Free GARP FRM-Part-1 Exam Questions

The investment banking division of a large German bank recently engaged a new client whose business is in direct competition with an existing client of the commercial banking division of the bank. A manager in the commercial banking division is concerned about conflicts of interest that may arise from providing both clients with a high level of customer service. What is of greatest concern to the manager regarding this situation?

A bank has entered into a 3 x 6 forward rate agreement to receive a xed rate of 3.35 percent on $12 million in six months. If the applicable rate in three months is 3.62 percent, the cash ow associated with this forward rate agreement for the bank would be closest to:

A senior analyst at a financial institution is giving a presentation to a group of junior analysts on the features of the power law and its uses. The senior analyst notes that the power law is particularly important in understanding the tails of distributions. Which of the following is correct regarding the power law?

All of the following are reasons that Nick Leeson engaged in aggressive speculative trading in the Barings Bank collapse except:

A $2 million balanced portfolio is comprised of 40 percent stocks and 60 percent intermediate bonds. For the next year, the expected return on the stock component is 9 percent and the expected return on the bond component is 6 percent. The standard deviation of the stock component is 18 percent and the standard deviation of the bond component is 8 percent. What is the annual VAR for the portfolio at a 1 percent probability level if the correlation between the stock and the bond component is 0.25?