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: May 24, 2026

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Question 1

A bank considers issuing new capital to increase its Tier 1 capital levels. Which of the

following financial instruments would most likely to be considered?

A : ng-term and callable debt convertible to equity

B : nvertible preferred shares

C : ort-term callable debt

D : ort-term debt convertible to non-cumulative preferred shares

Answer: B

Question 2

An endowment asset manager with a focus on long/short equity strategies is evaluating the

risks of an equity portfolio. Which of the following risk types does the asset manager need

to consider when evaluating her diversified equity portfolio?

I. Company-specific projected earnings and earnings risk

II. Aggregate earnings expectations

III. Market liquidity

IV. Individual asset volatility

A : I

B : IV

C : , III

D : II, IV

Answer: C

Question 3

A bank customer expecting to pay its Brazilian supplier BRL 100 million asks Alpha Bank to

buy Australian dollars and sell Brazilian reals. Alpha bank does not hold reals so it asks for

a quote to buy Brazilian reals in the market. The market rate is 100. The bank quotes a

selling rate of 101 to its customer and sells the reals at this quoted price. Then the bank

immediately buys the real at the market rate and completes foreign exchange matched

transaction. What is the financial impact of this transaction for Alpha bank?

A : is transaction leaves the bank a profit of AUD 10,101.

B : is transaction leaves the bank a profit of BRL 10,101.

C : is transaction leaves the bank a loss of AUD 10,101.

D : is transaction leaves the bank a loss of BRL 10,101.

Answer: A

Question 4

Alpha Bank determined that Delta Industrial Machinery Corporation has 2% change of default on a one-year no-payment of USD $1 million, including interest and principal repayment. The bank charges 3% interest rate spread to firms in the machinery industry, and the risk-free interest rate is 6%. Alpha Bank receives both interest and principal payments once at the end the year. Delta can only default at the end of the year. If Delta defaults, the bank expects to lose 50% of its promised payment. What may happen to the Delta's initial credit parameter and the value of its loan if the machinery industry experiences adverse structural changes?

A : obability of default and loss at default may decrease simultaneously, while duration rises causing the loan value to decrease.

B : obability of default and loss at default may decrease simultaneously, while duration falls causing the loan value to decrease.

C : obability of default and loss at default may increase simultaneously, while duration rises causing the loan value to decrease.

D : obability of default and loss at default may increase simultaneously, while duration falls causing the loan value to decrease.

Answer: D

Question 5

According to the principles of the Basel II Accord, which one of the following influences the implementation and relative weights of the elements of the operational risk framework?

A : The banks reporting currency

B : The banks regulatory capital level

C : The banks culture

D : The banks economic capital level

Answer: C

Page: 1 / 78

Total 390 Questions | Updated On: May 24, 2026

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