Free 2016-FRR Exam Braindumps
Financial Risk and Regulation (FRR) Series Questions 36–40 (page: 29)

Unico Delta stock is trading at $20 per share, its annualized dividend yield is 5% and the 12-month LIBOR is

3%. Given these statistics, the 12-month futures contact will trade at:

Which one of the following four statements about preferred shares is INCORRECT?

Short-selling is typically associated with the following risks:
I) Potential for extreme losses
II) Risk associated with the availability of shares to borrow
III) Market behavior risk
IV) Liquidity risk

What are some of the drawbacks of correlation estimates? Which of the following statements identifies major problems with correlation calculations?
I) Correlation estimates are not able to capture increases in factor co-movements in extreme market scenarios.
II) Correlation estimates tend to be unstable.
III) Historical correlations may not forecast future correlations correctly.
IV) Correlation estimates assume normally distributed returns.

A proprietary trading desk for a large bank hedges an Arab light OTC forward position with Brent crude oil forwards. The trading desk benefits from using the most liquid OTC market to hedge, the market for the Brent crude, but hedging its using the Brent contract, exposes itself to the following type of risk: