Scribd
Upload
6 views

Reviewer in FRM

This document contains a quiz reviewing key concepts in financial risk management. It includes three multiple choice sections and one true/false section covering topics such as risk transfer, risk analysis, risk assessment techniques like expected monetary value and risk matrices, risk management processes, and different types of financial risks including market risk, credit risk, liquidity risk, and operational risk. The questions assess understanding of risk management principles and how different risk management strategies like risk avoidance, risk reduction, and risk acceptance are applied.

Uploaded by

crishellegwen26
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
6 views

Reviewer in FRM

This document contains a quiz reviewing key concepts in financial risk management. It includes three multiple choice sections and one true/false section covering topics such as risk transfer, risk analysis, risk assessment techniques like expected monetary value and risk matrices, risk management processes, and different types of financial risks including market risk, credit risk, liquidity risk, and operational risk. The questions assess understanding of risk management principles and how different risk management strategies like risk avoidance, risk reduction, and risk acceptance are applied.

Uploaded by

crishellegwen26
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

REVIEWER IN FRM

A262

QUIZ #1
IDENTIFICATION
1.Business during this phase was difficult for both growers and merchant
buyers due to volatility in the price of grain - NORTH AMERICANS
DEVELOPMENT

2. During this phase, floating exchange rates were introduced amid the
volatility. - TURBULENCE IN FINANCIAL MARKETS

3. During this stage, the earliest trading involved commodities, since they are
very important to human existence. - EARLY MARKETS

4. In 1978, it developed the first energy futures contract. - NEW YORK


MERCANTILE EXCHANGE

5. In this stage, some exchanges are totally online, replacing a physical


trading floor with linked traders around the globe. - AUTOMATION AND
GROWTH

6. It was established in 1848 and was the first formal futures exchange in the
United States. - CHICAGO BOARD OF TRADE

7. The first automated exchange that took place in Bermuda in 1984. -


INTERNATIONAL FUTURES EXCHANGE

8. These were employed to indicate future delivery throughout the early


stages of the market. - LETTRES DE FAIRE

9. These were used by Flemish traders at medieval trade fairs as early as the
twelfth century. - FORWARD CONTRACTS

10. Trading in derivatives during this stage is one of the new horizons in
the development of financial risk management. - NEW ERA FINANCE

QUIZ #2
MULTIPLE CHOICE
1. A common risk management technique where the potential loss from an adverse outcome
faced by an individual or entity is shifted to a third party. - risk transfer
2. A qualitative problem-solving approach that uses various tools of assessment to work out
and rank risks for the purpose of assessing and resolving them. - risk analysis
3. Also known as risk retention. - risk acceptance
4. Basic steps of risk management process. - all of these
5. Basic steps that are taken to manage risk. - risk management process
6. Define the level of risk by considering the category of probability or likelihood against the
category of consequence severity. - risk assessment matrix
7. Elements of risk management. - all of these
8. Elimination of activities that can increase the chance of a loss or claim. -risk avoidance
9. Events that have already happened, or that you are confident will happen and must be
dealt with. - issues
10. Events that might happen but are not guaranteed. -risk
11. Helps to quantify and compare risks in many aspects of the project. - expected monetary
value
12. It assigns a numerical value to translate the risks and is entirely dependent upon the
quantity and accuracy of your data. - quantitative risk analysis
13. It focuses on identifying risks to measure both the likelihood, consequences and severity
of a specific event occurring during the project life cycle. - qualitative risk analysis
14. Measures to reduce the frequency or severity of losses, also known as loss control. - risk
reduction
15. Proactive approach that has the potential to lower both the likelihood of a risk occurring
and the impact of that risk. - effective risk management
16. Process of managing cyber-security risks through systems, policies, and technology. -
information technology risk management
17. Refers to the possibility of occurrence of a condition or an event. - probability
18. Responsible for overseeing the risk management process throughout the duration of a
given project. - project manager
19. Technique of Qualitative Risk Analysis. - risk assessment matrix
20. Technique of Quantitative Risk Analysis. - expected monetary value
21. Term used in business to describe risk management methods that firms use to identify and
mitigate risks that can pose problems for the enterprise. - enterprise risk management
22. The cost that you will spend when the identified risk or event happens - consequences
23. The following are basic principles of risk management except one. - cost should exceed
benefits
24. The process and strategy that investors and companies alike employ to minimize risks in a
variety of contexts. - risk management
25. The process of selecting and implementing of measures to modify risk. - risk treatment

QUIZ#3
TRUE OR FALSE
1. As investment risks rise, investors seek higher returns to compensate themselves for
taking such risks. - true
2. Availing insurance that will pay for your hospital bill in case of accident is an example of
risk transfer. - true
3. Avoiding risk means losing out on potential gain that accepting the risk may have allowed
- true
4. Cash concerns a firms current liquidity conditions. - true
5. Circumstances assess the borrower commercial strength and its relative weaknesses. - true
6. Credit Risk is the possibility of a loss resulting from a borrowers failure to repay a loan or
meet contractual obligations. - true
7. Financial conditions is the ability to use historic performance in order to attempt to predict
future outcomes. - true
8. Financial risk is a potential future situation that causes your business to lose money - true
9. Financial Risk management avoids catastrophe, maximizes opportunity and ensures
business growth. - true
10. Financial risk often arises as a result of market volatility and losses brought on by shifts in
stock prices, currencies, interest rates, and other variables. - true
11. If you want to reduce the risk in investment, you need to diversify. - true
12. In 5 Cs of risk assessment, character is the area where subjectivity can override
objectivity. - true
13. Investment risk refers to the degree of uncertainty and/or potential financial loss inherent
in an investment decision. - true
14. Liquidity Risk is a risk that a company or individual will not have enough cash to meet its
financial obligations on time. - true
15. Market Risk is the risk of financial losses on investments caused by adverse price
movements. - true
16. Operational Risk summarizes the uncertainties and hazards a company faces when it
attempts to do its day-to-day business activities within a given field or industry. - true
17. Risk acceptance is considered appropriate for the risks that are small, bearable, and can be
managed without much of a problem. - true
18. Risk avoidance implies that if a risk is deemed too high, then you simply avoid the
activity that creates the risk. - true
19. Risk management should create value. - true
20. Risk reduction is typically applied to lower risk probabilities and impacts to suit the risk
tolerance of an individual or organization. - true
21. Risk transfer allows you to transfer the risk you take to another party. - true
22. Risks are not the same as issues. - true
23. The 5 Cs of Risk Assessment are capital, cash, condition, circumstances and character. -
false
24. The items used as collateral serve to secure and possibly repay a loan. - true
25. The practice of assessing and managing present and potential financial risks in order to
lessen an organization exposure to risk is known as financial risk management. - true

You might also like