Question 51. 51. Derivatives activities in end users are primarily conducted by (Points : 1)

the human resources group the sales staff the chief financial officer the board of directors the treasury group

Question 52. 52. Which of the following best describes a company that practices enterprise risk management? (Points : 1)

interest rate risk and currency risk would be managed in unison a single department to manage risk it would manage insurance-related risks along with financial risk credit risk would be managed the same way as market risk operational risk would be managed

Question 53. 53. The front office refers to (Points : 1)

the compliance office the traders who engage in derivatives transactions legal counsel the risk management function senior management

Question 54. 54. FAS 133 defines effective hedging as (Points : 1)

a hedge with no basis risk a correctly priced hedge a perfect hedge a hedge that reduces 80 to 125 percent of the risk none of the above

Question 55. 55. In which of the following activities is hedge accounting prohibited? (Points : 1)

hedging an overall portfolio as opposed to an individual transaction using short calls to protect a long asset using long puts to protect an asset hedging a long position with a short futures hedging a swap with a swaption

Question 56. 56. Which of the following organizations recommends best practices for the investment management industry? (Points : 1)

PRMIA Risk Standards Working Group GARP G-30 Financial Accounting Standards Board

Question 57. 57. Which of the following activities does senior management not do? (Points : 1)

ensure that personnel are qualified ensure that controls are in place execute hedge transactions establish policies define roles and responsibilities

Question 58. 58. The primary distinction between FAS 133 and IAS 39 is (Points : 1)

IAS 39 does not permit hedge accounting IAS 39 was adopted earlier than FAS 133 IAS 39 applies only to publicly traded corporations IAS 39 applies to all financial assets and liabilities, not just derivatives none of the above

Question 59. 59. Metalgesellschaft lost about $1.3 billion doing what? (Points : 1)

hedging short-term commitments with long-term options using crude oil futures options to hedge crude oil futures trading futures spreads on crude oil hedging fixed rate oil price commitments with swaptions none of the above

Question 60. 60. "Independent risk management" means which of the following? (Points : 1)

that risk management of a firm is independent of its overall corporate policy decisions that the risk management function is provided by an outside consulting firm that the risk manager cannot be influenced by the traders that the risk manager is independent of the firm's senior managers none of the above