447596' id='answer-label-1447596' class=' answer'><span>Expected loss<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371850[]' id='answer-id-1447597' class='answer   answerof-371850 ' value='1447597'   \/><label for='answer-id-1447597' id='answer-label-1447597' class=' answer'><span>Unexpected loss<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371850[]' id='answer-id-1447598' class='answer   answerof-371850 ' value='1447598'   \/><label for='answer-id-1447598' id='answer-label-1447598' class=' answer'><span>Factor sensitivity<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-10' style=';'><div id='questionWrap-10'  class='   watupro-question-id-371851'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>10. <\/span>Bank Sigma has an opportunity to do a securitization deal for a credit card company, but has to retain a portion of the residual risk of the deal with an estimated VaR of $8 MM. Its fees for the deal are $2 MM, and the short-term financing costs are $600,000. <br \/>\r<br>What would be the RAROC for this transaction?<\/div><input type='hidden' name='question_id[]' id='qID_10' value='371851' \/><input type='hidden' id='answerType371851' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371851[]' id='answer-id-1447599' class='answer   answerof-371851 ' value='1447599'   \/><label for='answer-id-1447599' id='answer-label-1447599' class=' answer'><span>25%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371851[]' id='answer-id-1447600' class='answer   answerof-371851 ' value='1447600'   \/><label for='answer-id-1447600' id='answer-label-1447600' class=' answer'><span>17.5%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371851[]' id='answer-id-1447601' class='answer   answerof-371851 ' value='1447601'   \/><label for='answer-id-1447601' id='answer-label-1447601' class=' answer'><span>33%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371851[]' id='answer-id-1447602' class='answer   answerof-371851 ' value='1447602'   \/><label for='answer-id-1447602' id='answer-label-1447602' class=' answer'><span>12%<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-11' style=';'><div id='questionWrap-11'  class='   watupro-question-id-371852'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>11. <\/span>Financial regulators in a European country are considering banning trading in highly complex derivative instruments that are not settled through a centralized clearinghouse. <br \/>\r<br>This ban can result in: <br \/>\r<br>I. The value of the country's currency dropping <br \/>\r<br>II. Counterparties involved in trading of these derivative instruments failing to fulfill their obligations <br \/>\r<br>III. The business model relying on these instruments failing <br \/>\r<br>IV. Certain activities becoming illegal<\/div><input type='hidden' name='question_id[]' id='qID_11' value='371852' \/><input type='hidden' id='answerType371852' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371852[]' id='answer-id-1447603' class='answer   answerof-371852 ' value='1447603'   \/><label for='answer-id-1447603' id='answer-label-1447603' class=' answer'><span>I, II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371852[]' id='answer-id-1447604' class='answer   answerof-371852 ' value='1447604'   \/><label for='answer-id-1447604' id='answer-label-1447604' class=' answer'><span>II, III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371852[]' id='answer-id-1447605' class='answer   answerof-371852 ' value='1447605'   \/><label for='answer-id-1447605' id='answer-label-1447605' class=' answer'><span>I, IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371852[]' id='answer-id-1447606' class='answer   answerof-371852 ' value='1447606'   \/><label for='answer-id-1447606' id='answer-label-1447606' class=' answer'><span>II, III, IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-12' style=';'><div id='questionWrap-12'  class='   watupro-question-id-371853'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>12. <\/span>A bank has a large number of auto loans and would prefer to sell them to raise cash for more funding. However, selling individual auto loans is difficult. <br \/>\r<br>What could the bank do?<\/div><input type='hidden' name='question_id[]' id='qID_12' value='371853' \/><input type='hidden' id='answerType371853' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371853[]' id='answer-id-1447607' class='answer   answerof-371853 ' value='1447607'   \/><label for='answer-id-1447607' id='answer-label-1447607' class=' answer'><span>Package the loans into a securitized vehicle and sell the low risk portion of the portfolio.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371853[]' id='answer-id-1447608' class='answer   answerof-371853 ' value='1447608'   \/><label for='answer-id-1447608' id='answer-label-1447608' class=' answer'><span>Obtain a stronger credit rating so that the bank could borrow at a cheaper rate.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371853[]' id='answer-id-1447609' class='answer   answerof-371853 ' value='1447609'   \/><label for='answer-id-1447609' id='answer-label-1447609' class=' answer'><span>Set up a marketing team to sell individual loans to investors.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371853[]' id='answer-id-1447610' class='answer   answerof-371853 ' value='1447610'   \/><label for='answer-id-1447610' id='answer-label-1447610' class=' answer'><span>Merge with another bank.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-13' style=';'><div id='questionWrap-13'  class='   watupro-question-id-371854'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>13. <\/span>What are the add-on losses faced by a bank that is going bankrupt? <br \/>\r<br>I. The discount accepted by the bank for selling its assets in a fire sale. <br \/>\r<br>II. The increased cost of funding liabilities in a financially distressed situation. <br \/>\r<br>III. The reduction in the present value of future growth opportunities. <br \/>\r<br>IV. Loss of goodwill and intangible assets.<\/div><input type='hidden' name='question_id[]' id='qID_13' value='371854' \/><input type='hidden' id='answerType371854' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371854[]' id='answer-id-1447611' class='answer   answerof-371854 ' value='1447611'   \/><label for='answer-id-1447611' id='answer-label-1447611' class=' answer'><span>I, II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371854[]' id='answer-id-1447612' class='answer   answerof-371854 ' value='1447612'   \/><label for='answer-id-1447612' id='answer-label-1447612' class=' answer'><span>II, III, IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371854[]' id='answer-id-1447613' class='answer   answerof-371854 ' value='1447613'   \/><label for='answer-id-1447613' id='answer-label-1447613' class=' answer'><span>III, IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371854[]' id='answer-id-1447614' class='answer   answerof-371854 ' value='1447614'   \/><label for='answer-id-1447614' id='answer-label-1447614' class=' answer'><span>I, II, III, I<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-14' style=';'><div id='questionWrap-14'  class='   watupro-question-id-371855'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>14. <\/span>In additional to the commodity-specific risks, which of the following risks represent the main commodity derivative risks? <br \/>\r<br>I. Basis <br \/>\r<br>II. Term <br \/>\r<br>III. Correlation <br \/>\r<br>IV. Seasonality<\/div><input type='hidden' name='question_id[]' id='qID_14' value='371855' \/><input type='hidden' id='answerType371855' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371855[]' id='answer-id-1447615' class='answer   answerof-371855 ' value='1447615'   \/><label for='answer-id-1447615' id='answer-label-1447615' class=' answer'><span>I, II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371855[]' id='answer-id-1447616' class='answer   answerof-371855 ' value='1447616'   \/><label for='answer-id-1447616' id='answer-label-1447616' class=' answer'><span>II, III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371855[]' id='answer-id-1447617' class='answer   answerof-371855 ' value='1447617'   \/><label for='answer-id-1447617' id='answer-label-1447617' class=' answer'><span>I, IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371855[]' id='answer-id-1447618' class='answer   answerof-371855 ' value='1447618'   \/><label for='answer-id-1447618' id='answer-label-1447618' class=' answer'><span>I, II, III, IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-15' style=';'><div id='questionWrap-15'  class='   watupro-question-id-371856'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>15. <\/span>Which of the following are conclusions that could be drawn from the shape of the statistical distribution of losses that a bank might incur over a future time period? <br \/>\r<br>I. In most years a bank would look more profitable than it will be on average. <br \/>\r<br>II. Most of the time a sufficiently well capitalized bank will appear over-capitalized. <br \/>\r<br>III. Bad years do not come along very often, but when they do they lead to enormous losses.<\/div><input type='hidden' name='question_id[]' id='qID_15' value='371856' \/><input type='hidden' id='answerType371856' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371856[]' id='answer-id-1447619' class='answer   answerof-371856 ' value='1447619'   \/><label for='answer-id-1447619' id='answer-label-1447619' class=' answer'><span>I, II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371856[]' id='answer-id-1447620' class='answer   answerof-371856 ' value='1447620'   \/><label for='answer-id-1447620' id='answer-label-1447620' class=' answer'><span>I, III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371856[]' id='answer-id-1447621' class='answer   answerof-371856 ' value='1447621'   \/><label for='answer-id-1447621' id='answer-label-1447621' class=' answer'><span>II, III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371856[]' id='answer-id-1447622' class='answer   answerof-371856 ' value='1447622'   \/><label for='answer-id-1447622' id='answer-label-1447622' class=' answer'><span>I, II, III<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-16' style=';'><div id='questionWrap-16'  class='   watupro-question-id-371857'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>16. <\/span>Bank Muri has $4 million in cash and $5 million in loans coming due tomorrow with an expected default rate of 1%. The proceeds will be deposited overnight. The bank owes $ 9 million on a securities purchase that settles in two days and pays off $8 million in commercial paper in three days that is not expected to renew. On day 2, $1 million in loans is coming in with an expected default rate of 1% and on day 3, $2 million in loans is coming in with expected default rate of 2%. <br \/>\r<br>How much should the bank plan to raise in order to avoid liquidity problems?<\/div><input type='hidden' name='question_id[]' id='qID_16' value='371857' \/><input type='hidden' id='answerType371857' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371857[]' id='answer-id-1447623' class='answer   answerof-371857 ' value='1447623'   \/><label for='answer-id-1447623' id='answer-label-1447623' class=' answer'><span>$500 million<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371857[]' id='answer-id-1447624' class='answer   answerof-371857 ' value='1447624'   \/><label for='answer-id-1447624' id='answer-label-1447624' class=' answer'><span>$510 million<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371857[]' id='answer-id-1447625' class='answer   answerof-371857 ' value='1447625'   \/><label for='answer-id-1447625' id='answer-label-1447625' class=' answer'><span>$508 million<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371857[]' id='answer-id-1447626' class='answer   answerof-371857 ' value='1447626'   \/><label for='answer-id-1447626' id='answer-label-1447626' class=' answer'><span>$550 million<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-17' style=';'><div id='questionWrap-17'  class='   watupro-question-id-371858'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>17. <\/span>An endowment asset manager with a focus on long\/short equity strategies is evaluating the risks of an equity portfolio. <br \/>\r<br>Which of the following risk types does the asset manager need to consider when evaluating her diversified equity portfolio? <br \/>\r<br>I. Company-specific projected earnings and earnings risk <br \/>\r<br>II. Aggregate earnings expectations <br \/>\r<br>III. Market liquidity <br \/>\r<br>IV. Individual asset volatility<\/div><input type='hidden' name='question_id[]' id='qID_17' value='371858' \/><input type='hidden' id='answerType371858' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371858[]' id='answer-id-1447627' class='answer   answerof-371858 ' value='1447627'   \/><label for='answer-id-1447627' id='answer-label-1447627' class=' answer'><span>I<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371858[]' id='answer-id-1447628' class='answer   answerof-371858 ' value='1447628'   \/><label for='answer-id-1447628' id='answer-label-1447628' class=' answer'><span>I, IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371858[]' id='answer-id-1447629' class='answer   answerof-371858 ' value='1447629'   \/><label for='answer-id-1447629' id='answer-label-1447629' class=' answer'><span>II, III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371858[]' id='answer-id-1447630' class='answer   answerof-371858 ' value='1447630'   \/><label for='answer-id-1447630' id='answer-label-1447630' class=' answer'><span>I, II, IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-18' style=';'><div id='questionWrap-18'  class='   watupro-question-id-371859'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>18. <\/span>As Japan ___ its budget deficits and ___ its dependence on debt, the Japanese currency, JPY, would ___ in value against other currencies.<\/div><input type='hidden' name='question_id[]' id='qID_18' value='371859' \/><input type='hidden' id='answerType371859' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371859[]' id='answer-id-1447631' class='answer   answerof-371859 ' value='1447631'   \/><label for='answer-id-1447631' id='answer-label-1447631' class=' answer'><span>Reduces, reduces, appreciate<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371859[]' id='answer-id-1447632' class='answer   answerof-371859 ' value='1447632'   \/><label for='answer-id-1447632' id='answer-label-1447632' class=' answer'><span>Reduces, reduces, depreciate<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371859[]' id='answer-id-1447633' class='answer   answerof-371859 ' value='1447633'   \/><label for='answer-id-1447633' id='answer-label-1447633' class=' answer'><span>Increases, reduces, appreciate<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371859[]' id='answer-id-1447634' class='answer   answerof-371859 ' value='1447634'   \/><label for='answer-id-1447634' id='answer-label-1447634' class=' answer'><span>Reduces, increases, depreciate<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-19' style=';'><div id='questionWrap-19'  class='   watupro-question-id-371860'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>19. <\/span>An asset-sensitive bank will have a ___ cumulative gap and will benefit from ___ interest rates.<\/div><input type='hidden' name='question_id[]' id='qID_19' value='371860' \/><input type='hidden' id='answerType371860' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371860[]' id='answer-id-1447635' class='answer   answerof-371860 ' value='1447635'   \/><label for='answer-id-1447635' id='answer-label-1447635' class=' answer'><span>Positive; dropping<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371860[]' id='answer-id-1447636' class='answer   answerof-371860 ' value='1447636'   \/><label for='answer-id-1447636' id='answer-label-1447636' class=' answer'><span>Positive; rising<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371860[]' id='answer-id-1447637' class='answer   answerof-371860 ' value='1447637'   \/><label for='answer-id-1447637' id='answer-label-1447637' class=' answer'><span>Negative; dropping<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371860[]' id='answer-id-1447638' class='answer   answerof-371860 ' value='1447638'   \/><label for='answer-id-1447638' id='answer-label-1447638' class=' answer'><span>Negative; rising<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-20' style=';'><div id='questionWrap-20'  class='   watupro-question-id-371861'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>20. <\/span>A risk associate responsible for the operational risk function wants to evaluate the upward reporting governance structure and to assess its critical features. <br \/>\r<br>Which one of the four attributes does not represent a critical feature of the upward reporting governance structure?