Free GARP 2016-FRR Exam Questions

Become GARP Certified with updated 2016-FRR exam questions and correct answers

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Total 390 Questions | Updated On: Oct 26, 2026

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Question 1

Gamma Bank is operating in a highly volatile interest rate environment and wants to

stabilize its net income by shifting the sources of its earnings from interest rate sensitive

sources to less interest rate sensitive sources. All of the following strategies can help

achieve this objective EXCEPT:

A : arge bank fees for underwriting loans

B : ovide trust, asset management, and trading services to customers

C : tend different types of credit

D : iginate more floating interest rate loans

Answer: D

Question 2

Which one of the following four global markets for financial assets or instruments is widely believed to be the most liquid?

A : uity market

B : reign exchange market.

C : xed income market

D : mmodities market

Answer: B

Question 3

Which one of the following four statements regarding the analysis of recoveries in operational risk reporting is correct?

A : Recoveries are usually driven by automated processes

B : Recovery analysts cannot be used to improve the recovery rate

C : Recovery analysis can demonstrate the importance of the operational risk function

D : The experience of personnel within the recovery team has no effect on the recovery rate

Answer: C

Question 4

PV01 is a method of describing interest rate risk. Which one of the following is a specific weakness of PV01?

A : PV01 overestimates convexity risk

B : PV01 is not very good at describing value change due to large changes in interest rates

C : PV01 underestimates the effect of small changes in interest rates

D : PV01 requires a large number of calculations to produce a reasonable estimate of the effect of interest rate changes

Answer: B

Question 5

Which of the following statements about the interest rates and option prices is correct?

A : rho is positive, rising interest rates increase option prices.

B : rho is positive, rising interest rates decrease option prices.

C : interest rates rise, all options will rise in value.

D : interest rates fall, all options will rise in value

Answer: A

Page: 1 / 78

Total 390 Questions | Updated On: Oct 26, 2026

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