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Because the GARP 2016-FRR Exam covers a broad range of topics, it requires thorough preparation and a deep level of understanding of financial risk assessment, management, and regulatory compliance concepts. Those candidates who wish to sit for the exam should be prepared to spend many hours studying and reviewing the exam material, which includes textbooks, case studies, and real-world scenarios. However, earning the FRR credential can help increase your professional credibility and open doors to new career opportunities in the financial services industry.

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The FRR Series Certification Exam offered by GARP is a comprehensive and rigorous assessment of the skills and knowledge required to effectively manage financial risks. Financial Risk and Regulation (FRR) Series certification is globally recognized and respected in the industry, providing professionals with a valuable asset for career advancement. With the increasing importance of risk management in the financial industry, obtaining the FRR Series Certification is a wise investment in one's career.

GARP Financial Risk and Regulation (FRR) Series Sample Questions (Q136-Q141):

NEW QUESTION # 136
BIS Principles for Sound Liquidity Risk Management and Supervision seek to raise standards in which of the following areas?
I. Aligning the risk-taking incentives of individual business units with their liquidity risk exposures.
II. Management of intraday liquidity risks and collateral positions.
III. Public disclosures of a bank's liquidity risk profile and management.
IV. Maintenance of sufficient regulatory capital to survive protracted periods of liquidity stress.

A. I, III, IV
B. II, III, IV
C. I, II, IV
D. I, II, III

Answer: D

Explanation:
Comprehensive and Detailed In-Depth Explanation:
The BIS (Bank for International Settlements) "Principles for Sound Liquidity Risk Management and Supervision" (BCBS, September 2008) outlines 17 principles to enhance liquidity risk management. These principles include:
* I:Principle 2 emphasizes aligning risk-taking incentives with liquidity risk exposures, ensuring business units are accountable for the liquidity implications of their activities.
* II:Principle 11 focuses on managing intraday liquidity risks and collateral positions, critical for real- time payment and settlement systems.
* III:Principle 17 requires public disclosure of liquidity risk profiles to promote market discipline and transparency.
Reference:BCBS, "Principles for Sound Liquidity Risk Management and Supervision," September 2008, Principles 2, 11, 17; GARP FRR Study Notes, Liquidity Risk Section.

NEW QUESTION # 137
A credit risk analyst is evaluating factors that quantify credit risk exposures. The risk that the borrower would fail to make full and timely repayments of its financial obligations over a given time horizon typically refers to:

A. Probability of default.
B. Exposure at default.
C. Duration of default.
D. Loss given default.

Answer: A

Explanation:
* The probability of default (PD) refers to the likelihood that a borrower will fail to meet its debt obligations over a specific time horizon. This is a core component in quantifying credit risk exposures.
* Duration of default is not a commonly used term in credit risk analysis.
* Exposure at default (EAD) measures the total value at risk in the event of default but does not directly refer to the likelihood of default.
* Loss given default (LGD) measures the portion of the exposure that is lost when a borrower defaults but does not indicate the likelihood of default.
References:
* How Finance Works: "The risk that the borrower would fail to make full and timely repayments of its financial obligations over a given time horizon typically refers to the probability of default."

NEW QUESTION # 138
Which of the following statements about implementation of a successful RCSA program is correct?

A. The RCSA scoring methodology should include only financial impacts and not include reputational,
legal, regulatory, client and life safety impacts.
B. Internal loss data help to identify the risks and control weaknesses that need to be addressed in the
RCSA; external events are not helpful in informing the discussions around potential risks.
C. An RCSA is only complete after all possible mitigating actions have been identified and analyzed as a
result of the assessment process.
D. To ensure that the RCSA is well designed, it is important to interview participants, stakeholders and
support functions prior to the launching the RCSA.

Answer: D

NEW QUESTION # 139
A credit portfolio manager analyzes a large retail credit portfolio. Which of the following factors will represent typical disadvantages of market-linked credit risk drivers?
I. Need to supply a large number of input parameters to the model
II. Slow computation speed due to higher simulation complexity
III. Non-linear nature of the model applicable to a specific type of credit portfolios IV. Need to estimate a large number of unknown variable and use approximations

A. I
B. II, III
C. III, IV
D. I, II

Answer: D

Explanation:
Market-linked credit risk drivers often face specific disadvantages:
* Need to supply a large number of input parameters to the model: Complex models require numerous data inputs, which can be challenging to obtain and maintain.
* Slow computation speed due to higher simulation complexity: The complexity of these models can lead to slower computation times, making them less efficient for real-time analysis.
Non-linear nature of models and the need to estimate unknown variables are also relevant but are not as primary disadvantages as the first two mentioned.
References
* Verified information from the document

NEW QUESTION # 140
Counterparty credit risk assessment differs from traditional credit risk assessment in all of the following features EXCEPT:

A. Exposures can often be netted
B. Counterparty risk creates a two-way credit exposure
C. Exposure at default may be negatively correlated to the probability of default
D. Collateral arrangements are typically static in nature

Answer: D

Explanation:
Counterparty credit risk assessment differs from traditional credit risk assessment primarily in the features of exposures being netted, the possibility of negative correlation between exposure at default and the probability of default, and the two-way nature of credit exposure. Collateral arrangements in counterparty credit risk management are typically dynamic, not static, as they can change based on market conditions and the credit quality of the counterparty. Therefore, the feature that does not differ is that collateral arrangements are typically static in nature.

NEW QUESTION # 141
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