<\/div><input type='hidden' name='question_id[]' id='qID_20' value='371861' \/><input type='hidden' id='answerType371861' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371861[]' id='answer-id-1447639' class='answer   answerof-371861 ' value='1447639'   \/><label for='answer-id-1447639' id='answer-label-1447639' class=' answer'><span>Independence<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371861[]' id='answer-id-1447640' class='answer   answerof-371861 ' value='1447640'   \/><label for='answer-id-1447640' id='answer-label-1447640' class=' answer'><span>Importance<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371861[]' id='answer-id-1447641' class='answer   answerof-371861 ' value='1447641'   \/><label for='answer-id-1447641' id='answer-label-1447641' class=' answer'><span>Relevance<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371861[]' id='answer-id-1447642' class='answer   answerof-371861 ' value='1447642'   \/><label for='answer-id-1447642' id='answer-label-1447642' class=' answer'><span>Security<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-21' style=';'><div id='questionWrap-21'  class='   watupro-question-id-371862'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>21. <\/span>The market risk manager of SigmaBank is concerned with the value of the assets in the bank's trading book. <br \/>\r<br>Which one of the four following positions would most likely be not included in that book?<\/div><input type='hidden' name='question_id[]' id='qID_21' value='371862' \/><input type='hidden' id='answerType371862' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371862[]' id='answer-id-1447643' class='answer   answerof-371862 ' value='1447643'   \/><label for='answer-id-1447643' id='answer-label-1447643' class=' answer'><span>10,000 shares of IBM worth $10,000,000.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371862[]' id='answer-id-1447644' class='answer   answerof-371862 ' value='1447644'   \/><label for='answer-id-1447644' id='answer-label-1447644' class=' answer'><span>$10,000,000 loan to IBM worth $9,800,000.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371862[]' id='answer-id-1447645' class='answer   answerof-371862 ' value='1447645'   \/><label for='answer-id-1447645' id='answer-label-1447645' class=' answer'><span>$10,000,000 bond issued by IBM worth $11,000,000.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371862[]' id='answer-id-1447646' class='answer   answerof-371862 ' value='1447646'   \/><label for='answer-id-1447646' id='answer-label-1447646' class=' answer'><span>300,000 options on IBM shares worth $10,000,000.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-22' style=';'><div id='questionWrap-22'  class='   watupro-question-id-371863'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>22. <\/span>Modified duration of a bond measures:<\/div><input type='hidden' name='question_id[]' id='qID_22' value='371863' \/><input type='hidden' id='answerType371863' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371863[]' id='answer-id-1447647' class='answer   answerof-371863 ' value='1447647'   \/><label for='answer-id-1447647' id='answer-label-1447647' class=' answer'><span>The change in value of a bond when yields increase by 1 basis point.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371863[]' id='answer-id-1447648' class='answer   answerof-371863 ' value='1447648'   \/><label for='answer-id-1447648' id='answer-label-1447648' class=' answer'><span>The percentage change in a bond price when yields increase by 1 basis point.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371863[]' id='answer-id-1447649' class='answer   answerof-371863 ' value='1447649'   \/><label for='answer-id-1447649' id='answer-label-1447649' class=' answer'><span>The present value of the future cash flows of a bond calculated at a yield equal to 1%.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371863[]' id='answer-id-1447650' class='answer   answerof-371863 ' value='1447650'   \/><label for='answer-id-1447650' id='answer-label-1447650' class=' answer'><span>The percentage change in a bond price when the yields change by 1%.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-23' style=';'><div id='questionWrap-23'  class='   watupro-question-id-371864'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>23. <\/span>Securitization is the process by which banks <br \/>\r<br>I. Issue bonds where the payment of interest and repayment of principal on the bonds depends on the cash flow generated by a pool of bank assets. <br \/>\r<br>II. Issue bonds where the bank has transferred its legal right to payment of interest and repayment of principal to bondholders. <br \/>\r<br>III. Sell illiquid assets.<\/div><input type='hidden' name='question_id[]' id='qID_23' value='371864' \/><input type='hidden' id='answerType371864' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371864[]' id='answer-id-1447651' class='answer   answerof-371864 ' value='1447651'   \/><label for='answer-id-1447651' id='answer-label-1447651' class=' answer'><span>I, II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371864[]' id='answer-id-1447652' class='answer   answerof-371864 ' value='1447652'   \/><label for='answer-id-1447652' id='answer-label-1447652' class=' answer'><span>I<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371864[]' id='answer-id-1447653' class='answer   answerof-371864 ' value='1447653'   \/><label for='answer-id-1447653' id='answer-label-1447653' class=' answer'><span>I, III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371864[]' id='answer-id-1447654' class='answer   answerof-371864 ' value='1447654'   \/><label for='answer-id-1447654' id='answer-label-1447654' class=' answer'><span>I, II, III<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-24' style=';'><div id='questionWrap-24'  class='   watupro-question-id-371865'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>24. <\/span>Typically, which one of the following four option risk measures will be used to determine the number of options to use to hedge the underlying position?<\/div><input type='hidden' name='question_id[]' id='qID_24' value='371865' \/><input type='hidden' id='answerType371865' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371865[]' id='answer-id-1447655' class='answer   answerof-371865 ' value='1447655'   \/><label for='answer-id-1447655' id='answer-label-1447655' class=' answer'><span>Vega<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371865[]' id='answer-id-1447656' class='answer   answerof-371865 ' value='1447656'   \/><label for='answer-id-1447656' id='answer-label-1447656' class=' answer'><span>Rho<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371865[]' id='answer-id-1447657' class='answer   answerof-371865 ' value='1447657'   \/><label for='answer-id-1447657' id='answer-label-1447657' class=' answer'><span>Delta<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371865[]' id='answer-id-1447658' class='answer   answerof-371865 ' value='1447658'   \/><label for='answer-id-1447658' id='answer-label-1447658' class=' answer'><span>Theta<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-25' style=';'><div id='questionWrap-25'  class='   watupro-question-id-371866'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>25. <\/span>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. <br \/>\r<br>If the interest rates rise:<\/div><input type='hidden' name='question_id[]' id='qID_25' value='371866' \/><input type='hidden' id='answerType371866' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371866[]' id='answer-id-1447659' class='answer   answerof-371866 ' value='1447659'   \/><label for='answer-id-1447659' id='answer-label-1447659' class=' answer'><span>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.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371866[]' id='answer-id-1447660' class='answer   answerof-371866 ' value='1447660'   \/><label for='answer-id-1447660' id='answer-label-1447660' class=' answer'><span>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.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371866[]' id='answer-id-1447661' class='answer   answerof-371866 ' value='1447661'   \/><label for='answer-id-1447661' id='answer-label-1447661' class=' answer'><span>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.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371866[]' id='answer-id-1447662' class='answer   answerof-371866 ' value='1447662'   \/><label for='answer-id-1447662' id='answer-label-1447662' class=' answer'><span>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 \r\nfund the loans was of a shorter maturity than the loans.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-26' style=';'><div id='questionWrap-26'  class='   watupro-question-id-371867'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>26. <\/span>In the United States, Which one of the following four options represents the largest component of securitized debt?<\/div><input type='hidden' name='question_id[]' id='qID_26' value='371867' \/><input type='hidden' id='answerType371867' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371867[]' id='answer-id-1447663' class='answer   answerof-371867 ' value='1447663'   \/><label for='answer-id-1447663' id='answer-label-1447663' class=' answer'><span>Education loans<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371867[]' id='answer-id-1447664' class='answer   answerof-371867 ' value='1447664'   \/><label for='answer-id-1447664' id='answer-label-1447664' class=' answer'><span>Credit card loans<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371867[]' id='answer-id-1447665' class='answer   answerof-371867 ' value='1447665'   \/><label for='answer-id-1447665' id='answer-label-1447665' class=' answer'><span>Real estate loans<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371867[]' id='answer-id-1447666' class='answer   answerof-371867 ' value='1447666'   \/><label for='answer-id-1447666' id='answer-label-1447666' class=' answer'><span>Lines of credit<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-27' style=';'><div id='questionWrap-27'  class='   watupro-question-id-371868'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>27. <\/span>Gamma Bank provides a $100,000 loan to Big Bath retail stores at 5% interest rate (paid annually). The loan is collateralized with $55,000. The loan also has an annual expected default rate of 2%, and loss given default at 50%. <br \/>\r<br>In this case, what will the bank's exposure at default (EAD) be?<\/div><input type='hidden' name='question_id[]' id='qID_27' value='371868' \/><input type='hidden' id='answerType371868' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371868[]' id='answer-id-1447667' class='answer   answerof-371868 ' value='1447667'   \/><label for='answer-id-1447667' id='answer-label-1447667' class=' answer'><span>$25,000<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371868[]' id='answer-id-1447668' class='answer   answerof-371868 ' value='1447668'   \/><label for='answer-id-1447668' id='answer-label-1447668' class=' answer'><span>$50,000<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371868[]' id='answer-id-1447669' class='answer   answerof-371868 ' value='1447669'   \/><label for='answer-id-1447669' id='answer-label-1447669' class=' answer'><span>$75,000<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371868[]' id='answer-id-1447670' class='answer   answerof-371868 ' value='1447670'   \/><label for='answer-id-1447670' id='answer-label-1447670' class=' answer'><span>$105,000<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-28' style=';'><div id='questionWrap-28'  class='   watupro-question-id-371869'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>28. <\/span>A large energy company has a recurring foreign currency demands, and seeks to use options with a pay-off based on the average price of the underlying asset on either a few specific chosen dates or all dates within a specific pricing window. <br \/>\r<br>Which one of the following four option types would most likely meet these specific foreign currency demands?<\/div><input type='hidden' name='question_id[]' id='qID_28' value='371869' \/><input type='hidden' id='answerType371869' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371869[]' id='answer-id-1447671' class='answer   answerof-371869 ' value='1447671'   \/><label for='answer-id-1447671' id='answer-label-1447671' class=' answer'><span>American options<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371869[]' id='answer-id-1447672' class='answer   answerof-371869 ' value='1447672'   \/><label for='answer-id-1447672' id='answer-label-1447672' class=' answer'><span>European options<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371869[]' id='answer-id-1447673' class='answer   answerof-371869 ' value='1447673'   \/><label for='answer-id-1447673' id='answer-label-1447673' class=' answer'><span>Asian options<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371869[]' id='answer-id-1447674' class='answer   answerof-371869 ' value='1447674'   \/><label for='answer-id-1447674' id='answer-label-1447674' class=' answer'><span>Chooser options<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-29' style=';'><div id='questionWrap-29'  class='   watupro-question-id-371870'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>29. <\/span>James Johnson manages a bond portfolio with all investment grade bonds. <br \/>\r<br>Adding which of the following bonds would minimize the credit risk of his portfolio?<\/div><input type='hidden' name='question_id[]' id='qID_29' value='371870' \/><input type='hidden' id='answerType371870' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371870[]' id='answer-id-1447675' class='answer   answerof-371870 ' value='1447675'   \/><label for='answer-id-1447675' id='answer-label-1447675' class=' answer'><span>A<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371870[]' id='answer-id-1447676' class='answer   answerof-371870 ' value='1447676'   \/><label for='answer-id-1447676' id='answer-label-1447676' class=' answer'><span>B<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371870[]' id='answer-id-1447677' class='answer   answerof-371870 ' value='1447677'   \/><label for='answer-id-1447677' id='answer-label-1447677' class=' answer'><span>C<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371870[]' id='answer-id-1447678' class='answer   answerof-371870 ' value='1447678'   \/><label for='answer-id-1447678' id='answer-label-1447678' class=' answer'><span>D<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-30' style=';'><div id='questionWrap-30'  class='   watupro-question-id-371871'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>30. <\/span>BetaFin has decided to use the hybrid RCSA approach because it believes that it fits its operational framework. <br \/>\r<br>Which of the following could be reasons to use the hybrid RCSA method? <br \/>\r<br>I. BetaFin has previously created series of RCSA workshops, and the results of these workshops can be used to design the questionnaires. <br \/>\r<br>II. BetaFin believes that using the questionnaire approach should be more useful. <br \/>\r<br>III. BetaFin had used the questionnaire approach successfully for certain businesses and the workshop approach for others. <br \/>\r<br>IV. BetaFin had already implemented a sophisticated RCSA IT-system.