Online Access Free 2016-FRR Practice Test

Which one of the following market risk measures evaluates the bank's earnings sensitivity?

• A.Large exposure risk identification
• B.Value-at-risk back testing
• C.Earnings-at-risk stress testing
• D.Cash flow stress testing

Rising TED spread is typically a sign of increase in what type of risk among large banks?
I. Credit risk
II. Market risk
III. Liquidity risk
IV. Operational risk

• A.II only
• B.I and IV
• C.I only
• D.I, II, and III

If the LTV (loan-to-value ratio) is 75%, what is the haircut?

• A.5%
• B.50%
• C.75%
• D.25%

Which of the following statements describes a bank's reasons to set risk limits?
I. To control and minimize a bank's current risk exposure.
II. To predict future risks.
III. To allocate risks to business units.
IV. To keep risk within tolerance levels.

• A.I and II
• B.I, III, and IV
• C.III and IV
• D.I, II, and III

A key function of treasuries in commercial/retail banks is:
I). To manage the interest margin of the banks.
II). To focus on underwriting risk.
III). To ensure strong earnings.
IV). To increase profit margins.

• A.II
• B.III, IV
• C.II, III
• D.I