Free GARP FRM-Part-2 Exam Questions

A UK-based retail brokerage firm has recently experienced rapid growth through aseries of acquisitions and plans to improve its operational resilience in order tocomply with new requirements issued by national regulators. The CRO asks anoperational risk manager to assess best practices in this area and to suggestpotential actions that the firm should take to meet this objective. Which of thefollowing actions would be most appropriate for the manager to recommend in orderto comply with the regulatory guidelines concerning operational resilience forimportant business services?

Two financial institutions are facing different funding issues. Bank A, a mid-size regional bank is concerned that it has a shortfall in legal reserves for the day and is seeking an alternative to address this shortfall. Bank B, a small community bank, on the other hand, has recently experienced a much greater than anticipated shortfall in long term certificates of deposit (CD) renewals due to fierce local competition for retail deposits. Bank B has traditionally used stable CDs to fund its home mortgage portfolio. What is the most appropriate funding response of each of these two institutions considering timing and the availability of non-deposit funds?

A researcher at a national regulatory agency is examining the use of thestandardized ratings-based approach (SA) and the advanced internal ratingsbased(A-IRB) approach in determining credit risk capital. The researcherevaluates the implications of applying these approaches on two different banks,Global Bank and Resource Bank. Information about the credit exposures of the two banks is provided below:• Global Bank lends to large global corporations that have highly diversebusiness lines by providing sizable long-dated unsecured credit facilities.• Resource Bank lends to oil and gas producers in its region, most of which have small-scale operations.Which of the following is the most appropriate conclusion for the researcher to reach?

The CRO of a regional bank expresses concern in a meeting of the risk team thatthe bank’s internal risk models are not adequately assessing potential randomextreme losses. A risk analyst asks if implementing a model based on extremevalue theory (EVT) would address the CRO’s concern. Which of the following iscorrect when applying EVT and examining distributions of losses exceeding a threshold value?

Which of the following measures is most likely an example of a dynamic financial correlation measure?