Free GARP FRM-Part-2 Exam Questions

The structural model of credit risk is most likely a(n):

Country X’s banking regulator established sector-specific cybersecurity requirements. This most likely indicates that Country X is a(n):

A bank is assessing the impact of a new transaction on CVA and DVA. If the new transaction is negatively correlated to existing transactions, the impact will likely be a(n):

Which of the following statements is least accurate regarding a credit support annex (CSA) and/or an ISDA Master Agreement?

A portfolio manager is revising an equity portfolio with the goal of attaining theoptimal portfolio on the portfolio’s efficient frontier. The manager believes this goalcan be achieved by replacing a stock in the portfolio with a new stock that is not partof the existing portfolio and keeping the portfolio value constant. The managerconsiders the following alternative actions:• Action 1: Sell the stock with the highest marginal VaR and purchase anequivalent value of a new stock that would have the lowest marginal VaR in the portfolio.• Action 2: Sell a particular stock and purchase an equivalent value of a newstock, which would cause the ratio of expected excess returns to portfoliobeta for all stocks in the portfolio to be equal.• Action 3: Sell a particular stock and purchase an equivalent value of a newstock, which would cause the portfolio betas of all stocks in the portfolio to be equal.• Action 4: Sell a particular stock and purchase an equivalent value of a newstock, which would significantly decrease the portfolio standard deviationwithout changing the average excess portfolio return.Which of the actions above would create an optimal portfolio?