Download International Certificate in Banking Risk and Regulation (ICBRR).ICBRR.SelfTestEngine.2020-03-18.205q.tqb

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Vendor: GARP
Exam Code: ICBRR
Exam Name: International Certificate in Banking Risk and Regulation (ICBRR)
Date: Mar 18, 2020
File Size: 743 KB
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Demo Questions

Question 1
Which one of the following four statements correctly defines credit risk?
  1. Credit risk is the risk that complements market and liquidity risks.
  2. Credit risk is a form of performance risk in contractual relationship.
  3. Credit risk is the risk arising from execution of a company's strategy.
  4. Credit risk is the risk that summarizes the exposures a company or firm assumes when it attempts to operate within a given field or industry.
Correct answer: B
Question 2
To estimate the interest charges on the loan, an analyst should use one of the following four formulas:
  1. Loan interest = Risk-free rate - Probability of default x Loss given default + Spread
  2. Loan interest = Risk-free rate + Probability of default x Loss given default + Spread
  3. Loan interest = Risk-free rate - Probability of default x Loss given default - Spread
  4. Loan interest = Risk-free rate + Probability of default x Loss given default - Spread
Correct answer: B
Question 3
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. Hence, the loss rate in this case will be
  1. 1%
  2. 3%
  3. 5%
  4. 10%
Correct answer: A
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