Free 2016-FRR Exam Braindumps
Financial Risk and Regulation (FRR) Series Questions 1–5 (page: 22)

Updated On: 9-Feb-2026

If the yield on the 3-month risk free bonds issued by the U.S government is 0.5%, and the 3-month LIBOR rate is 2.5%, what is the TED spread?

  1. 0.5%
  2. -2.0%
  3. 2.0%
  4. 3.0%

Answer(s): C



Which of the following statements regarding CDO-squared is correct?
I) CDO-squared use other CDOs and CMOs as collateral.
II) Risk assessment of CDO-squared is almost impossible due to their complexity.
III) CDO-squared have lower credit risk than CMOs but higher than CDOs.

  1. I only
  2. I and II
  3. II and III
  4. I, II, and III

Answer(s): B



Which one of the following statements regarding collateralized mortgage obligations (CMO) is incorrect?

  1. CMOs have senior tranches which are considered short-term, low-risk instruments by banks
  2. CMOs are asset-backed securities that have pools of collateralized debt obligations (CDOs) as underlying collateral.
  3. CMOs are generally less risky investment than CDOs.
  4. CMOs are pools of mortgages that are divided according to the timing of cash flows.

Answer(s): B



To estimate the responsiveness of a particular equity portfolio to the overall market, a trader should use the portfolio's

  1. Alpha
  2. Beta
  3. CVaR
  4. VaR

Answer(s): B



Which one of the following four exercise features is typical for the most exchange-traded equity options?

  1. Asian exercise feature
  2. American exercise feature
  3. European exercise feature
  4. A shout option exercise feature

Answer(s): B



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