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Financial Risk and Regulation 2016-FRR Exam Questions and Answers PDF

Page: 4 / 28
Total 387 questions

Financial Risk and Regulation (FRR) Series Questions and Answers

Question 13

A financial analyst is trying to distinguish credit risk from market risk. A $100 loan collateralized with $200 in stock has limited ___, but an uncollateralized obligation issued by a large bank to pay an amount linked to the long-term performance of the Nikkei 225 Index that measures the performance of the leading Japanese stocks on the Tokyo Stock Exchange likely has more ___ than ___.

Options:

A.

Legal risk; market risk; credit risk

B.

Market risk; market risk; credit risk

C.

Market risk; credit risk; market risk

D.

Credit risk, legal risk; market risk

Question 14

Changes to which one of the following four factors would typically not increase the cost of credit?

Options:

A.

Increasing inflation rates in a country.

B.

Increase in consumption of goods and services.

C.

Higher risk premium on a fixed income instrument.

D.

Higher return earned on alternative investments.

Question 15

Which one of the following four global markets for financial assets or instruments is widely believed to be the most liquid?

Options:

A.

Equity market.

B.

Foreign exchange market.

C.

Fixed income market

D.

Commodities market

Question 16

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

Options:

A.

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

B.

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

C.

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

D.

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

Page: 4 / 28
Total 387 questions