<\/div><input type='hidden' name='question_id[]' id='qID_30' value='371871' \/><input type='hidden' id='answerType371871' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371871[]' id='answer-id-1447679' class='answer   answerof-371871 ' value='1447679'   \/><label for='answer-id-1447679' id='answer-label-1447679' class=' answer'><span>I and II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371871[]' id='answer-id-1447680' class='answer   answerof-371871 ' value='1447680'   \/><label for='answer-id-1447680' id='answer-label-1447680' class=' answer'><span>I and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371871[]' id='answer-id-1447681' class='answer   answerof-371871 ' value='1447681'   \/><label for='answer-id-1447681' id='answer-label-1447681' class=' answer'><span>III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371871[]' id='answer-id-1447682' class='answer   answerof-371871 ' value='1447682'   \/><label for='answer-id-1447682' id='answer-label-1447682' class=' answer'><span>II, III, and IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-31' style=';'><div id='questionWrap-31'  class='   watupro-question-id-371872'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>31. <\/span>Interest rate swaps are:<\/div><input type='hidden' name='question_id[]' id='qID_31' value='371872' \/><input type='hidden' id='answerType371872' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371872[]' id='answer-id-1447683' class='answer   answerof-371872 ' value='1447683'   \/><label for='answer-id-1447683' id='answer-label-1447683' class=' answer'><span>Exchange traded derivative contracts that allow banks to take positions in future interest rates.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371872[]' id='answer-id-1447684' class='answer   answerof-371872 ' value='1447684'   \/><label for='answer-id-1447684' id='answer-label-1447684' class=' answer'><span>OTC derivative contracts that allow banks and customers to obtain the risk\/reward profile of long-term interest rates without relying on long-term funding.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371872[]' id='answer-id-1447685' class='answer   answerof-371872 ' value='1447685'   \/><label for='answer-id-1447685' id='answer-label-1447685' class=' answer'><span>Exchange traded derivative contracts that allow banks and customers to obtain the risk\/reward profile of long-term interest rates without having to use long-term funding.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371872[]' id='answer-id-1447686' class='answer   answerof-371872 ' value='1447686'   \/><label for='answer-id-1447686' id='answer-label-1447686' class=' answer'><span>OTC derivative contracts that allow banks to take positions in series of future exchange rates.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-32' style=';'><div id='questionWrap-32'  class='   watupro-question-id-371873'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>32. <\/span>Which one of the following four statements about the relationship between exchange rates and option values is correct?<\/div><input type='hidden' name='question_id[]' id='qID_32' value='371873' \/><input type='hidden' id='answerType371873' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371873[]' id='answer-id-1447687' class='answer   answerof-371873 ' value='1447687'   \/><label for='answer-id-1447687' id='answer-label-1447687' class=' answer'><span>As the dollar appreciates relative to the pound, the right to buy dollars at a fixed pound exchange rate decreases.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371873[]' id='answer-id-1447688' class='answer   answerof-371873 ' value='1447688'   \/><label for='answer-id-1447688' id='answer-label-1447688' class=' answer'><span>As the dollar appreciates relative to the pound, the right to buy dollars at a fixed pound exchange rate increases.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371873[]' id='answer-id-1447689' class='answer   answerof-371873 ' value='1447689'   \/><label for='answer-id-1447689' id='answer-label-1447689' class=' answer'><span>As the dollar depreciates relative to the pound, the right to buy dollars at a fixed pound exchange rate increases.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371873[]' id='answer-id-1447690' class='answer   answerof-371873 ' value='1447690'   \/><label for='answer-id-1447690' id='answer-label-1447690' class=' answer'><span>As the dollar appreciates relative to the pound, the right to sell dollars at a fixed pound exchange \r\nrate increases.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-33' style=';'><div id='questionWrap-33'  class='   watupro-question-id-371874'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>33. <\/span>Which of the following are among the main uses of risk reports? <br \/>\r<br>I. Identification of exceptional situations that require managerial attention. <br \/>\r<br>II. Display the relative risk among different trades. <br \/>\r<br>III. Specify how RAROC will be maximized within the bank. <br \/>\r<br>IV. Estimate the overall risk levels of the bank.<\/div><input type='hidden' name='question_id[]' id='qID_33' value='371874' \/><input type='hidden' id='answerType371874' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371874[]' id='answer-id-1447691' class='answer   answerof-371874 ' value='1447691'   \/><label for='answer-id-1447691' id='answer-label-1447691' class=' answer'><span>I, II and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371874[]' id='answer-id-1447692' class='answer   answerof-371874 ' value='1447692'   \/><label for='answer-id-1447692' id='answer-label-1447692' class=' answer'><span>II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371874[]' id='answer-id-1447693' class='answer   answerof-371874 ' value='1447693'   \/><label for='answer-id-1447693' id='answer-label-1447693' class=' answer'><span>II and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371874[]' id='answer-id-1447694' class='answer   answerof-371874 ' value='1447694'   \/><label for='answer-id-1447694' id='answer-label-1447694' class=' answer'><span>II, III, and IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-34' style=';'><div id='questionWrap-34'  class='   watupro-question-id-371875'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>34. <\/span>AlphaBank's management is evaluating how changes in its business environment could materially impact risk categories. As a result, bank's management decides to implement the structure, which facilitates the discussion in an integrative context, spanning market, credit, and operational risk factors, and encourages transparency and communication between risk disciplines. <br \/>\r<br>Which one of the following four approaches should the management choose to achieve this strategic goal?<\/div><input type='hidden' name='question_id[]' id='qID_34' value='371875' \/><input type='hidden' id='answerType371875' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371875[]' id='answer-id-1447695' class='answer   answerof-371875 ' value='1447695'   \/><label for='answer-id-1447695' id='answer-label-1447695' class=' answer'><span>Regulatory risk management approach<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371875[]' id='answer-id-1447696' class='answer   answerof-371875 ' value='1447696'   \/><label for='answer-id-1447696' id='answer-label-1447696' class=' answer'><span>Enterprise risk management approach<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371875[]' id='answer-id-1447697' class='answer   answerof-371875 ' value='1447697'   \/><label for='answer-id-1447697' id='answer-label-1447697' class=' answer'><span>Scenario-based risk management approach<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371875[]' id='answer-id-1447698' class='answer   answerof-371875 ' value='1447698'   \/><label for='answer-id-1447698' id='answer-label-1447698' class=' answer'><span>Taxonomy-based risk management approach<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-35' style=';'><div id='questionWrap-35'  class='   watupro-question-id-371876'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>35. <\/span>Which of the following assets on the bank's balance sheet has greatest endogenous liquidity risk?<\/div><input type='hidden' name='question_id[]' id='qID_35' value='371876' \/><input type='hidden' id='answerType371876' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371876[]' id='answer-id-1447699' class='answer   answerof-371876 ' value='1447699'   \/><label for='answer-id-1447699' id='answer-label-1447699' class=' answer'><span>A 2-year<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371876[]' id='answer-id-1447700' class='answer   answerof-371876 ' value='1447700'   \/><label for='answer-id-1447700' id='answer-label-1447700' class=' answer'><span>S treasury bond<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371876[]' id='answer-id-1447701' class='answer   answerof-371876 ' value='1447701'   \/><label for='answer-id-1447701' id='answer-label-1447701' class=' answer'><span>A 1-week corporate loan with a AAA rated company<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371876[]' id='answer-id-1447702' class='answer   answerof-371876 ' value='1447702'   \/><label for='answer-id-1447702' id='answer-label-1447702' class=' answer'><span>A 10-year<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371876[]' id='answer-id-1447703' class='answer   answerof-371876 ' value='1447703'   \/><label for='answer-id-1447703' id='answer-label-1447703' class=' answer'><span>S treasury bond<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371876[]' id='answer-id-1447704' class='answer   answerof-371876 ' value='1447704'   \/><label for='answer-id-1447704' id='answer-label-1447704' class=' answer'><span>A 3-year subprime mortgage<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-36' style=';'><div id='questionWrap-36'  class='   watupro-question-id-371877'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>36. <\/span>The potential failure of a manufacturer to honor a warranty might be called ____, whereas the potential <br \/>\r<br>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 ___.<\/div><input type='hidden' name='question_id[]' id='qID_36' value='371877' \/><input type='hidden' id='answerType371877' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371877[]' id='answer-id-1447705' class='answer   answerof-371877 ' value='1447705'   \/><label for='answer-id-1447705' id='answer-label-1447705' class=' answer'><span>Credit risk; market risk<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371877[]' id='answer-id-1447706' class='answer   answerof-371877 ' value='1447706'   \/><label for='answer-id-1447706' id='answer-label-1447706' class=' answer'><span>Market risk; credit risk<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371877[]' id='answer-id-1447707' class='answer   answerof-371877 ' value='1447707'   \/><label for='answer-id-1447707' id='answer-label-1447707' class=' answer'><span>Credit risk; performance risk<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371877[]' id='answer-id-1447708' class='answer   answerof-371877 ' value='1447708'   \/><label for='answer-id-1447708' id='answer-label-1447708' class=' answer'><span>Performance risk; credit risk<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-37' style=';'><div id='questionWrap-37'  class='   watupro-question-id-371878'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>37. <\/span>In hedging transactions, derivatives typically have the following advantages over cash instruments: <br \/>\r<br>I. Lower credit risk <br \/>\r<br>II. Lower funding requirements <br \/>\r<br>III. Lower dealing costs <br \/>\r<br>IV. Lower capital charges<\/div><input type='hidden' name='question_id[]' id='qID_37' value='371878' \/><input type='hidden' id='answerType371878' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371878[]' id='answer-id-1447709' class='answer   answerof-371878 ' value='1447709'   \/><label for='answer-id-1447709' id='answer-label-1447709' class=' answer'><span>I, II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371878[]' id='answer-id-1447710' class='answer   answerof-371878 ' value='1447710'   \/><label for='answer-id-1447710' id='answer-label-1447710' class=' answer'><span>I, III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371878[]' id='answer-id-1447711' class='answer   answerof-371878 ' value='1447711'   \/><label for='answer-id-1447711' id='answer-label-1447711' class=' answer'><span>II, IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371878[]' id='answer-id-1447712' class='answer   answerof-371878 ' value='1447712'   \/><label for='answer-id-1447712' id='answer-label-1447712' class=' answer'><span>I, II, III, IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-38' style=';'><div id='questionWrap-38'  class='   watupro-question-id-371879'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>38. <\/span>Which one of the four following statements about Basis point values is correct? <br \/>\r<br>Basis point value:<\/div><input type='hidden' name='question_id[]' id='qID_38' value='371879' \/><input type='hidden' id='answerType371879' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371879[]' id='answer-id-1447713' class='answer   answerof-371879 ' value='1447713'   \/><label for='answer-id-1447713' id='answer-label-1447713' class=' answer'><span>Is a widely used statistical tool used to measure market risk.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371879[]' id='answer-id-1447714' class='answer   answerof-371879 ' value='1447714'   \/><label for='answer-id-1447714' id='answer-label-1447714' class=' answer'><span>Refers to the change in the value of a fixed income position for a very small change yields.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371879[]' id='answer-id-1447715' class='answer   answerof-371879 ' value='1447715'   \/><label for='answer-id-1447715' id='answer-label-1447715' class=' answer'><span>Is a risk sensitivity measure used to measure the point spread risk in the banking book.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371879[]' id='answer-id-1447716' class='answer   answerof-371879 ' value='1447716'   \/><label for='answer-id-1447716' id='answer-label-1447716' class=' answer'><span>Provides a quick estimate of the sensitivity of the bank's banking book, to increasing volatility in \r\ninterest rates.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-39' style=';'><div id='questionWrap-39'  class='   watupro-question-id-371880'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>39. <\/span>A trader attempts to hold long positions when markets are rising and hold short positions when markets are falling. <br \/>\r<br>Which one of the following four trading styles is she likely to use?<\/div><input type='hidden' name='question_id[]' id='qID_39' value='371880' \/><input type='hidden' id='answerType371880' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371880[]' id='answer-id-1447717' class='answer   answerof-371880 ' value='1447717'   \/><label for='answer-id-1447717' id='answer-label-1447717' class=' answer'><span>Technical trading<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371880[]' id='answer-id-1447718' class='answer   answerof-371880 ' value='1447718'   \/><label for='answer-id-1447718' id='answer-label-1447718' class=' answer'><span>Contrarian trading<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371880[]' id='answer-id-1447719' class='answer   answerof-371880 ' value='1447719'   \/><label for='answer-id-1447719' id='answer-label-1447719' class=' answer'><span>Black box trading<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371880[]' id='answer-id-1447720' class='answer   answerof-371880 ' value='1447720'   \/><label for='answer-id-1447720' id='answer-label-1447720' class=' answer'><span>Market timing trading<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-40' style=';'><div id='questionWrap-40'  class='   watupro-question-id-371881'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>40. <\/span>Which one of the following four statements represents a possible disadvantage of using total return swap to manage equity portfolio risks?<\/div><input type='hidden' name='question_id[]' id='qID_40' value='371881' \/><input type='hidden' id='answerType371881' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371881[]' id='answer-id-1447721' class='answer   answerof-371881 ' value='1447721'   \/><label for='answer-id-1447721' id='answer-label-1447721' class=' answer'><span>Similar to the formal portfolio rebalancing strategy, the total return receiver needs to modify the size of the trading position.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371881[]' id='answer-id-1447722' class='answer   answerof-371881 ' value='1447722'   \/><label for='answer-id-1447722' id='answer-label-1447722' class=' answer'><span>The total return receiver needs to incur the transaction costs of establishing an equity position.