Free GARP FRM-Part-2 Exam Questions

A group of newly hired investment analysts at a large wealth management firm isundergoing training on the company’s investment practices. Part of the trainingfocuses on hedge fund investments and addresses how the firm evaluates the riskmanagement processes and procedures of a hedge fund being considered forinvestment. The analysts learn that the firm performs comprehensive due diligenceon the hedge fund’s investment environment, as well as on its operationalenvironment and business practices. Which of the following is correct about a hedgefund investor’s due diligence on the operational environment of a hedge fund?

An investment bank has a one-way credit support annex (CSA) on a bilateral transaction with a hedge fund counterparty. Under the terms of the CSA, the mark-to-market value of the transaction forms the basis of the hedge fund’s collateral requirements, which are provided below:Value (CNY)Mark-to-market value of net exposure 25,000,000Mark-to-market value of collateral posted 10,800,000Threshold amount 14,000,000Minimum transfer amount 2,500,000Rounding amount 10,000Assuming the net exposure increases to CNY 27,000,000 and the mark-to-market value of collateral posted has not changed, how much additional collateral will the hedge fund have to post?

What is the impact on the bond price-yield curve if, all other factors held constant, the maturity of a zero-coupon bond increases? The pricing curve becomes:

Which of the following statements concerning the calculation of value at a node in a fixed-income binomial interest rate tree is most accurate? The value at each node is the:

A bank treasurer is seeking to identify the most appropriate investment maturitystrategy to apply considering the status of its balance sheet and the economicconditions it is currently facing. The treasurer gathers the following information:• The bank faces a high interest rate environment with a flat yield curve.• The bank’s asset mix includes a high proportion of US Treasury bondspurchased years ago when interest rates were significantly lower.• The bank has a high proportion of revenues from loans and anticipates arecord high level of profitability this year.Which of the following strategies would be the most appropriate for the bank to takein order to maintain its current level of total income?