Free GARP FRM-Part-2 Exam Questions

Which of the following statements best describes the benefit of netting risk exposures?The benefits of netting are realized when:

If investors are risk-neutral and the price of a 2-year zero-coupon bond is $0.88035 today, what is the implied 2-year spot rate?

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?

At inception, the tranches in a synthetic CDO are priced to earn a spread that is:

In the context of arbitrage trades, if the CDS spread is significantly greater than the bond yield spread, what is the most appropriate action by the investor?