Practice Quiz

FRM Financial Risk Manager Practice Test - Question List

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71. As an investor, Tom is obliged to perform due diligence. What is "due diligence"?
  1. Education on market regulations.
  2. The paperwork required to make an investment.
  3. The responsibility to gather necessary information on actual or potential risks involved in an investment.
  4. Commitment to be diligent all the time for investment projects in order to prevent actual or potential risks.
  5. None of the above.
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72. Bankruptcy refers to a situation when a court judges that a debtor (or a borrower) is unable to make the payments owed to a creditor (or a lender). America’s bankruptcy code for corporate entities can be found in
  1. Chapter 8.
  2. Chapter 9.
  3. Chapter 10.
  4. Chapter 11.
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73. Insolvency refers to:
  1. Having illiquid assets.
  2. Bankruptcy.
  3. Having negative net assets as liabilities exceed assets.
  4. The inability to pay debts when they fall due.
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74. You would most likely receive confirmation of “freedom to operate” from:
  1. A nurse.
  2. A patent attorney.
  3. A strategy consultant.
  4. The head of IT.
  5. Compliance director.
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75. Ted has 10 content projects that he wants to push forward. Each one has a positive net present value with an initial up-front investment followed by a multiple-year revenue stream. Which of the following would be the biggest reason why he would not pursue them all right away?
  1. Lock-in.
  2. Switching costs.
  3. Cash flow cycle.
  4. Synergies.
  5. Risk.
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