GARP ICBRR Exam (page: 8)
GARP International Certificate in Banking Risk and Regulation (ICBRR)
Updated on: 15-Feb-2026

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As DeltaBank explores the securitization business, it is most likely to embrace securitization to:

I) Bring transparency to the bank's balance sheet
II) Create a new profit center for the bank
III) Strategically release risk capital and regulatory capital for redeployment
IV) Generate cash for additional debt origination

  1. I, III
  2. II, IV
  3. I, II, III
  4. II, III, IV

Answer(s): D



After entering the securitization business, Delta Bank increases its cash efficiency by selling off the lower risk portions of the portfolio credit risk. This process ___ risk on the residual pieces of the credit portfolio, and as a result it ___ return on equity for the bank.

  1. Decreases; increases;
  2. Increases; increases;
  3. Increases; decreases;
  4. Decreases; increases;

Answer(s): B



Which of the following risk types are historically associated with credit derivatives?

I) Documentation risk
II) Definition of credit events
III) Occurrence of credit events
IV) Enterprise risk

  1. I, IV
  2. I, II
  3. I, II, III
  4. II, III, IV

Answer(s): C



The pricing of credit default swaps is a function of all of the following EXCEPT:

  1. Probability of default
  2. Duration
  3. Loss given default
  4. Market spreads

Answer(s): B



To safeguard its capital and obtain insurance if the borrowers cannot repay their loans, Gamma Bank accepts financial collateral to manage its credit risk and mitigate the effect of the borrowers' defaults. Gamma Bank will typically accept all of the following instruments as financial collateral EXCEPT?

  1. Unrated bonds issued and traded on a recognized exchange
  2. Equities and convertible bonds included in a main market index
  3. Commercial debts owed to a company in a form of receivables
  4. Mutual fund shares and similar unit investment vehicles subject to daily quotes

Answer(s): C



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Vey 5/27/2023 12:06:00 AM

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