FRM EXAM 2024/2025 WITH 100% ACCURATE
SOLUTIONS
What exactly is risk? - Precise Answer ✔✔Risk can be defined as the
volatility of unexpected outcomes.
What two broad categories of risk are firms subject to? - Precise Answer
✔✔Business and Financial risks.
What are business risks? - Precise Answer ✔✔Are those risks which the
corporation assumes willingly to add value to shareholders. This
includes business decisions and strategic risks.
What are financial risks? - Precise Answer ✔✔Are those risks which
relate to possible losses owing to financial market activity.
What is the primary function of financial institutions? - Precise Answer
✔✔To assume, intermediate, or advise on financial risks.
What are derivatives? - Precise Answer ✔✔Instruments designed to
manage financial risks efficiently.
What is a derivatives contract? - Precise Answer ✔✔A private contract
deriving its value from some underlying asset price, reference rate, or
index. They are private agreements between two parties.
SOLUTIONS
What exactly is risk? - Precise Answer ✔✔Risk can be defined as the
volatility of unexpected outcomes.
What two broad categories of risk are firms subject to? - Precise Answer
✔✔Business and Financial risks.
What are business risks? - Precise Answer ✔✔Are those risks which the
corporation assumes willingly to add value to shareholders. This
includes business decisions and strategic risks.
What are financial risks? - Precise Answer ✔✔Are those risks which
relate to possible losses owing to financial market activity.
What is the primary function of financial institutions? - Precise Answer
✔✔To assume, intermediate, or advise on financial risks.
What are derivatives? - Precise Answer ✔✔Instruments designed to
manage financial risks efficiently.
What is a derivatives contract? - Precise Answer ✔✔A private contract
deriving its value from some underlying asset price, reference rate, or
index. They are private agreements between two parties.
