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Pearson 2016-FRR New Attempt

Page: 16 / 28
Total 387 questions

Financial Risk and Regulation (FRR) Series Questions and Answers

Question 61

Which one of the following four statements best describes challenges of delta-normal method of mapping options positions?

Delta-normal method understates

Options:

A.

Risks of long and short positions for both calls and puts.

B.

Risks of long option positions for puts and overstates risks of short option positions for calls.

C.

Risks of long option positions for calls and overstates risks of short option positions for puts.

D.

Risks of short option positions and overstates risks of long option positions for both calls and puts.

Question 62

Which one of the following four statements about economic capital of a bank is correct?

Options:

A.

Economic capital measures how the economy is doing compared to the bank.

B.

Economic capital reflects the possible losses that could occur based on the bank's own estimates of the risks it is taking.

C.

Economic capital is determined by rules imposed by an external authority.

D.

Economic capital is the present value of the earnings generated by the bank in the future.

Question 63

Which of the following correctly identifies reasons for collecting internal operational risk event and loss information?

I. Assessing the risk of specific areas of concern.

II. Evaluating risk events and outcomes.

III. Collecting data for capital modeling.

IV. Getting insight into risk events in other firms in the industry.

Options:

A.

I and II

B.

II and III

C.

I, II and III

D.

II, III, and IV

Question 64

Which one of the four following aspects of legal risk is NOT included in the Basel II Accord?

Options:

A.

Exposure to fines

B.

Private settlements

C.

Punitive damages resulting from supervisory actions

D.

Negative publicity resulting from reputational damages

Page: 16 / 28
Total 387 questions