2016-FRR Exam Results

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:

Which statements correctly describe the features of using subscription databases for operational loss data analysis?

Subscription databases

I. Provide central data repositories and benchmarking services to their members.

II. Can provide insight into whether the losses in a firm reflect the usual losses in their industry.

III. Assist with mapping the events to the appropriate business lines, risk categories and causes.

IV. Reflect only events that are interesting to the press and are reported in the press.

Which of the following statements about endogenous and external types of liquidity are accurate?

I. Endogenous liquidity is the liquidity inherent in the bank's assets themselves.

II. External liquidity is the liquidity provided by the bank's liquidity structure to fund its assets and maturing liabilities.

III. External liquidity is the non-contractual and contingent capital supplied by investors to support the bank in times of liquidity stress.

IV. Endogenous liquidity is the same as funding liquidity.

The main building blocks of an operational risk framework include all of the following options EXCEPT: