FRM Exam 1| First book of FRM I| Questions with Complete Solutions 100%
Verified| Latest Update Graded A+
Benefits of risk aggregation 1.Increased ability to anticipate problems
2.Enhances ability to identify routes to return to financial health
3.Improve resolvability
4.Increase efficiency, reduce the chance of loss, and ultimately inc profitability
governance principles 1.Governance
2.Data architecture and infrastructure
3.Accuracy and Integrity
4.Completeness
5.Timeliness
6.Adaptability
7.Accuracy
8.Comprehensivness
9.Clarity and usefulness
10.Frequency
11.Distribution
Risk Reporting practices -Clear and complete
-Risk data is reported at the right time to the right people
professional integrity and ethical conduct -act professionally
-ethically
-mindful of cultural differences
-not do illegal things
,conflict of interest -act fairly in all situations
-full fair disclosures
Confidentiality -not make use of confidential info for inappropriate purposes
Fundamental Responsibilities -comply with all laws
-have ethical responsibilities
-understand needs and complexity of employer/client
-be diligent
best practices -execute all services with diligence
-be familiar with current risk mngt practices
-ensure communications with factual dara
-distinction btwn fact and opinion
violations of code of conduct result in temporary suspension or permanent removal of GARP
membership
commercial bank takes deposits and makes loans
investment bank assist in raising capital for their customers
Major Risks facing banks 1.Credit Risk
2.Market Risk
3.Operational Risk
,Regulatory Capital the amount of capital that a financial institution must hold because of
regulatory requirements
private placement primary offerings in which shares are sold directly to a small group of
institutional or wealthy investors
public offering Securities sold to the investing public
Best Efforts An offering in which the investment banker agrees to distribute as much of the
offering as possible and to return to the issuer any unsold shares
Firm Commitment A lender's agreement to make a loan to a specific borrower on a specific
property.
Initial Public Offering (IPO) the first time a company issues stock that may be bought by the
general public
Dutch Auction an auction in which the opening price is set high and then drops until
someone buys
banking book Assets on a bank's balance sheet that are expected to be held to maturity and
all securities that are not actively traded by the institution
trading book related to banks trading activities
life insurance Provides payment to beneficiaries who were named by the insured person
once person is dead
, property and casualty insurance -premiums may inc or dec based on any changes in
estimates of expected payouts
-high liquid bonds with short maturities
Federal Deposit Insurance Corporation (FDIC) the government agency that insures customer
deposits if a bank fails
defined benefit plan a pension plan in which the amount an employee is to receive on
retirement is specifically set forth
defined contribution plan A pension plan that establishes the basis on which an employer
will contribute to the pension fund
mutual fund Pool of money managed by an investment company and invested in multiple
companies (diversification)
Open Ended Mutual Funds funds that sell shares directly to investors and repurchase those
shares whenever investors wish to sell them. Available at NAV
Net Asset Value (NAV) open ended fund, sum of all assets owned minus liabilities divided by
shares outstanding
back-end load a sales charge paid when you sell an investment in a window of time
front-end load set percentage charged to investor when asset is originally sold
closed-end mutual fund similar to open but, invest in specific emerging markets, number of
shares always remains static, cannot simply redeem shares from the fund company, not priced
at NAV
Verified| Latest Update Graded A+
Benefits of risk aggregation 1.Increased ability to anticipate problems
2.Enhances ability to identify routes to return to financial health
3.Improve resolvability
4.Increase efficiency, reduce the chance of loss, and ultimately inc profitability
governance principles 1.Governance
2.Data architecture and infrastructure
3.Accuracy and Integrity
4.Completeness
5.Timeliness
6.Adaptability
7.Accuracy
8.Comprehensivness
9.Clarity and usefulness
10.Frequency
11.Distribution
Risk Reporting practices -Clear and complete
-Risk data is reported at the right time to the right people
professional integrity and ethical conduct -act professionally
-ethically
-mindful of cultural differences
-not do illegal things
,conflict of interest -act fairly in all situations
-full fair disclosures
Confidentiality -not make use of confidential info for inappropriate purposes
Fundamental Responsibilities -comply with all laws
-have ethical responsibilities
-understand needs and complexity of employer/client
-be diligent
best practices -execute all services with diligence
-be familiar with current risk mngt practices
-ensure communications with factual dara
-distinction btwn fact and opinion
violations of code of conduct result in temporary suspension or permanent removal of GARP
membership
commercial bank takes deposits and makes loans
investment bank assist in raising capital for their customers
Major Risks facing banks 1.Credit Risk
2.Market Risk
3.Operational Risk
,Regulatory Capital the amount of capital that a financial institution must hold because of
regulatory requirements
private placement primary offerings in which shares are sold directly to a small group of
institutional or wealthy investors
public offering Securities sold to the investing public
Best Efforts An offering in which the investment banker agrees to distribute as much of the
offering as possible and to return to the issuer any unsold shares
Firm Commitment A lender's agreement to make a loan to a specific borrower on a specific
property.
Initial Public Offering (IPO) the first time a company issues stock that may be bought by the
general public
Dutch Auction an auction in which the opening price is set high and then drops until
someone buys
banking book Assets on a bank's balance sheet that are expected to be held to maturity and
all securities that are not actively traded by the institution
trading book related to banks trading activities
life insurance Provides payment to beneficiaries who were named by the insured person
once person is dead
, property and casualty insurance -premiums may inc or dec based on any changes in
estimates of expected payouts
-high liquid bonds with short maturities
Federal Deposit Insurance Corporation (FDIC) the government agency that insures customer
deposits if a bank fails
defined benefit plan a pension plan in which the amount an employee is to receive on
retirement is specifically set forth
defined contribution plan A pension plan that establishes the basis on which an employer
will contribute to the pension fund
mutual fund Pool of money managed by an investment company and invested in multiple
companies (diversification)
Open Ended Mutual Funds funds that sell shares directly to investors and repurchase those
shares whenever investors wish to sell them. Available at NAV
Net Asset Value (NAV) open ended fund, sum of all assets owned minus liabilities divided by
shares outstanding
back-end load a sales charge paid when you sell an investment in a window of time
front-end load set percentage charged to investor when asset is originally sold
closed-end mutual fund similar to open but, invest in specific emerging markets, number of
shares always remains static, cannot simply redeem shares from the fund company, not priced
at NAV