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371881[]' id='answer-id-1447723' class='answer   answerof-371881 ' value='1447723'   \/><label for='answer-id-1447723' id='answer-label-1447723' class=' answer'><span>Similar to an equity forward position, the total return receiver does not get paid the dividend.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371881[]' id='answer-id-1447724' class='answer   answerof-371881 ' value='1447724'   \/><label for='answer-id-1447724' id='answer-label-1447724' class=' answer'><span>The total return receiver does not have any voting rights.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-41' style=';'><div id='questionWrap-41'  class='   watupro-question-id-371882'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>41. <\/span>John owns a bond portfolio worth $2 million with duration of 10. <br \/>\r<br>What positions must he take to hedge this portfolio against a small parallel shifts in the term structure.<\/div><input type='hidden' name='question_id[]' id='qID_41' value='371882' \/><input type='hidden' id='answerType371882' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371882[]' id='answer-id-1447725' class='answer   answerof-371882 ' value='1447725'   \/><label for='answer-id-1447725' id='answer-label-1447725' class=' answer'><span>Long position worth $2 million with duration of 10.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371882[]' id='answer-id-1447726' class='answer   answerof-371882 ' value='1447726'   \/><label for='answer-id-1447726' id='answer-label-1447726' class=' answer'><span>Long position worth $20 million with duration of 1.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371882[]' id='answer-id-1447727' class='answer   answerof-371882 ' value='1447727'   \/><label for='answer-id-1447727' id='answer-label-1447727' class=' answer'><span>Short position worth $2 million with duration of 10.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371882[]' id='answer-id-1447728' class='answer   answerof-371882 ' value='1447728'   \/><label for='answer-id-1447728' id='answer-label-1447728' class=' answer'><span>Short position worth $20 million with duration of 1.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-42' style=';'><div id='questionWrap-42'  class='   watupro-question-id-371883'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>42. <\/span>Which of the following statements about the option gamma is correct? <br \/>\r<br>I. Second derivative of the option value with respect to the volatility. <br \/>\r<br>II. Percentage change in option value per percentage change in the price of the underlying instrument. <br \/>\r<br>III. Second derivative of the value function with respect to the price of the underlying instrument. <br \/>\r<br>IV. Rate of change of the option delta with respect to changes in the underlying price.<\/div><input type='hidden' name='question_id[]' id='qID_42' value='371883' \/><input type='hidden' id='answerType371883' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371883[]' id='answer-id-1447729' class='answer   answerof-371883 ' value='1447729'   \/><label for='answer-id-1447729' id='answer-label-1447729' class=' answer'><span>I only<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371883[]' id='answer-id-1447730' class='answer   answerof-371883 ' value='1447730'   \/><label for='answer-id-1447730' id='answer-label-1447730' class=' answer'><span>II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371883[]' id='answer-id-1447731' class='answer   answerof-371883 ' value='1447731'   \/><label for='answer-id-1447731' id='answer-label-1447731' class=' answer'><span>III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371883[]' id='answer-id-1447732' class='answer   answerof-371883 ' value='1447732'   \/><label for='answer-id-1447732' id='answer-label-1447732' class=' answer'><span>II, III, and IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-43' style=';'><div id='questionWrap-43'  class='   watupro-question-id-371884'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>43. <\/span>Which of the following statements depicts a difference between funding liquidity risks and trading liquidity risks?<\/div><input type='hidden' name='question_id[]' id='qID_43' value='371884' \/><input type='hidden' id='answerType371884' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371884[]' id='answer-id-1447733' class='answer   answerof-371884 ' value='1447733'   \/><label for='answer-id-1447733' id='answer-label-1447733' class=' answer'><span>Funding liquidity risks are associated with how fast prices move in the market while trading liquidity risks originate out of bank trades.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371884[]' id='answer-id-1447734' class='answer   answerof-371884 ' value='1447734'   \/><label for='answer-id-1447734' id='answer-label-1447734' class=' answer'><span>Funding liquidity risks are concerned with the ability of the bank to fund deposits withdrawals while trading liquidity risks are concerned with the change in bid-offer spreads of asset values.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371884[]' id='answer-id-1447735' class='answer   answerof-371884 ' value='1447735'   \/><label for='answer-id-1447735' id='answer-label-1447735' class=' answer'><span>Funding liquidity risks are short term risks while trading liquidity risks are longer term risks.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371884[]' id='answer-id-1447736' class='answer   answerof-371884 ' value='1447736'   \/><label for='answer-id-1447736' id='answer-label-1447736' class=' answer'><span>Funding liquidity risks are associated only with the bank assets while trading liquidity risks are \r\nassociated with both assets and liabilities of the bank.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-44' style=';'><div id='questionWrap-44'  class='   watupro-question-id-371885'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>44. <\/span>The retail banking business of BankGamma has an expected P &amp; L of $50 million and a VaR of $100 million. The bank seeks to diversify its revenue, and is considering the opportunity to acquire a credit card business with an expected P &amp; L of $50 million and a VaR of $150 million. <br \/>\r<br>What will be the overall RAROC if the bank acquires the new business?<\/div><input type='hidden' name='question_id[]' id='qID_44' value='371885' \/><input type='hidden' id='answerType371885' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371885[]' id='answer-id-1447737' class='answer   answerof-371885 ' value='1447737'   \/><label for='answer-id-1447737' id='answer-label-1447737' class=' answer'><span>33.3%.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371885[]' id='answer-id-1447738' class='answer   answerof-371885 ' value='1447738'   \/><label for='answer-id-1447738' id='answer-label-1447738' class=' answer'><span>50%.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371885[]' id='answer-id-1447739' class='answer   answerof-371885 ' value='1447739'   \/><label for='answer-id-1447739' id='answer-label-1447739' class=' answer'><span>58%.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371885[]' id='answer-id-1447740' class='answer   answerof-371885 ' value='1447740'   \/><label for='answer-id-1447740' id='answer-label-1447740' class=' answer'><span>72%.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-45' style=';'><div id='questionWrap-45'  class='   watupro-question-id-371886'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>45. <\/span>What are some of the drawbacks of correlation estimates? Which of the following statements identifies major problems with correlation calculations? <br \/>\r<br>I. Correlation estimates are not able to capture increases in factor co-movements in extreme market scenarios. <br \/>\r<br>II. Correlation estimates tend to be unstable. <br \/>\r<br>III. Historical correlations may not forecast future correlations correctly. <br \/>\r<br>IV. Correlation estimates assume normally distributed returns.<\/div><input type='hidden' name='question_id[]' id='qID_45' value='371886' \/><input type='hidden' id='answerType371886' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371886[]' id='answer-id-1447741' class='answer   answerof-371886 ' value='1447741'   \/><label for='answer-id-1447741' id='answer-label-1447741' class=' answer'><span>I and II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371886[]' id='answer-id-1447742' class='answer   answerof-371886 ' value='1447742'   \/><label for='answer-id-1447742' id='answer-label-1447742' class=' answer'><span>I and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371886[]' id='answer-id-1447743' class='answer   answerof-371886 ' value='1447743'   \/><label for='answer-id-1447743' id='answer-label-1447743' class=' answer'><span>I, II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371886[]' id='answer-id-1447744' class='answer   answerof-371886 ' value='1447744'   \/><label for='answer-id-1447744' id='answer-label-1447744' class=' answer'><span>II, III, and IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-46' style=';'><div id='questionWrap-46'  class='   watupro-question-id-371887'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>46. <\/span>A risk associate evaluating his current portfolio of assets and liabilities wants to determine how sensitive this portfolio is to changes in interest rates. <br \/>\r<br>Which one of the following four metrics is typically used for this purpose?<\/div><input type='hidden' name='question_id[]' id='qID_46' value='371887' \/><input type='hidden' id='answerType371887' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371887[]' id='answer-id-1447745' class='answer   answerof-371887 ' value='1447745'   \/><label for='answer-id-1447745' id='answer-label-1447745' class=' answer'><span>Modified duration<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371887[]' id='answer-id-1447746' class='answer   answerof-371887 ' value='1447746'   \/><label for='answer-id-1447746' id='answer-label-1447746' class=' answer'><span>Duration of default<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371887[]' id='answer-id-1447747' class='answer   answerof-371887 ' value='1447747'   \/><label for='answer-id-1447747' id='answer-label-1447747' class=' answer'><span>Effective duration<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371887[]' id='answer-id-1447748' class='answer   answerof-371887 ' value='1447748'   \/><label for='answer-id-1447748' id='answer-label-1447748' class=' answer'><span>Macaulay duration<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-47' style=';'><div id='questionWrap-47'  class='   watupro-question-id-371888'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>47. <\/span>The data available to estimate the statistical distribution of bank losses is difficult to assemble for which of the following reasons? <br \/>\r<br>I. The needed data is vast in quantity. <br \/>\r<br>II. The data requires bringing together significantly different measures of risk. <br \/>\r<br>III. Some risks are difficult to quantify and hence the data might involve subjective elements.<\/div><input type='hidden' name='question_id[]' id='qID_47' value='371888' \/><input type='hidden' id='answerType371888' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371888[]' id='answer-id-1447749' class='answer   answerof-371888 ' value='1447749'   \/><label for='answer-id-1447749' id='answer-label-1447749' class=' answer'><span>I, II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371888[]' id='answer-id-1447750' class='answer   answerof-371888 ' value='1447750'   \/><label for='answer-id-1447750' id='answer-label-1447750' class=' answer'><span>I, III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371888[]' id='answer-id-1447751' class='answer   answerof-371888 ' value='1447751'   \/><label for='answer-id-1447751' id='answer-label-1447751' class=' answer'><span>II, III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371888[]' id='answer-id-1447752' class='answer   answerof-371888 ' value='1447752'   \/><label for='answer-id-1447752' id='answer-label-1447752' class=' answer'><span>I, II, III<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-48' style=';'><div id='questionWrap-48'  class='   watupro-question-id-371889'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>48. <\/span>Which of the following statements about parametric and nonparametric methods for calculating Value-at-risk is correct?<\/div><input type='hidden' name='question_id[]' id='qID_48' value='371889' \/><input type='hidden' id='answerType371889' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371889[]' id='answer-id-1447753' class='answer   answerof-371889 ' value='1447753'   \/><label for='answer-id-1447753' id='answer-label-1447753' class=' answer'><span>Parametric methods generally assume returns are normally distributed, and non-parametric methods make no assumptions about return distributions.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371889[]' id='answer-id-1447754' class='answer   answerof-371889 ' value='1447754'   \/><label for='answer-id-1447754' id='answer-label-1447754' class=' answer'><span>Parametric methods make no assumptions about return distributions, and non-parametric methods assume returns are normally distributed.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371889[]' id='answer-id-1447755' class='answer   answerof-371889 ' value='1447755'   \/><label for='answer-id-1447755' id='answer-label-1447755' class=' answer'><span>Both parametric and nonparametric methods assume returns are normally distributed.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371889[]' id='answer-id-1447756' class='answer   answerof-371889 ' value='1447756'   \/><label for='answer-id-1447756' id='answer-label-1447756' class=' answer'><span>Both parametric and nonparametric methods make no assumptions about return distributions.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-49' style=';'><div id='questionWrap-49'  class='   watupro-question-id-371890'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>49. <\/span>Banks duration match their assets and liabilities to manage their interest risk in their banking book. A bank has $100 million in interest rate sensitive assets and $100 million in interest rate sensitive liabilities. Currently the bank's assets have a duration of 5 and its liabilities have a duration of 2. The asset-liability management committee of the bank is in the process of duration-matching. <br \/>\r<br>Which of the following actions would best match the durations?<\/div><input type='hidden' name='question_id[]' id='qID_49' value='371890' \/><input type='hidden' id='answerType371890' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371890[]' id='answer-id-1447757' class='answer   answerof-371890 ' value='1447757'   \/><label for='answer-id-1447757' id='answer-label-1447757' class=' answer'><span>Increase the duration of liabilities by 2 and increase the duration of assets by 1.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371890[]' id='answer-id-1447758' class='answer   answerof-371890 ' value='1447758'   \/><label for='answer-id-1447758' id='answer-label-1447758' class=' answer'><span>Increase the duration of liabilities by 2 and decrease the duration of assets by 1.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371890[]' id='answer-id-1447759' class='answer   answerof-371890 ' value='1447759'   \/><label for='answer-id-1447759' id='answer-label-1447759' class=' answer'><span>Decrease the duration of liabilities by 1 and increase the duration of assets by 1.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371890[]' id='answer-id-1447760' class='answer   answerof-371890 ' value='1447760'   \/><label for='answer-id-1447760' id='answer-label-1447760' class=' answer'><span>Decrease the duration of liabilities by 1 and decrease the duration of assets by 1.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-50' style=';'><div id='questionWrap-50'  class='   watupro-question-id-371891'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>50. <\/span>Which one of the following is a reason for a bank to keep a commercial loan in its portfolio until maturity? <br \/>\r<br>I. Commercial loans usually have attractive risk-return profile. <br \/>\r<br>II. Commercial loans are difficult to sell due to non standard features. <br \/>\r<br>III. Commercial loans could be used to maintain good relations with important customers. <br \/>\r<br>IV. The credit risk in commercial loans is low.