Practice Quiz

FRM Financial Risk Manager Practice Test - Question List

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56. Suppose two bonds are trading in the secondary market. They have the same maturity date and similar credit quality, but one has a nominal yield of 4% while the other has one of 8%. What does this really tell you about the two bonds?
  1. One is more attractive than the other.
  2. Two bonds must be different in values.
  3. Two bonds must have been issued by different lenders.
  4. Two bonds must have been issued at different times.
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57. You want to borrow money from a bank and your house is used as a mortgage, which serves as a protection for the bank in case you default on your repayment. In a mortgage loan, the house represents what of the following?
  1. A debt.
  2. Collateral.
  3. An interest from lending the money.
  4. A credit risk.
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58. Small and illiquid assets that are unable to be sold individually can be pooled together into financial instruments in order to reduce risk and to be sold to general investors. This strategy is called:
  1. Diversification.
  2. Securitization.
  3. Investment.
  4. Due diligence.
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59. What is the primary responsibility of the U.S. Securities and Exchange Commission (SEC)?
  1. Regulating the securities industry, stocks, and options exchanges.
  2. Enforcing the federal securities laws.
  3. Regulating electronic securities markets.
  4. All of the above.
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60. NASDAQ, the National Association of Securities Dealers Automated Quotations, is an American stock exchange. It is the largest electronic screen-based securities trading market in the United States. What is the authority that oversees NASDAQ operations and regulations?
  1. NASCAR
  2. NASD
  3. NASB
  4. NASA
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