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Free ICBRR Exam Braindumps
International Certificate in Banking Risk and Regulation (ICBRR) Questions 131–135 (page: 28)

Updated On: 10-Feb-2026
Page 28 of 70
PDF with 342 Questions

What is a difference between currency swaps and interest rate swaps?

  1. Currency swaps do not require the exchange of notional principal on maturity.
  2. Currency swaps allow banks and customers to obtain the risk/reward profile of long-term interest rates without having to use long-term funding.
  3. Currency swaps are OTC derivative contracts.
  4. Currency swaps generate foreign exchange rate risk in addition to interest rate risk.

Answer(s): D



James Arthur is a customer of a bank who has taken a floating rate loan from the bank. He is concerned that the rates may rise in the future increasing his payment amount.
Which of the following instruments should he buy to hedge against the rise in interest rates?

  1. Interest rate floor
  2. Interest rate cap
  3. Index amortizing swap
  4. Interest rate swap that receives fixed and pays floating

Answer(s): B



Arnold Wu owns a floating rate bond. He is concerned that the rates may fall in the future decreasing his payment amount.
Which of the following instruments should he buy to hedge against the fall in interest rates?

  1. Interest rate floor
  2. Interest rate cap
  3. Index amortizing swap
  4. Interest rate swap that receives floating and pays fixed

Answer(s): A



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



On January 1, 2010 the TED (treasury-euro dollar) spread was 0.4%, and on January 31, 2010 the TED spread is 0.9%. As a risk manager, how would you interpret this change?

  1. The decrease in the TED spread indicates a decrease in credit risk on interbank loans.
  2. The decrease in the TED spread indicates an increase in credit risk on interbank loans.
  3. Increase in interest rates on both interbank loans and T-bills.
  4. Increase in credit risk on T-bills.

Answer(s): B



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