GARP 2016-FRR Exam With Confidence Using Practice Dumps

Option delta (Δ) is a measure used in finance to indicate the sensitivity of an option's price to the price of the underlying asset. Specifically, it represents the rate of change of the option's value with respect to changes in the price of the underlying instrument. It is a fundamental concept in options trading and risk management.

References:

Standard definition from options theory.

In the event of a bank liquidation, the order of repayment is as follows:

Depositors: They are given priority as they are often covered by deposit insurance schemes to maintain confidence in the banking system.

Debt Holders: After depositors, holders of the bank’s debt are repaid. This includes both secured and unsecured creditors, with secured creditors having a higher claim.

Shareholders: They are last in line to receive any remaining funds after all other obligations have been satisfied. Common shareholders are the last to be paid, after preferred shareholders.

This hierarchy ensures that the most senior and secured claims are addressed first, providing a structured approach to liquidation.References: How Finance Works, discussions on bank liquidation processes and the hierarchy of claims​​.

An asset-sensitive bank has more rate-sensitive assets than rate-sensitive liabilities. This results in a positive cumulative gap, meaning the bank will benefit from rising interest rates. As interest rates increase, the income from rate-sensitive assets will increase more than the expense on rate-sensitive liabilities, improving the bank's net interest income.