Practice Quiz

FRM Financial Risk Manager Practice Test - Question List

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41. In the end of 2008, We Pro Ltd., a corporation, earned a profit. The profit was then reinvested into the corporation or was paid out to shareholders as dividends. The amount of dividends a shareholder would receive is tied to:
  1. The shareholders’ ties with the company.
  2. The number of shares that investors hold.
  3. The shareholders’ roles and seniority within the corporation.
  4. The shareholders’ trust in the corporation.
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42. A financial bubble happens only because of irrational behaviors of investors, such as herding activities or outright foolishness. Is this true or false?
  1. True
  2. False
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43. A speculative bubble is usually caused by which of the following? Select all that apply:
  1. Exaggerated expectations of future growth.
  2. Price appreciation.
  3. An increase in asset values.
  4. Higher trading volumes.
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44. The main reason that led to the collapse of the oldest merchant bank in England, Barings Bank, in 1995 after 233 years of existence was...
  1. A bank run.
  2. A change in the board of directors, which caused a confidence crisis among the public.
  3. An unauthorized speculation by one employee on future contracts.
  4. The Kobe earthquake in Japan, which led to a financial crisis in Asia and hence, severely affected the bank’s activities.
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45. Which of the following events fueled the Asian Financial crisis in 1997?
  1. The war between Indonesia and West Timor.
  2. The Thai government decided to float its currency, the Baht.
  3. Brunei stopped selling its oil to neighboring countries.
  4. A political uproar in the Philippines.
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