ICRM PART 1 PRACTICE EXAMINATION 2026 QUESTIONS
WITH ANSWERS GRADED A+
● Capital Distribution. Answer: Dividends and share buybacks
● Capital Action. Answer: Planned distribution to shareholders
● Earnings Retention. Answer: Keeping profits to build capital
● Internal Capital Generation. Answer: Building capital through retained earnings
● External Capital Raising. Answer: Obtaining capital from investors
● Common Stock Issuance. Answer: Selling new shares to raise capital
● Preferred Stock. Answer: Equity with fixed dividend
● Debt Issuance. Answer: Borrowing to raise funds
● Hybrid Security. Answer: Instrument with debt and equity features
● Convertible Bond. Answer: Debt convertible to equity
● Contingent Convertible. Answer: Security converting to equity in stress
● Write-Down. Answer: Reduction in security value
● Conversion Trigger. Answer: Event causing contingent convertible to convert
● Point of Non-Viability. Answer: When institution deemed non-viable
● Gone Concern. Answer: Institution no longer viable
● Going Concern. Answer: Institution continuing to operate
● Leverage Ratio. Answer: Total assets divided by capital
● Supplementary Leverage Ratio. Answer: US leverage ratio including off-balance sheet
● Leverage Exposure. Answer: Total assets plus certain off-balance sheet items
, ● Off-Balance Sheet Item. Answer: Commitment or contingency not on balance sheet
● Notional Amount. Answer: Face value of derivative contract
● Credit Conversion Factor. Answer: Rate converting commitment to credit equivalent
● Large Exposure. Answer: Concentration exceeding threshold
● Large Exposure Limit. Answer: Maximum permitted concentration
● Single Counterparty Limit. Answer: Maximum exposure to one entity
● Group of Connected Counterparties. Answer: Related entities treated as one
● Economic Interdependence. Answer: Entities linked such that one's failure affects other
● Control Relationship. Answer: One entity controlling another
● Exposure Aggregation. Answer: Combining exposures to related entities
● Exposure Measurement. Answer: Quantifying risk to counterparty
● Exposure Calculation. Answer: Computing exposure amount
● Current Exposure. Answer: Present value of derivative position
● Potential Future Exposure. Answer: Possible increase in derivative exposure
● Expected Positive Exposure. Answer: Average positive exposure over time
● Peak Exposure. Answer: Maximum expected exposure
● Credit Valuation Adjustment. Answer: Adjustment for counterparty credit risk
● Debit Valuation Adjustment. Answer: Adjustment for own credit risk
● Funding Valuation Adjustment. Answer: Adjustment for funding costs
● Wrong-Way Risk. Answer: Exposure increasing when counterparty weakens
● Right-Way Risk. Answer: Exposure decreasing when counterparty weakens
● Specific Wrong-Way Risk. Answer: Explicit linkage between exposure and credit
● General Wrong-Way Risk. Answer: Correlation between exposure and credit
WITH ANSWERS GRADED A+
● Capital Distribution. Answer: Dividends and share buybacks
● Capital Action. Answer: Planned distribution to shareholders
● Earnings Retention. Answer: Keeping profits to build capital
● Internal Capital Generation. Answer: Building capital through retained earnings
● External Capital Raising. Answer: Obtaining capital from investors
● Common Stock Issuance. Answer: Selling new shares to raise capital
● Preferred Stock. Answer: Equity with fixed dividend
● Debt Issuance. Answer: Borrowing to raise funds
● Hybrid Security. Answer: Instrument with debt and equity features
● Convertible Bond. Answer: Debt convertible to equity
● Contingent Convertible. Answer: Security converting to equity in stress
● Write-Down. Answer: Reduction in security value
● Conversion Trigger. Answer: Event causing contingent convertible to convert
● Point of Non-Viability. Answer: When institution deemed non-viable
● Gone Concern. Answer: Institution no longer viable
● Going Concern. Answer: Institution continuing to operate
● Leverage Ratio. Answer: Total assets divided by capital
● Supplementary Leverage Ratio. Answer: US leverage ratio including off-balance sheet
● Leverage Exposure. Answer: Total assets plus certain off-balance sheet items
, ● Off-Balance Sheet Item. Answer: Commitment or contingency not on balance sheet
● Notional Amount. Answer: Face value of derivative contract
● Credit Conversion Factor. Answer: Rate converting commitment to credit equivalent
● Large Exposure. Answer: Concentration exceeding threshold
● Large Exposure Limit. Answer: Maximum permitted concentration
● Single Counterparty Limit. Answer: Maximum exposure to one entity
● Group of Connected Counterparties. Answer: Related entities treated as one
● Economic Interdependence. Answer: Entities linked such that one's failure affects other
● Control Relationship. Answer: One entity controlling another
● Exposure Aggregation. Answer: Combining exposures to related entities
● Exposure Measurement. Answer: Quantifying risk to counterparty
● Exposure Calculation. Answer: Computing exposure amount
● Current Exposure. Answer: Present value of derivative position
● Potential Future Exposure. Answer: Possible increase in derivative exposure
● Expected Positive Exposure. Answer: Average positive exposure over time
● Peak Exposure. Answer: Maximum expected exposure
● Credit Valuation Adjustment. Answer: Adjustment for counterparty credit risk
● Debit Valuation Adjustment. Answer: Adjustment for own credit risk
● Funding Valuation Adjustment. Answer: Adjustment for funding costs
● Wrong-Way Risk. Answer: Exposure increasing when counterparty weakens
● Right-Way Risk. Answer: Exposure decreasing when counterparty weakens
● Specific Wrong-Way Risk. Answer: Explicit linkage between exposure and credit
● General Wrong-Way Risk. Answer: Correlation between exposure and credit
