GARP International Certificate in Banking Risk and Regulation (ICBRR) - ICBRR FREE EXAM DUMPS QUESTIONS & ANSWERS
An asset and liability manager for a large financial institution has to recognize that retail products ___ include embedded options, which are often not rationally exercised, while wholesale products ___ carry penalties for repayment or include rights to terminate wholesale contracts on very different terms than are common in retail products.
Correct Answer: C
Vote an answer
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. By running the trades through a clearinghouse, the small bank can achieve all of the following objectives EXCEPT:
Correct Answer: A
Vote an answer
Which one of the following four statements about economic capital of a bank is correct?
Correct Answer: A
Vote an answer
What is generally true of the relationship between a bond's yield and it's time to maturity when the yield curve is upward sloping?
Correct Answer: A
Vote an answer
Which of the activities represent examples of market manipulation?
Correct Answer: A
Vote an answer
Mega Bank holds a $250 million mortgage loan portfolio, which reprices every 5 years at LIBOR + 10%. The bank also has $150 million in deposits that reprices every month at LIBOR + 3%. What is the amount of Mega Bank's rate sensitive assets?
Correct Answer: A
Vote an answer
BetaFin, a financial services firm, does not have retail branches, but has fixed income, equity, and asset management divisions. Which one of the four following risk and control self-assessment (RCSA) methods fits the firm's operational risk framework the best?
Correct Answer: A
Vote an answer
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.
Correct Answer: C
Vote an answer
The Basel II Accord's operational risk definition excludes all of the following items EXCEPT:
Correct Answer: A
Vote an answer
A bank customer chooses a mortgage with low initial payments and payments that increase over time because the customer knows that she will have trouble making payments in the early years of the loan. The bank makes this type of mortgage with the same default assumptions uses for ordinary mortgages, thus underestimating the risk of default and becoming exposed to:
Correct Answer: C
Vote an answer
Which one of the following is a reason for a bank to keep a commercial loan in its portfolio until maturity?
I. Commercial loans usually have attractive risk-return profile.
II. Commercial loans are difficult to sell due to non standard features.
III. Commercial loans could be used to maintain good relations with important customers.
IV.
The credit risk in commercial loans is low.
I. Commercial loans usually have attractive risk-return profile.
II. Commercial loans are difficult to sell due to non standard features.
III. Commercial loans could be used to maintain good relations with important customers.
IV.
The credit risk in commercial loans is low.
Correct Answer: C
Vote an answer
Which of the following risk types are historically associated with credit derivatives?
I. Documentation risk
II. Definition of credit events
III. Occurrence of credit events
IV.
Enterprise risk
I. Documentation risk
II. Definition of credit events
III. Occurrence of credit events
IV.
Enterprise risk
Correct Answer: B
Vote an answer