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Free 2016-FRR – Financial Risk and Regulation (FRR) Series Practice Test Question

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Showing 13–15 of 15 questions

Question 13 (Volume B)

In the United States, stock investors must comply with the Regulation T of the Federal Reserve Bank and may borrow up to               of the value of the securities from their brokers.

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    30%
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    40%
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    50%
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    60%
Question 14 (Volume A)

By lowering the spread on lower credit quality borrowers, the bank will typically achieve all of the following outcomes EXCEPT:

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    Aggressively courting of new business
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    Lower probability of default
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    Rapid growth
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    Higher losses in case of default
Question 15 (Volume A)

Which one of the following four statements regarding counterparty credit risk is INCORRECT?

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    Counterparty credit risk refers to the inability to realize gains in a contract with a counterparty due to its default.
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    The exposure at default is variable due to fluctuations in swap valuations.
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    The exposure at default can be negatively correlated to probability of default.
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    Dynamic collateral provisions often increase counterparty risk considerably.