<\/div><input type='hidden' name='question_id[]' id='qID_50' value='371891' \/><input type='hidden' id='answerType371891' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371891[]' id='answer-id-1447761' class='answer   answerof-371891 ' value='1447761'   \/><label for='answer-id-1447761' id='answer-label-1447761' class=' answer'><span>I, II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371891[]' id='answer-id-1447762' class='answer   answerof-371891 ' value='1447762'   \/><label for='answer-id-1447762' id='answer-label-1447762' class=' answer'><span>III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371891[]' id='answer-id-1447763' class='answer   answerof-371891 ' value='1447763'   \/><label for='answer-id-1447763' id='answer-label-1447763' class=' answer'><span>II and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371891[]' id='answer-id-1447764' class='answer   answerof-371891 ' value='1447764'   \/><label for='answer-id-1447764' id='answer-label-1447764' class=' answer'><span>IV only<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-51' style=';'><div id='questionWrap-51'  class='   watupro-question-id-371892'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>51. <\/span>On January 1, 2010 the TED (treasury-euro dollar) spread was 0.4%, and on January 31, 2010 the TED spread is 0.9%. As a risk manager, how would you interpret this change?<\/div><input type='hidden' name='question_id[]' id='qID_51' value='371892' \/><input type='hidden' id='answerType371892' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371892[]' id='answer-id-1447765' class='answer   answerof-371892 ' value='1447765'   \/><label for='answer-id-1447765' id='answer-label-1447765' class=' answer'><span>The decrease in the TED spread indicates a decrease in credit risk on interbank loans.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371892[]' id='answer-id-1447766' class='answer   answerof-371892 ' value='1447766'   \/><label for='answer-id-1447766' id='answer-label-1447766' class=' answer'><span>The decrease in the TED spread indicates an increase in credit risk on interbank loans.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371892[]' id='answer-id-1447767' class='answer   answerof-371892 ' value='1447767'   \/><label for='answer-id-1447767' id='answer-label-1447767' class=' answer'><span>Increase in interest rates on both interbank loans and T-bills.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371892[]' id='answer-id-1447768' class='answer   answerof-371892 ' value='1447768'   \/><label for='answer-id-1447768' id='answer-label-1447768' class=' answer'><span>Increase in credit risk on T-bills.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-52' style=';'><div id='questionWrap-52'  class='   watupro-question-id-371893'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>52. <\/span>Rising TED spread is typically a sign of increase in what type of risk among large banks? <br \/>\r<br>I. Credit risk <br \/>\r<br>II. Market risk <br \/>\r<br>III. Liquidity risk <br \/>\r<br>IV. Operational risk<\/div><input type='hidden' name='question_id[]' id='qID_52' value='371893' \/><input type='hidden' id='answerType371893' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371893[]' id='answer-id-1447769' class='answer   answerof-371893 ' value='1447769'   \/><label for='answer-id-1447769' id='answer-label-1447769' class=' answer'><span>I only<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371893[]' id='answer-id-1447770' class='answer   answerof-371893 ' value='1447770'   \/><label for='answer-id-1447770' id='answer-label-1447770' class=' answer'><span>II only<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371893[]' id='answer-id-1447771' class='answer   answerof-371893 ' value='1447771'   \/><label for='answer-id-1447771' id='answer-label-1447771' class=' answer'><span>I and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371893[]' id='answer-id-1447772' class='answer   answerof-371893 ' value='1447772'   \/><label for='answer-id-1447772' id='answer-label-1447772' class=' answer'><span>I, II, and III<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-53' style=';'><div id='questionWrap-53'  class='   watupro-question-id-371894'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>53. <\/span>Which one of the following four statements regarding floating rate bonds is incorrect?<\/div><input type='hidden' name='question_id[]' id='qID_53' value='371894' \/><input type='hidden' id='answerType371894' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371894[]' id='answer-id-1447773' class='answer   answerof-371894 ' value='1447773'   \/><label for='answer-id-1447773' id='answer-label-1447773' class=' answer'><span>Floating rate bonds have coupon payments tied to floating interest rates or floating interest rate indexes.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371894[]' id='answer-id-1447774' class='answer   answerof-371894 ' value='1447774'   \/><label for='answer-id-1447774' id='answer-label-1447774' class=' answer'><span>Floating rate bonds typically have less price risk than fixed rate bonds.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371894[]' id='answer-id-1447775' class='answer   answerof-371894 ' value='1447775'   \/><label for='answer-id-1447775' id='answer-label-1447775' class=' answer'><span>Floating rate bonds are very sensitive to changes in interest rates.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371894[]' id='answer-id-1447776' class='answer   answerof-371894 ' value='1447776'   \/><label for='answer-id-1447776' id='answer-label-1447776' class=' answer'><span>Floating rate bonds only have a small degree of interest rate risk.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-54' style=';'><div id='questionWrap-54'  class='   watupro-question-id-371895'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>54. <\/span>James Johnson bought a coupon bond yielding 4.7% for $1,000. <br \/>\r<br>Assuming that the price drops to $976 when yield increases to 4.71%, what is the PVBP of the bond.<\/div><input type='hidden' name='question_id[]' id='qID_54' value='371895' \/><input type='hidden' id='answerType371895' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371895[]' id='answer-id-1447777' class='answer   answerof-371895 ' value='1447777'   \/><label for='answer-id-1447777' id='answer-label-1447777' class=' answer'><span>$26.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371895[]' id='answer-id-1447778' class='answer   answerof-371895 ' value='1447778'   \/><label for='answer-id-1447778' id='answer-label-1447778' class=' answer'><span>$76.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371895[]' id='answer-id-1447779' class='answer   answerof-371895 ' value='1447779'   \/><label for='answer-id-1447779' id='answer-label-1447779' class=' answer'><span>$870.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371895[]' id='answer-id-1447780' class='answer   answerof-371895 ' value='1447780'   \/><label for='answer-id-1447780' id='answer-label-1447780' class=' answer'><span>$976.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-55' style=';'><div id='questionWrap-55'  class='   watupro-question-id-371896'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>55. <\/span>Which of the following statements regarding CDO-squared is correct? <br \/>\r<br>I. CDO-squared use other CDOs and CMOs as collateral. <br \/>\r<br>II. Risk assessment of CDO-squared is almost impossible due to their complexity. <br \/>\r<br>III. CDO-squared have lower credit risk than CMOs but higher than CDOs.<\/div><input type='hidden' name='question_id[]' id='qID_55' value='371896' \/><input type='hidden' id='answerType371896' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371896[]' id='answer-id-1447781' class='answer   answerof-371896 ' value='1447781'   \/><label for='answer-id-1447781' id='answer-label-1447781' class=' answer'><span>I only<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371896[]' id='answer-id-1447782' class='answer   answerof-371896 ' value='1447782'   \/><label for='answer-id-1447782' id='answer-label-1447782' class=' answer'><span>I and II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371896[]' id='answer-id-1447783' class='answer   answerof-371896 ' value='1447783'   \/><label for='answer-id-1447783' id='answer-label-1447783' class=' answer'><span>II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371896[]' id='answer-id-1447784' class='answer   answerof-371896 ' value='1447784'   \/><label for='answer-id-1447784' id='answer-label-1447784' class=' answer'><span>I, II, and III<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-56' style=';'><div id='questionWrap-56'  class='   watupro-question-id-371897'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>56. <\/span>Which one of the following four statements represents the advantages of the historical sim-ulation method when calculating VaR?<\/div><input type='hidden' name='question_id[]' id='qID_56' value='371897' \/><input type='hidden' id='answerType371897' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371897[]' id='answer-id-1447785' class='answer   answerof-371897 ' value='1447785'   \/><label for='answer-id-1447785' id='answer-label-1447785' class=' answer'><span>Solve the problem caused by incorrectly assuming that asset returns are normally distributed.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371897[]' id='answer-id-1447786' class='answer   answerof-371897 ' value='1447786'   \/><label for='answer-id-1447786' id='answer-label-1447786' class=' answer'><span>Rely on current market data to describe the distribution of returns and determine volatilities.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371897[]' id='answer-id-1447787' class='answer   answerof-371897 ' value='1447787'   \/><label for='answer-id-1447787' id='answer-label-1447787' class=' answer'><span>Are believed to be superior in accuracy predicting future levels of realized volatility.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371897[]' id='answer-id-1447788' class='answer   answerof-371897 ' value='1447788'   \/><label for='answer-id-1447788' id='answer-label-1447788' class=' answer'><span>Are only using loss probabilities that can be found in tables of the standard normal distribution.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-57' style=';'><div id='questionWrap-57'  class='   watupro-question-id-371898'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>57. <\/span>The Basel II Accord's operational risk definition excludes all of the following items EXCEPT:<\/div><input type='hidden' name='question_id[]' id='qID_57' value='371898' \/><input type='hidden' id='answerType371898' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371898[]' id='answer-id-1447789' class='answer   answerof-371898 ' value='1447789'   \/><label for='answer-id-1447789' id='answer-label-1447789' class=' answer'><span>Legal risk<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371898[]' id='answer-id-1447790' class='answer   answerof-371898 ' value='1447790'   \/><label for='answer-id-1447790' id='answer-label-1447790' class=' answer'><span>Strategic risk<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371898[]' id='answer-id-1447791' class='answer   answerof-371898 ' value='1447791'   \/><label for='answer-id-1447791' id='answer-label-1447791' class=' answer'><span>Reputational risk<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371898[]' id='answer-id-1447792' class='answer   answerof-371898 ' value='1447792'   \/><label for='answer-id-1447792' id='answer-label-1447792' class=' answer'><span>Geopolitical risk<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-58' style=';'><div id='questionWrap-58'  class='   watupro-question-id-371899'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>58. <\/span>Bank customers traditionally trade commodity futures with banks in order to achieve which of the following goals? <br \/>\r<br>I. To express their own price views <br \/>\r<br>II. To reverse undesired short-term exposure created from fixed commodity sales <br \/>\r<br>III. To reach short-term budgetary targets<\/div><input type='hidden' name='question_id[]' id='qID_58' value='371899' \/><input type='hidden' id='answerType371899' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371899[]' id='answer-id-1447793' class='answer   answerof-371899 ' value='1447793'   \/><label for='answer-id-1447793' id='answer-label-1447793' class=' answer'><span>I<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371899[]' id='answer-id-1447794' class='answer   answerof-371899 ' value='1447794'   \/><label for='answer-id-1447794' id='answer-label-1447794' class=' answer'><span>II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371899[]' id='answer-id-1447795' class='answer   answerof-371899 ' value='1447795'   \/><label for='answer-id-1447795' id='answer-label-1447795' class=' answer'><span>I, III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371899[]' id='answer-id-1447796' class='answer   answerof-371899 ' value='1447796'   \/><label for='answer-id-1447796' id='answer-label-1447796' class=' answer'><span>I, II, III<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-59' style=';'><div id='questionWrap-59'  class='   watupro-question-id-371900'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>59. <\/span>To estimate the responsiveness of a particular equity portfolio to the overall market, a trader should use the portfolio's<\/div><input type='hidden' name='question_id[]' id='qID_59' value='371900' \/><input type='hidden' id='answerType371900' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371900[]' id='answer-id-1447797' class='answer   answerof-371900 ' value='1447797'   \/><label for='answer-id-1447797' id='answer-label-1447797' class=' answer'><span>Alpha<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371900[]' id='answer-id-1447798' class='answer   answerof-371900 ' value='1447798'   \/><label for='answer-id-1447798' id='answer-label-1447798' class=' answer'><span>Beta<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371900[]' id='answer-id-1447799' class='answer   answerof-371900 ' value='1447799'   \/><label for='answer-id-1447799' id='answer-label-1447799' class=' answer'><span>CVaR<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371900[]' id='answer-id-1447800' class='answer   answerof-371900 ' value='1447800'   \/><label for='answer-id-1447800' id='answer-label-1447800' class=' answer'><span>VaR<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-60' style=';'><div id='questionWrap-60'  class='   watupro-question-id-371901'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>60. <\/span>For a bank a 1-year VaR of USD 10 million at 95% confidence level means that:<\/div><input type='hidden' name='question_id[]' id='qID_60' value='371901' \/><input type='hidden' id='answerType371901' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371901[]' id='answer-id-1447801' class='answer   answerof-371901 ' value='1447801'   \/><label for='answer-id-1447801' id='answer-label-1447801' class=' answer'><span>There is a 5% chance that the bank would lose less than USD 10 million in a year.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371901[]' id='answer-id-1447802' class='answer   answerof-371901 ' value='1447802'   \/><label for='answer-id-1447802' id='answer-label-1447802' class=' answer'><span>There is a 5% chance that the bank would lose more than USD 10 million in a year.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371901[]' id='answer-id-1447803' class='answer   answerof-371901 ' value='1447803'   \/><label for='answer-id-1447803' id='answer-label-1447803' class=' answer'><span>There is a 5% chance that the worst loss would be USD 10 million in a year.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371901[]' id='answer-id-1447804' class='answer   answerof-371901 ' value='1447804'   \/><label for='answer-id-1447804' id='answer-label-1447804' class=' answer'><span>There is a 5% chance that the least loss would be USD 10 million in a year.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-61' style=';'><div id='questionWrap-61'  class='   watupro-question-id-371902'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>61. <\/span>Which of the following statements is a key difference between customer loans and interbank loans?