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Online 2016-FRR Questions Video

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Total 387 questions

Financial Risk and Regulation (FRR) Series Questions and Answers

Question 45

Beta Insurance Company is only allowed to invest in investment grade bonds. To maximize the interest income, Beta Insurance Company should invest in bonds with which of the following ratings?

Options:

A.

AAA

B.

AA

C.

A

D.

B

Question 46

Which one of the following four statements correctly defines credit risk?

Options:

A.

Credit risk is the risk that complements market and liquidity risks.

B.

Credit risk is a form of performance risk in contractual relationship.

C.

Credit risk is the risk arising from execution of a company's strategy.

D.

Credit risk is the risk that summarizes the exposures a company or firm assumes when it attempts to operate within a given field or industry.

Question 47

Which one of the following four statements regarding bank's exposure to credit and default risk is INCORRECT?

Options:

A.

The more the bank diversifies its credit portfolio, the better spread its credit risks become.

B.

In debt management, the value of any loan exposure will change typically in a fashion similar the same way that an equity investment can.

C.

In debt management, the goal is to minimize the effect of any defaults.

D.

Default risk cannot be hedged away fully, and it will always exist for the holder of the credit or for the person insuring against the credit or default event.

Question 48

Which one of the following four parameters is NOT a required input in the Black-Scholes model to price a foreign exchange option?

Options:

A.

Underlying exchange rates

B.

Underlying interest rates

C.

Discrete future stock prices

D.

Option exercise price

Page: 12 / 28
Total 387 questions