Practice Quiz

FRM Financial Risk Manager Practice Test - Question List

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16. In 2009, Deutsche Bank warned that the UAE might face deflation, which is a general decline in overall prices. Which of the following is the result of deflation?
  1. Shrinking employment.
  2. Decrease in income.
  3. Defaults on loans.
  4. Economic recession.
  5. All of the above.
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17. A systemic risk is a risk that affects an entire financial market or system--not just a specific section. True or false: It is possible to avoid the systemic risk through diversification.
  1. True
  2. False
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18. True or false: Reducing inventory levels reduces risk.
  1. True
  2. False
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19. What are the four options for dealing with a risk?
  1. Accept, mitigate, transfer, and avoid.
  2. Accept, insure, transfer, and avoid.
  3. Accept, mitigate, reduce, and avoid.
  4. Situation, task, action, and result.
  5. It’s a trick question-there are only three and they are transfer, mitigate, and avoid.
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20. There is evidence for a stock market that rates of return on shares tend to be lower Monday compared with other days of the week. Which of the following is true?
  1. If conventional wisdom is that rates of return should be approximately the same each day, this is evidence of an anomaly.
  2. If conventional wisdom is that rates of return should be affected by events on Saturdays and Sundays, this is evidence that the market is weak-form inefficient.
  3. The evidence shows that asset markets are semi-strong-form inefficient but may be weak-form efficient.
  4. The evidence shows that noise-traders dominate the market.
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