<\/div><input type='hidden' name='question_id[]' id='qID_61' value='371902' \/><input type='hidden' id='answerType371902' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371902[]' id='answer-id-1447805' class='answer   answerof-371902 ' value='1447805'   \/><label for='answer-id-1447805' id='answer-label-1447805' class=' answer'><span>Customers are less credit-worthy than banks on average and hence yields are higher on average for customer loans as compared to interbank loans<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371902[]' id='answer-id-1447806' class='answer   answerof-371902 ' value='1447806'   \/><label for='answer-id-1447806' id='answer-label-1447806' class=' answer'><span>Customer loans are of shorter duration than interbank loans<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371902[]' id='answer-id-1447807' class='answer   answerof-371902 ' value='1447807'   \/><label for='answer-id-1447807' id='answer-label-1447807' class=' answer'><span>Customer loans are easier to sell than interbank loans<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371902[]' id='answer-id-1447808' class='answer   answerof-371902 ' value='1447808'   \/><label for='answer-id-1447808' id='answer-label-1447808' class=' answer'><span>Interbank loans are more customized than commercial loans<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-62' style=';'><div id='questionWrap-62'  class='   watupro-question-id-371903'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>62. <\/span>Which of the following statements defines Value-at-risk (VaR)?<\/div><input type='hidden' name='question_id[]' id='qID_62' value='371903' \/><input type='hidden' id='answerType371903' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371903[]' id='answer-id-1447809' class='answer   answerof-371903 ' value='1447809'   \/><label for='answer-id-1447809' id='answer-label-1447809' class=' answer'><span>VaR is the worst possible loss on a financial instrument or a portfolio of financial instruments over a given time period.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371903[]' id='answer-id-1447810' class='answer   answerof-371903 ' value='1447810'   \/><label for='answer-id-1447810' id='answer-label-1447810' class=' answer'><span>VaR is the minimum likely loss on a financial instrument or a portfolio of financial instruments with a given degree of probabilistic confidence.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371903[]' id='answer-id-1447811' class='answer   answerof-371903 ' value='1447811'   \/><label for='answer-id-1447811' id='answer-label-1447811' class=' answer'><span>VaR is the maximum of past losses over a given period of time.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371903[]' id='answer-id-1447812' class='answer   answerof-371903 ' value='1447812'   \/><label for='answer-id-1447812' id='answer-label-1447812' class=' answer'><span>VaR is the maximum likely loss on a financial instrument or a portfolio of financial instruments over \r\na given time period with a given degree of probabilistic confidence.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-63' style=';'><div id='questionWrap-63'  class='   watupro-question-id-371904'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>63. <\/span>A risk manager analyzes a long position with a USD 10 million value. To hedge the portfolio, it seeks to use options that decrease JPY 0.50 in value for every JPY 1 increase in the long position. At first approximation, what is the overall exposure to USD depreciation?<\/div><input type='hidden' name='question_id[]' id='qID_63' value='371904' \/><input type='hidden' id='answerType371904' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371904[]' id='answer-id-1447813' class='answer   answerof-371904 ' value='1447813'   \/><label for='answer-id-1447813' id='answer-label-1447813' class=' answer'><span>His overall portfolio has the same exposure to USD as a portfolio that is long USD 5 million.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371904[]' id='answer-id-1447814' class='answer   answerof-371904 ' value='1447814'   \/><label for='answer-id-1447814' id='answer-label-1447814' class=' answer'><span>His overall portfolio has the same exposure to USD as a portfolio that is long USD 10 million.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371904[]' id='answer-id-1447815' class='answer   answerof-371904 ' value='1447815'   \/><label for='answer-id-1447815' id='answer-label-1447815' class=' answer'><span>His overall portfolio has the same exposure to USD as a portfolio that is short USD 5 million.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371904[]' id='answer-id-1447816' class='answer   answerof-371904 ' value='1447816'   \/><label for='answer-id-1447816' id='answer-label-1447816' class=' answer'><span>His overall portfolio has the same exposure to USD as a portfolio that is short USD 10 million.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-64' style=';'><div id='questionWrap-64'  class='   watupro-question-id-371905'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>64. <\/span>Which one of the following four statements about equity indices is INCORRECT?<\/div><input type='hidden' name='question_id[]' id='qID_64' value='371905' \/><input type='hidden' id='answerType371905' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371905[]' id='answer-id-1447817' class='answer   answerof-371905 ' value='1447817'   \/><label for='answer-id-1447817' id='answer-label-1447817' class=' answer'><span>Equity indices are numerical calculations that reflect the performance of hypothetical equity portfolios.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371905[]' id='answer-id-1447818' class='answer   answerof-371905 ' value='1447818'   \/><label for='answer-id-1447818' id='answer-label-1447818' class=' answer'><span>Equity indices do not trade in cash form, rather, they are meant to track the overall performance of an equity market.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371905[]' id='answer-id-1447819' class='answer   answerof-371905 ' value='1447819'   \/><label for='answer-id-1447819' id='answer-label-1447819' class=' answer'><span>Capitalization-weighted equity indices are not generally considered better to track the performance of an overall market.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371905[]' id='answer-id-1447820' class='answer   answerof-371905 ' value='1447820'   \/><label for='answer-id-1447820' id='answer-label-1447820' class=' answer'><span>Price-weighted equity indices give greater weight to shares trading at high prices.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-65' style=';'><div id='questionWrap-65'  class='   watupro-question-id-371906'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>65. <\/span>In the United States, during the second quarter of 2009, transactions in foreign exchange derivative contracts comprised approximately what proportion of all types of derivative transactions between financial institutions?<\/div><input type='hidden' name='question_id[]' id='qID_65' value='371906' \/><input type='hidden' id='answerType371906' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371906[]' id='answer-id-1447821' class='answer   answerof-371906 ' value='1447821'   \/><label for='answer-id-1447821' id='answer-label-1447821' class=' answer'><span>2%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371906[]' id='answer-id-1447822' class='answer   answerof-371906 ' value='1447822'   \/><label for='answer-id-1447822' id='answer-label-1447822' class=' answer'><span>7%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371906[]' id='answer-id-1447823' class='answer   answerof-371906 ' value='1447823'   \/><label for='answer-id-1447823' id='answer-label-1447823' class=' answer'><span>25%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371906[]' id='answer-id-1447824' class='answer   answerof-371906 ' value='1447824'   \/><label for='answer-id-1447824' id='answer-label-1447824' class=' answer'><span>43%<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-66' style=';'><div id='questionWrap-66'  class='   watupro-question-id-371907'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>66. <\/span>Beta Insurance Company is only allowed to invest in investment grade bonds. <br \/>\r<br>To maximize the interest income, Beta Insurance Company should invest in bonds with which of the following ratings?<\/div><input type='hidden' name='question_id[]' id='qID_66' value='371907' \/><input type='hidden' id='answerType371907' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371907[]' id='answer-id-1447825' class='answer   answerof-371907 ' value='1447825'   \/><label for='answer-id-1447825' id='answer-label-1447825' class=' answer'><span>AAA<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371907[]' id='answer-id-1447826' class='answer   answerof-371907 ' value='1447826'   \/><label for='answer-id-1447826' id='answer-label-1447826' class=' answer'><span>AA<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371907[]' id='answer-id-1447827' class='answer   answerof-371907 ' value='1447827'   \/><label for='answer-id-1447827' id='answer-label-1447827' class=' answer'><span>A<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371907[]' id='answer-id-1447828' class='answer   answerof-371907 ' value='1447828'   \/><label for='answer-id-1447828' id='answer-label-1447828' class=' answer'><span>B<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-67' style=';'><div id='questionWrap-67'  class='   watupro-question-id-371908'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>67. <\/span>Using a forward transaction, Omega Bank buys 100 metric tones of aluminum for delivery in six-months' time. However, after two months, the bank becomes concerned with the potential fluctuations in aluminum prices and wants to hedge its potential exposure against a possible decline in aluminum prices. <br \/>\r<br>Which one of the following four strategies could the bank use to offset the risk from its current exposure to aluminum as it sets the price for selling the commodity in four-months' time?<\/div><input type='hidden' name='question_id[]' id='qID_67' value='371908' \/><input type='hidden' id='answerType371908' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371908[]' id='answer-id-1447829' class='answer   answerof-371908 ' value='1447829'   \/><label for='answer-id-1447829' id='answer-label-1447829' class=' answer'><span>Sell an aluminum futures contract<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371908[]' id='answer-id-1447830' class='answer   answerof-371908 ' value='1447830'   \/><label for='answer-id-1447830' id='answer-label-1447830' class=' answer'><span>Buy an aluminum futures contract<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371908[]' id='answer-id-1447831' class='answer   answerof-371908 ' value='1447831'   \/><label for='answer-id-1447831' id='answer-label-1447831' class=' answer'><span>Sell an aluminum forward contract<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371908[]' id='answer-id-1447832' class='answer   answerof-371908 ' value='1447832'   \/><label for='answer-id-1447832' id='answer-label-1447832' class=' answer'><span>Buy an aluminum forward contract<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-68' style=';'><div id='questionWrap-68'  class='   watupro-question-id-371909'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>68. <\/span>How could a bank's hedging activities with futures contracts expose it to liquidity risk?<\/div><input type='hidden' name='question_id[]' id='qID_68' value='371909' \/><input type='hidden' id='answerType371909' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371909[]' id='answer-id-1447833' class='answer   answerof-371909 ' value='1447833'   \/><label for='answer-id-1447833' id='answer-label-1447833' class=' answer'><span>The futures hedge may not work due to the widening of basis which could result in a loss for the bank.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371909[]' id='answer-id-1447834' class='answer   answerof-371909 ' value='1447834'   \/><label for='answer-id-1447834' id='answer-label-1447834' class=' answer'><span>Prices may move such that a loss results on the hedge.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371909[]' id='answer-id-1447835' class='answer   answerof-371909 ' value='1447835'   \/><label for='answer-id-1447835' id='answer-label-1447835' class=' answer'><span>Since futures require margins which are settled every day, the bank could find itself scrambling for funds.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371909[]' id='answer-id-1447836' class='answer   answerof-371909 ' value='1447836'   \/><label for='answer-id-1447836' id='answer-label-1447836' class=' answer'><span>The bank could get exposed to liquidity risk since futures trade on an exchange.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-69' style=';'><div id='questionWrap-69'  class='   watupro-question-id-371910'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>69. <\/span>Which one of the following four exercise features is typical for the most exchange-traded equity options?<\/div><input type='hidden' name='question_id[]' id='qID_69' value='371910' \/><input type='hidden' id='answerType371910' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371910[]' id='answer-id-1447837' class='answer   answerof-371910 ' value='1447837'   \/><label for='answer-id-1447837' id='answer-label-1447837' class=' answer'><span>Asian exercise feature<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371910[]' id='answer-id-1447838' class='answer   answerof-371910 ' value='1447838'   \/><label for='answer-id-1447838' id='answer-label-1447838' class=' answer'><span>American exercise feature<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371910[]' id='answer-id-1447839' class='answer   answerof-371910 ' value='1447839'   \/><label for='answer-id-1447839' id='answer-label-1447839' class=' answer'><span>European exercise feature<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371910[]' id='answer-id-1447840' class='answer   answerof-371910 ' value='1447840'   \/><label for='answer-id-1447840' id='answer-label-1447840' class=' answer'><span>A shout option exercise feature<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-70' style=';'><div id='questionWrap-70'  class='   watupro-question-id-371911'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>70. <\/span>James Johnson has a $1 million long position in ThetaGroup with a VaR of 0.3 million, and $1 million long position in VolgaCorp with a VaR of 0.4 million. The returns of the two companies have zero correlation. <br \/>\r<br>What is the portfolio VaR?<\/div><input type='hidden' name='question_id[]' id='qID_70' value='371911' \/><input type='hidden' id='answerType371911' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371911[]' id='answer-id-1447841' class='answer   answerof-371911 ' value='1447841'   \/><label for='answer-id-1447841' id='answer-label-1447841' class=' answer'><span>$1 million<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371911[]' id='answer-id-1447842' class='answer   answerof-371911 ' value='1447842'   \/><label for='answer-id-1447842' id='answer-label-1447842' class=' answer'><span>$0.7 million<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371911[]' id='answer-id-1447843' class='answer   answerof-371911 ' value='1447843'   \/><label for='answer-id-1447843' id='answer-label-1447843' class=' answer'><span>$0.5 million<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371911[]' id='answer-id-1447844' class='answer   answerof-371911 ' value='1447844'   \/><label for='answer-id-1447844' id='answer-label-1447844' class=' answer'><span>$0.4 million<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-71' style=';'><div id='questionWrap-71'  class='   watupro-question-id-371912'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>71. <\/span>Which type of risk does a bank incur on loans that are in the &quot;pipeline&quot;, i.e loans that are in the process of origination but not yet originated?