Free GARP FRM-Part-2 Exam Questions
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GARP FRM-Part-2 Exam Questions
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Provided By: GARP
- Exam: FRM Exam Part II
- Certification: GARP Certification
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Total Questions: 503
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Updated On: Nov 19, 2024
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Rated: 4.9 |
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Online Users: 1006
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Question 1
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Country X’s banking regulator established sector-specific cybersecurity requirements. This most likely indicates that Country X is a(n):
Answer: A
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Country X’s banking regulator established sector-specific cybersecurity requirements. This most likely indicates that Country X is a(n):
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Question 2
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An option pricing analyst at an investment bank has been asked to write a reportexamining the relationship between option prices and implied volatility curves. Theanalyst notes that the implied volatility curves of different underlying assets oftenhave different shapes and explains the reasons why this occurs. Which of thefollowing statements can correctly be included in the report?
Answer: A
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An option pricing analyst at an investment bank has been asked to write a reportexamining the relationship between option prices and implied volatility curves. Theanalyst notes that the implied volatility curves of different underlying assets oftenhave different shapes and explains the reasons why this occurs. Which of thefollowing statements can correctly be included in the report?
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Question 3
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How many of the following statements regarding wrong-way risk (WWR) and right way risk (RWR) are correct?Co-movement in risk exposure and default probability producing a decline in overall risk is an example of wrong-way risk.Co-movement in risk exposure and default probability producing an increase in overall counterparty risk is an example of right-way risk.Co-movement in risk exposure and default probability producing neither a decline nor an increase in the overall counterparty risk is an example of wrong-way risk.Co-movement in risk exposure and default probability producing a decline in risk exposure but an increase in counterparty default probability is an example of rightway risk.
Answer: C
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How many of the following statements regarding wrong-way risk (WWR) and right way risk (RWR) are correct?Co-movement in risk exposure and default probability producing a decline in overall risk is an example of wrong-way risk.Co-movement in risk exposure and default probability producing an increase in overall counterparty risk is an example of right-way risk.Co-movement in risk exposure and default probability producing neither a decline nor an increase in the overall counterparty risk is an example of wrong-way risk.Co-movement in risk exposure and default probability producing a decline in risk exposure but an increase in counterparty default probability is an example of rightway risk.
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Question 4
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Imagine you are a risk manager at a mid-sized commercial bank that has experienced rapid growth over the past three years. Your bank, similar to Silicon Valley Bank (SVB), has asignificant reliance on uninsured deposits and a concentrated customer base. Given the recentfailure of SVB, primarily attributed to liquidity risk management deficiencies, your CEO hastasked you with reviewing and strengthening the bank’s liquidity risk management framework.Your review reveals several areas that mirror SVB’s situation, particularly concerning internalliquidity stress testing (ILST), the modeling of a 30-day liquidity buffer, and management'sresponsiveness to liquidity challenges. Based on the lessons learned from SVB's failure, which ofthe following actions should you prioritize to improve your bank’s liquidity risk management?
Answer: B
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Imagine you are a risk manager at a mid-sized commercial bank that has experienced rapid growth over the past three years. Your bank, similar to Silicon Valley Bank (SVB), has asignificant reliance on uninsured deposits and a concentrated customer base. Given the recentfailure of SVB, primarily attributed to liquidity risk management deficiencies, your CEO hastasked you with reviewing and strengthening the bank’s liquidity risk management framework.Your review reveals several areas that mirror SVB’s situation, particularly concerning internalliquidity stress testing (ILST), the modeling of a 30-day liquidity buffer, and management'sresponsiveness to liquidity challenges. Based on the lessons learned from SVB's failure, which ofthe following actions should you prioritize to improve your bank’s liquidity risk management?
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Question 5
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An operational risk analyst at a large bank is preparing a year-end report of thebank’s operational loss events. The analyst uses the Basel operational risktaxonomy to classify different events into Level 1, Level 2, and Level 3. As part ofthis process, the analyst considers the following four events that occurred during the year:• A sales representative in the lending department forged a senior manager’ssignature to approve an application for a large commercial loan that defaulted.• The bank failed to deliver sufficient collateral to support a swap position,which was later terminated at a loss.• Several managers in the bank’s wealth management group were found tohave misused confidential customer information by sharing this informationwith other employees and a third-party vendor representative.• Some personal customer information was stolen in a cyber-attack in whichan external hacker broke into a database stored in the cloud.In classifying the four events and considering the Basel taxonomy in general, whichof the following actions would be most appropriate for the analyst to take?
Answer: D
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An operational risk analyst at a large bank is preparing a year-end report of thebank’s operational loss events. The analyst uses the Basel operational risktaxonomy to classify different events into Level 1, Level 2, and Level 3. As part ofthis process, the analyst considers the following four events that occurred during the year:• A sales representative in the lending department forged a senior manager’ssignature to approve an application for a large commercial loan that defaulted.• The bank failed to deliver sufficient collateral to support a swap position,which was later terminated at a loss.• Several managers in the bank’s wealth management group were found tohave misused confidential customer information by sharing this informationwith other employees and a third-party vendor representative.• Some personal customer information was stolen in a cyber-attack in whichan external hacker broke into a database stored in the cloud.In classifying the four events and considering the Basel taxonomy in general, whichof the following actions would be most appropriate for the analyst to take?