2016-FRR Exam Question 46
Which of the following statements about a bank's behavior regarding Risk Adjusted Return on Capital
(RAROC) is correct?
I. A bank should always seek to maximize their overall RAROC.
II. A bank should consider investing in a business even with negative RAROC if it increases the RAROC of
the bank as a whole.
III. A bank should minimize its overall RAROC by controlling the absolute and relative amount of risk of its
businesses.
IV. A bank should maximize its RAROC by always investing in a new business that maximizes the RAROC
for that business unit.
(RAROC) is correct?
I. A bank should always seek to maximize their overall RAROC.
II. A bank should consider investing in a business even with negative RAROC if it increases the RAROC of
the bank as a whole.
III. A bank should minimize its overall RAROC by controlling the absolute and relative amount of risk of its
businesses.
IV. A bank should maximize its RAROC by always investing in a new business that maximizes the RAROC
for that business unit.
2016-FRR Exam Question 47
Beta Insurance Company is only allowed to invest in investment grade bonds. To maximize the interest
income, Beta Insurance Company should invest in bonds with which of the following ratings?
income, Beta Insurance Company should invest in bonds with which of the following ratings?
2016-FRR Exam Question 48
Which one of the following four statements correctly defines an option's delta?
2016-FRR Exam Question 49
An asset-sensitive bank will have a ___ cumulative gap and will benefit from ___ interest rates.
2016-FRR Exam Question 50
The Sarbanes-Oxley Act includes one of the following four requirements for financial institutions in the
United States:
United States: