Financial Risk and Regulation 2016-FRR Exam Questions and Answers PDF

Financial Risk and Regulation (FRR) Series Questions and Answers

Question 13

To hedge equity exposure without buying or selling shares of stock or otherwise rebalancing the portfolio, a risk manager could initiate

Options:

A short total return swap position.

A long total return swap position.

A short debt-for-equity swap.

A long debt-for-equity swap.

Question 14

Which one of the four following activities is NOT a component of the daily VaR computing process?

Options:

Updating individual risk factor models.

Computing portfolio risk by delta-normal or delta-gamma method.

Updating factor interrelationships.

Producing the VaR report.

Question 15

James Arthur is a customer of a bank who has taken a floating rate loan from the bank. He is concerned that the rates may rise in the future increasing his payment amount. Which of the following instruments should he buy to hedge against the rise in interest rates?

Options:

Interest rate floor

Interest rate cap

Index amortizing swap

Interest rate swap that receives fixed and pays floating

Question 16

When the cost of gold is $1,100 per bullion and the 3-month forward contract trades at $900, a commodity trader seeks out arbitrage opportunities in this relationship. To capitalize on any arbitrage opportunities, the trader could implement which one of the following four strategies?

Options:

Short-sell physical gold and take a long position in the futures contract

Take a long position in physical gold and short-sell the futures contract

Short-sell both physical gold and futures contract

Take long positions in both physical gold and futures contract

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Financial Risk and Regulation 2016-FRR Exam Questions and Answers PDF

Financial Risk and Regulation (FRR) Series Questions and Answers

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