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Vendor: GARP
Exam Code: 2016-FRR
Exam Name: Financial Risk and Regulation (FRR) Series
Certification: Financial Risk and Regulation
Total Questions: 342 Q&A
Updated on: Dec 16, 2024
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For which one of the following four reasons do corporate customers use foreign exchange derivatives?
I. To lock in the current value of foreign-denominated receivables
II. To lock in the current value of foreign-denominated payables
III. To lock in the value of expected future foreign-denominated receivables
IV.
To lock in the value of expected future foreign-denominated payables
A.
II
B.
I and IV
C.
II and III
D.
I, II, III, IV
Which one of the following four statements best describes challenges of delta-normal method of mapping options positions?
Delta-normal method understates
A. Risks of long and short positions for both calls and puts.
B. Risks of long option positions for puts and overstates risks of short option positions for calls.
C. Risks of long option positions for calls and overstates risks of short option positions for puts.
D. Risks of short option positions and overstates risks of long option positions for both calls and puts.
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 Brazilian 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, sells the reals, and receives AUD 1,010,000. To perform foreign exchange matched position trading, the banks should
A. Immediately buy the real at the market rate of 100 and pay AUD 1,000,000.
B. Immediately buy the real above the market rate of 105 and pay AUD 1,050,050.
C. Immediately sell the real at the market rate of 100 and receive AUD 1,000,000.
D. Immediately sell the real above the market rate of 105 and receive AUD 1,050,050.
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