All 2016-FRR Test Inside GARP Questions

Financial Risk and Regulation (FRR) Series Questions and Answers

Question 9

Which one of the following four interest rate related yield curves is used to revalue loan and deposit positions in banks?

Options:

Derivative

Bond

Cash

Basis

Question 10

Which one of the following four physical commodities markets has the right combination of characteristics that generally allows short selling in the market, without making the short-selling transaction prohibitively expensive?

Options:

Oil

Natural Gas

Grain

Gold

Question 11

Which one of the following four relationships should be used to price equity forwards or futures?

Options:

Equity forward or futures price = market equity price + (1 + risk-free rate – expected dividend rate)t

Equity forward or futures price = market equity price x (1 - risk-free rate – expected dividend rate)t

Equity forward or futures price = market equity price x (1 + risk-free rate – expected dividend rate)t

Equity forward or futures price = market equity price + (1 + risk-free rate + expected dividend rate)t

Question 12

Which one of the following four statements represents a possible disadvantage of using total return swap to manage equity portfolio risks?

Options:

Similar to the formal portfolio rebalancing strategy, the total return receiver needs to modify the size of the trading position.

The total return receiver needs to incur the transaction costs of establishing an equity position.

Similar to an equity forward position, the total return receiver does not get paid the dividend.

The total return receiver does not have any voting rights.

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All 2016-FRR Test Inside GARP Questions

Financial Risk and Regulation (FRR) Series Questions and Answers

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