<\/div><input type='hidden' name='question_id[]' id='qID_71' value='371912' \/><input type='hidden' id='answerType371912' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371912[]' id='answer-id-1447845' class='answer   answerof-371912 ' value='1447845'   \/><label for='answer-id-1447845' id='answer-label-1447845' class=' answer'><span>Interest rate risk and credit risk<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371912[]' id='answer-id-1447846' class='answer   answerof-371912 ' value='1447846'   \/><label for='answer-id-1447846' id='answer-label-1447846' class=' answer'><span>Interest rate risk only<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371912[]' id='answer-id-1447847' class='answer   answerof-371912 ' value='1447847'   \/><label for='answer-id-1447847' id='answer-label-1447847' class=' answer'><span>Credit Risk only<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371912[]' id='answer-id-1447848' class='answer   answerof-371912 ' value='1447848'   \/><label for='answer-id-1447848' id='answer-label-1447848' class=' answer'><span>The bank does not incur any risk since the loan is not yet originated<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-72' style=';'><div id='questionWrap-72'  class='   watupro-question-id-371913'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>72. <\/span>Why is economic capital across market, credit and operational risks simply added up to arrive at an estimate of aggregate economic capital in practice?<\/div><input type='hidden' name='question_id[]' id='qID_72' value='371913' \/><input type='hidden' id='answerType371913' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371913[]' id='answer-id-1447849' class='answer   answerof-371913 ' value='1447849'   \/><label for='answer-id-1447849' id='answer-label-1447849' class=' answer'><span>Market, credit and operational risks are perfectly correlated which justifies adding up their associated economic capital.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371913[]' id='answer-id-1447850' class='answer   answerof-371913 ' value='1447850'   \/><label for='answer-id-1447850' id='answer-label-1447850' class=' answer'><span>In practice, it is very difficult to estimate the correlations between the risk categories and as a result a conservative estimate is obtained by adding up the risks.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371913[]' id='answer-id-1447851' class='answer   answerof-371913 ' value='1447851'   \/><label for='answer-id-1447851' id='answer-label-1447851' class=' answer'><span>Regulators require banks to add up economic capital across market, credit and operational risks.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371913[]' id='answer-id-1447852' class='answer   answerof-371913 ' value='1447852'   \/><label for='answer-id-1447852' id='answer-label-1447852' class=' answer'><span>Since market, credit and operational risks are significantly different measures of risk, there is no \r\ndiversification benefit to computing economic capital to banks across types of risks.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-73' style=';'><div id='questionWrap-73'  class='   watupro-question-id-371914'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>73. <\/span>Present value of a basis point (PVBP) is one of the ways to quantify the risk of a bond, and it measures:<\/div><input type='hidden' name='question_id[]' id='qID_73' value='371914' \/><input type='hidden' id='answerType371914' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371914[]' id='answer-id-1447853' class='answer   answerof-371914 ' value='1447853'   \/><label for='answer-id-1447853' id='answer-label-1447853' class=' answer'><span>The change in value of a bond when yields increase by 0.01%.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371914[]' id='answer-id-1447854' class='answer   answerof-371914 ' value='1447854'   \/><label for='answer-id-1447854' id='answer-label-1447854' class=' answer'><span>The percentage change in bond price when yields change by 1 basis point.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371914[]' id='answer-id-1447855' class='answer   answerof-371914 ' value='1447855'   \/><label for='answer-id-1447855' id='answer-label-1447855' class=' answer'><span>The present value of the future cash flows of a bond calculated at a yield equal to 1%.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371914[]' id='answer-id-1447856' class='answer   answerof-371914 ' value='1447856'   \/><label for='answer-id-1447856' id='answer-label-1447856' class=' answer'><span>The percentage change in bond price when the yields change by 1%.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-74' style=';'><div id='questionWrap-74'  class='   watupro-question-id-371915'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>74. <\/span>To estimate the required risk-adjusted rate of return on a highly volatile energy stock, a risk associate compiled the following statistics: <br \/>\r<br>Risk-free rate = 5% <br \/>\r<br>Beta = 2.5 <br \/>\r<br>Market Risk = 8% <br \/>\r<br>Using the Capital Asset Pricing Model, she estimates the rate of return to be equal:<\/div><input type='hidden' name='question_id[]' id='qID_74' value='371915' \/><input type='hidden' id='answerType371915' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371915[]' id='answer-id-1447857' class='answer   answerof-371915 ' value='1447857'   \/><label for='answer-id-1447857' id='answer-label-1447857' class=' answer'><span>10%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371915[]' id='answer-id-1447858' class='answer   answerof-371915 ' value='1447858'   \/><label for='answer-id-1447858' id='answer-label-1447858' class=' answer'><span>15%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371915[]' id='answer-id-1447859' class='answer   answerof-371915 ' value='1447859'   \/><label for='answer-id-1447859' id='answer-label-1447859' class=' answer'><span>25%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371915[]' id='answer-id-1447860' class='answer   answerof-371915 ' value='1447860'   \/><label for='answer-id-1447860' id='answer-label-1447860' class=' answer'><span>40%<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-75' style=';'><div id='questionWrap-75'  class='   watupro-question-id-371916'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>75. <\/span>If a bank is long &pound;500 million pounds, short &pound;300 million in delta-equivalent pound options, and long &pound;100 million in pound-denominated stocks, what is the amount of pound exposure that would be shown in the aggregated risk reports?<\/div><input type='hidden' name='question_id[]' id='qID_75' value='371916' \/><input type='hidden' id='answerType371916' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371916[]' id='answer-id-1447861' class='answer   answerof-371916 ' value='1447861'   \/><label for='answer-id-1447861' id='answer-label-1447861' class=' answer'><span>&pound;300 million pounds<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371916[]' id='answer-id-1447862' class='answer   answerof-371916 ' value='1447862'   \/><label for='answer-id-1447862' id='answer-label-1447862' class=' answer'><span>&pound;500 million pounds<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371916[]' id='answer-id-1447863' class='answer   answerof-371916 ' value='1447863'   \/><label for='answer-id-1447863' id='answer-label-1447863' class=' answer'><span>&pound;800 million pounds<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371916[]' id='answer-id-1447864' class='answer   answerof-371916 ' value='1447864'   \/><label for='answer-id-1447864' id='answer-label-1447864' class=' answer'><span>&pound;900 million pounds<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-76' style=';'><div id='questionWrap-76'  class='   watupro-question-id-371917'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>76. <\/span>Which of the following statements describes correctly the objectives of position mapping? <br \/>\r<br>I. For VaR calculations, mapping converts positions based on their deltas to underlying factor risks. <br \/>\r<br>II. Position mapping models risk factors affecting the value of a position as combination of core risk factors used in the VaR calculations. <br \/>\r<br>III. Position mapping groups similar positions into one group based on the closeness of their respective VaR. <br \/>\r<br>IV. Position mapping reduces the possible number of risk factors to a computationally manageable level.<\/div><input type='hidden' name='question_id[]' id='qID_76' value='371917' \/><input type='hidden' id='answerType371917' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371917[]' id='answer-id-1447865' class='answer   answerof-371917 ' value='1447865'   \/><label for='answer-id-1447865' id='answer-label-1447865' class=' answer'><span>I and II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371917[]' id='answer-id-1447866' class='answer   answerof-371917 ' value='1447866'   \/><label for='answer-id-1447866' id='answer-label-1447866' class=' answer'><span>II and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371917[]' id='answer-id-1447867' class='answer   answerof-371917 ' value='1447867'   \/><label for='answer-id-1447867' id='answer-label-1447867' class=' answer'><span>I, II and III<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-77' style=';'><div id='questionWrap-77'  class='   watupro-question-id-371918'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>77. <\/span>Alpha Bank, a small bank,has a long position with larger BetaBank and has an identical short position with another larger bank GammaBank. Each large bank requires a 20% initial collateral to support the trade. As prices fluctuate in either direction, one large bank will require additional collateral from the small bank, while the risk of loss to the other large bank will increase. <br \/>\r<br>By running the trades through a clearinghouse, the small bank can achieve all of the following objectives EXCEPT:<\/div><input type='hidden' name='question_id[]' id='qID_77' value='371918' \/><input type='hidden' id='answerType371918' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371918[]' id='answer-id-1447868' class='answer   answerof-371918 ' value='1447868'   \/><label for='answer-id-1447868' id='answer-label-1447868' class=' answer'><span>Eliminating the collateral requirement<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371918[]' id='answer-id-1447869' class='answer   answerof-371918 ' value='1447869'   \/><label for='answer-id-1447869' id='answer-label-1447869' class=' answer'><span>Protecting itself against increases in future collateral demands<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371918[]' id='answer-id-1447870' class='answer   answerof-371918 ' value='1447870'   \/><label for='answer-id-1447870' id='answer-label-1447870' class=' answer'><span>Protecting against the risk of the failure of one of the large banks<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371918[]' id='answer-id-1447871' class='answer   answerof-371918 ' value='1447871'   \/><label for='answer-id-1447871' id='answer-label-1447871' class=' answer'><span>Mitigating option hedging risks and altering margin requirement<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-78' style=';'><div id='questionWrap-78'  class='   watupro-question-id-371919'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>78. <\/span>An associate from the finance group has been identified as an operational risk coordinator (ORC) for her department. <br \/>\r<br>To fulfill her ORC responsibilities the associate will need to: <br \/>\r<br>I. Provide main communication contact with operational risk department <br \/>\r<br>II. Provide main reporting contact with audit department <br \/>\r<br>III. Coordinate collection of key risk indicators in her area <br \/>\r<br>IV. Coordinate training and awareness activities in her area<\/div><input type='hidden' name='question_id[]' id='qID_78' value='371919' \/><input type='hidden' id='answerType371919' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371919[]' id='answer-id-1447872' class='answer   answerof-371919 ' value='1447872'   \/><label for='answer-id-1447872' id='answer-label-1447872' class=' answer'><span>I, II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371919[]' id='answer-id-1447873' class='answer   answerof-371919 ' value='1447873'   \/><label for='answer-id-1447873' id='answer-label-1447873' class=' answer'><span>II, III, IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371919[]' id='answer-id-1447874' class='answer   answerof-371919 ' value='1447874'   \/><label for='answer-id-1447874' id='answer-label-1447874' class=' answer'><span>I, II, III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371919[]' id='answer-id-1447875' class='answer   answerof-371919 ' value='1447875'   \/><label for='answer-id-1447875' id='answer-label-1447875' class=' answer'><span>I, III, IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-79' style=';'><div id='questionWrap-79'  class='   watupro-question-id-371920'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>79. <\/span>What is a common implicit assumption that is made when computing VaR using parametric methods?<\/div><input type='hidden' name='question_id[]' id='qID_79' value='371920' \/><input type='hidden' id='answerType371920' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371920[]' id='answer-id-1447876' class='answer   answerof-371920 ' value='1447876'   \/><label for='answer-id-1447876' id='answer-label-1447876' class=' answer'><span>The expected returns are constant, but the standard deviation changes over time.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371920[]' id='answer-id-1447877' class='answer   answerof-371920 ' value='1447877'   \/><label for='answer-id-1447877' id='answer-label-1447877' class=' answer'><span>The standard deviations of returns are constant, but the mean changes over time.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371920[]' id='answer-id-1447878' class='answer   answerof-371920 ' value='1447878'   \/><label for='answer-id-1447878' id='answer-label-1447878' class=' answer'><span>The mean of and the standard deviations of returns are both constant.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371920[]' id='answer-id-1447879' class='answer   answerof-371920 ' value='1447879'   \/><label for='answer-id-1447879' id='answer-label-1447879' class=' answer'><span>The mean and standard deviation of returns change periodically in response to crises.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-80' style=';'><div id='questionWrap-80'  class='   watupro-question-id-371921'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>80. <\/span>In the United States, stock investors must comply with the Regulation T of the Federal Reserve Bank and may borrow up to ___ of the value of the securities from their brokers.<\/div><input type='hidden' name='question_id[]' id='qID_80' value='371921' \/><input type='hidden' id='answerType371921' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371921[]' id='answer-id-1447880' class='answer   answerof-371921 ' value='1447880'   \/><label for='answer-id-1447880' id='answer-label-1447880' class=' answer'><span>30%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371921[]' id='answer-id-1447881' class='answer   answerof-371921 ' value='1447881'   \/><label for='answer-id-1447881' id='answer-label-1447881' class=' answer'><span>40%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371921[]' id='answer-id-1447882' class='answer   answerof-371921 ' value='1447882'   \/><label for='answer-id-1447882' id='answer-label-1447882' class=' answer'><span>50%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371921[]' id='answer-id-1447883' class='answer   answerof-371921 ' value='1447883'   \/><label for='answer-id-1447883' id='answer-label-1447883' class=' answer'><span>60%<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-81' style=';'><div id='questionWrap-81'  class='   watupro-question-id-371922'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>81. <\/span>Gamma Bank has a significant number of retail customers and finds its balance sheet shape and structure difficult to manage. <br \/>\r<br>Which one of the following characteristics of a bank with wide retail operations is INCORRECT?<\/div><input type='hidden' name='question_id[]' id='qID_81' value='371922' \/><input type='hidden' id='answerType371922' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371922[]' id='answer-id-1447884' class='answer   answerof-371922 ' value='1447884'   \/><label for='answer-id-1447884' id='answer-label-1447884' class=' answer'><span>Banks with a wide retail base are typically driven by contractual obligations and not simply relationship considerations.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371922[]' id='answer-id-1447885' class='answer   answerof-371922 ' value='1447885'   \/><label for='answer-id-1447885' id='answer-label-1447885' class=' answer'><span>Attracting and retaining customers often involves offering retail products whose features are different from wholesale market products.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371922[]' id='answer-id-1447886' class='answer   answerof-371922 ' value='1447886'   \/><label for='answer-id-1447886' id='answer-label-1447886' class=' answer'><span>Pricing of retail products often has more to do with marketing considerations rather than prevailing market price.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371922[]' id='answer-id-1447887' class='answer   answerof-371922 ' value='1447887'   \/><label for='answer-id-1447887' id='answer-label-1447887' class=' answer'><span>The way retail customers behave in relation to the retail banking products they hold often results in the apparent contractual obligation of the parties providing a poor description of the actual nature of the obligations.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-82' style=';'><div id='questionWrap-82'  class='   watupro-question-id-371923'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>82. <\/span>Which one of the following four statements presents a challenge of using external loss databases in the operational risk framework?<\/div><input type='hidden' name='question_id[]' id='qID_82' value='371923' \/><input type='hidden' id='answerType371923' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371923[]' id='answer-id-1447888' class='answer   answerof-371923 ' value='1447888'   \/><label for='answer-id-1447888' id='answer-label-1447888' class=' answer'><span>Use of benchmarked data reflects similar data collection standards.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371923[]' id='answer-id-1447889' class='answer   answerof-371923 ' value='1447889'   \/><label for='answer-id-1447889' id='answer-label-1447889' class=' answer'><span>External events are usually not of interest to senior management.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371923[]' id='answer-id-1447890' class='answer   answerof-371923 ' value='1447890'   \/><label for='answer-id-1447890' id='answer-label-1447890' class=' answer'><span>If the external data is gathered from news sources, it may only reflect events that are interesting to the press.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371923[]' id='answer-id-1447891' class='answer   answerof-371923 ' value='1447891'   \/><label for='answer-id-1447891' id='answer-label-1447891' class=' answer'><span>They provide a source of data on what operational loss events will occur.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-83' style=';'><div id='questionWrap-83'  class='   watupro-question-id-371924'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>83. <\/span>A key function of treasuries in commercial\/retail banks is: <br \/>\r<br>I. To manage the interest margin of the banks. <br \/>\r<br>II. To focus on underwriting risk. <br \/>\r<br>III. To ensure strong earnings. <br \/>\r<br>IV. To increase profit margins.<\/div><input type='hidden' name='question_id[]' id='qID_83' value='371924' \/><input type='hidden' id='answerType371924' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371924[]' id='answer-id-1447892' class='answer   answerof-371924 ' value='1447892'   \/><label for='answer-id-1447892' id='answer-label-1447892' class=' answer'><span>I<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371924[]' id='answer-id-1447893' class='answer   answerof-371924 ' value='1447893'   \/><label for='answer-id-1447893' id='answer-label-1447893' class=' answer'><span>II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371924[]' id='answer-id-1447894' class='answer   answerof-371924 ' value='1447894'   \/><label for='answer-id-1447894' id='answer-label-1447894' class=' answer'><span>II, III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371924[]' id='answer-id-1447895' class='answer   answerof-371924 ' value='1447895'   \/><label for='answer-id-1447895' id='answer-label-1447895' class=' answer'><span>III, IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-84' style=';'><div id='questionWrap-84'  class='   watupro-question-id-371925'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>84. <\/span>An options trader is assessing the aggregate risk of her currency options exposures. As an options buyer, she can potentially ___ lose more than the premium originally paid. As an option seller, however, she has a ___ risk on the contract and always receives a premium.<\/div><input type='hidden' name='question_id[]' id='qID_84' value='371925' \/><input type='hidden' id='answerType371925' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371925[]' id='answer-id-1447896' class='answer   answerof-371925 ' value='1447896'   \/><label for='answer-id-1447896' id='answer-label-1447896' class=' answer'><span>Never, unlimited<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371925[]' id='answer-id-1447897' class='answer   answerof-371925 ' value='1447897'   \/><label for='answer-id-1447897' id='answer-label-1447897' class=' answer'><span>Sometimes, unlimited<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371925[]' id='answer-id-1447898' class='answer   answerof-371925 ' value='1447898'   \/><label for='answer-id-1447898' id='answer-label-1447898' class=' answer'><span>Never, limited<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371925[]' id='answer-id-1447899' class='answer   answerof-371925 ' value='1447899'   \/><label for='answer-id-1447899' id='answer-label-1447899' class=' answer'><span>Sometimes, limited<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-85' style=';'><div id='questionWrap-85'  class='   watupro-question-id-371926'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>85. <\/span>Which one of the following four statements about regulatory capital for a bank is accurate?<\/div><input type='hidden' name='question_id[]' id='qID_85' value='371926' \/><input type='hidden' id='answerType371926' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371926[]' id='answer-id-1447900' class='answer   answerof-371926 ' value='1447900'   \/><label for='answer-id-1447900' id='answer-label-1447900' class=' answer'><span>Regulatory capital is determined by rules imposed by an outside authority, such as a supervisor or central bank.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371926[]' id='answer-id-1447901' class='answer   answerof-371926 ' value='1447901'   \/><label for='answer-id-1447901' id='answer-label-1447901' class=' answer'><span>Regulatory capital is the lowest level of economic capital the bank should have to meet regulatory requirement.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371926[]' id='answer-id-1447902' class='answer   answerof-371926 ' value='1447902'   \/><label for='answer-id-1447902' id='answer-label-1447902' class=' answer'><span>Regulatory capital reflects the economic tradeoffs of the bank as accurately as the bank can represent them.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371926[]' id='answer-id-1447903' class='answer   answerof-371926 ' value='1447903'   \/><label for='answer-id-1447903' id='answer-label-1447903' class=' answer'><span>Regulatory capital is less than the regulatory capital requirement.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-86' style=';'><div id='questionWrap-86'  class='   watupro-question-id-371927'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>86. <\/span>According to Basel II what constitutes Tier 1 capital?<\/div><input type='hidden' name='question_id[]' id='qID_86' value='371927' \/><input type='hidden' id='answerType371927' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371927[]' id='answer-id-1447904' class='answer   answerof-371927 ' value='1447904'   \/><label for='answer-id-1447904' id='answer-label-1447904' class=' answer'><span>Equity capital and core capital<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371927[]' id='answer-id-1447905' class='answer   answerof-371927 ' value='1447905'   \/><label for='answer-id-1447905' id='answer-label-1447905' class=' answer'><span>Profits to reserves and innovative Tier 1 capital<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371927[]' id='answer-id-1447906' class='answer   answerof-371927 ' value='1447906'   \/><label for='answer-id-1447906' id='answer-label-1447906' class=' answer'><span>Equity capital and accrued profits to reserves<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371927[]' id='answer-id-1447907' class='answer   answerof-371927 ' value='1447907'   \/><label for='answer-id-1447907' id='answer-label-1447907' class=' answer'><span>Core capital and innovative Tier 1 capital.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-87' style=';'><div id='questionWrap-87'  class='   watupro-question-id-371928'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>87. <\/span>When looking at the distribution of portfolio credit losses, the shape of the loss distribution is ___ , as the likelihood of total losses, the sum of expected and unexpected credit losses, is ___ than the likelihood of no credit losses.<\/div><input type='hidden' name='question_id[]' id='qID_87' value='371928' \/><input type='hidden' id='answerType371928' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371928[]' id='answer-id-1447908' class='answer   answerof-371928 ' value='1447908'   \/><label for='answer-id-1447908' id='answer-label-1447908' class=' answer'><span>Symmetric; less<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371928[]' id='answer-id-1447909' class='answer   answerof-371928 ' value='1447909'   \/><label for='answer-id-1447909' id='answer-label-1447909' class=' answer'><span>Symmetric; greater<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371928[]' id='answer-id-1447910' class='answer   answerof-371928 ' value='1447910'   \/><label for='answer-id-1447910' id='answer-label-1447910' class=' answer'><span>Asymmetric; less<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371928[]' id='answer-id-1447911' class='answer   answerof-371928 ' value='1447911'   \/><label for='answer-id-1447911' id='answer-label-1447911' class=' answer'><span>Asymmetric; greater<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-88' style=';'><div id='questionWrap-88'  class='   watupro-question-id-371929'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>88. <\/span>A multinational bank just bought two bonds each worth $10,000. One of the bonds pays a fixed interest of 5% semi-annually and the other pays LIBOR semi-annually. The six month LIBOR is at 5% currently. The risk manager of the bank is concerned about the sensitivity to interest rates. <br \/>\r<br>Which of the following statements are true?<\/div><input type='hidden' name='question_id[]' id='qID_88' value='371929' \/><input type='hidden' id='answerType371929' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371929[]' id='answer-id-1447912' class='answer   answerof-371929 ' value='1447912'   \/><label for='answer-id-1447912' id='answer-label-1447912' class=' answer'><span>The price of the bond paying floating interest is more sensitive to interest rates than the bond paying fixed interest.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371929[]' id='answer-id-1447913' class='answer   answerof-371929 ' value='1447913'   \/><label for='answer-id-1447913' id='answer-label-1447913' class=' answer'><span>The price of the bond paying fixed interest is more sensitive to interest rates than the bond paying floating interest.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371929[]' id='answer-id-1447914' class='answer   answerof-371929 ' value='1447914'   \/><label for='answer-id-1447914' id='answer-label-1447914' class=' answer'><span>Both bond prices are equally sensitive to interest rates.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371929[]' id='answer-id-1447915' class='answer   answerof-371929 ' value='1447915'   \/><label for='answer-id-1447915' id='answer-label-1447915' class=' answer'><span>The given information is not enough to determine the sensitivity of the bond prices.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-89' style=';'><div id='questionWrap-89'  class='   watupro-question-id-371930'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>89. <\/span>What is a difference between currency swaps and interest rate swaps?<\/div><input type='hidden' name='question_id[]' id='qID_89' value='371930' \/><input type='hidden' id='answerType371930' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371930[]' id='answer-id-1447916' class='answer   answerof-371930 ' value='1447916'   \/><label for='answer-id-1447916' id='answer-label-1447916' class=' answer'><span>Currency swaps do not require the exchange of notional principal on maturity.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371930[]' id='answer-id-1447917' class='answer   answerof-371930 ' value='1447917'   \/><label for='answer-id-1447917' id='answer-label-1447917' class=' answer'><span>Currency swaps allow banks and customers to obtain the risk\/reward profile of long-term interest rates without having to use long-term funding.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371930[]' id='answer-id-1447918' class='answer   answerof-371930 ' value='1447918'   \/><label for='answer-id-1447918' id='answer-label-1447918' class=' answer'><span>Currency swaps are OTC derivative contracts.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371930[]' id='answer-id-1447919' class='answer   answerof-371930 ' value='1447919'   \/><label for='answer-id-1447919' id='answer-label-1447919' class=' answer'><span>Currency swaps generate foreign exchange rate risk in addition to interest rate risk.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-90' style=';'><div id='questionWrap-90'  class='   watupro-question-id-371931'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>90. <\/span>Which one of the following four statements correctly defines chooser options?<\/div><input type='hidden' name='question_id[]' id='qID_90' value='371931' \/><input type='hidden' id='answerType371931' value='radio'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371931[]' id='answer-id-1447920' class='answer   answerof-371931 ' value='1447920'   \/><label for='answer-id-1447920' id='answer-label-1447920' class=' answer'><span>The owner of these options decides if the option is a call or put option only when a predetermined date is reached.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371931[]' id='answer-id-1447921' class='answer   answerof-371931 ' value='1447921'   \/><label for='answer-id-1447921' id='answer-label-1447921' class=' answer'><span>These options represent a variation of the plain vanilla option where the underlying asset is a basket of currencies.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371931[]' id='answer-id-1447922' class='answer   answerof-371931 ' value='1447922'   \/><label for='answer-id-1447922' id='answer-label-1447922' class=' answer'><span>These options pay an amount equal to the power of the value of the underlying asset above the strike price.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='radio' name='answer-371931[]' id='answer-id-1447923' class='answer   answerof-371931 ' value='1447923'   \/><label for='answer-id-1447923' id='answer-label-1447923' class=' answer'><span>These options give the holder the right to exchange one asset for another.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div style='display:none' id='question-91'>\n\t<div class='question-content'>\n\t\t<img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.dumpsbase.com\/freedumps\/wp-content\/plugins\/watupro\/img\/loading.gif\" width=\"16\" height=\"16\" alt=\"Loading...\" title=\"Loading...\" \/>&nbsp;Loading...\t<\/div>\n<\/div>\n\n<br \/>\n\t\n\t\t\t<div class=\"watupro_buttons flex \" id=\"watuPROButtons9324\" >\n\t\t  <div id=\"prev-question\" style=\"display:none;\"><input type=\"button\" value=\"&lt; Previous\" onclick=\"WatuPRO.nextQuestion(event, 'previous');\"\/><\/div>\t\t  \t\t  \t\t   \n\t\t   \t  \t\t<div><input type=\"button\" name=\"action\" class=\"watupro-submit-button\" onclick=\"WatuPRO.submitResult(event)\" id=\"action-button\" value=\"View Results\"  \/>\n\t\t<\/div>\n\t\t<\/div>\n\t\t\n\t<input type=\"hidden\" name=\"quiz_id\" value=\"9324\" id=\"watuPROExamID\"\/>\n\t<input type=\"hidden\" 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