FSR Final HW EXAM QUESTIONS & ANSWERS 100% CORRECT!!
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FSR HW
Institution
FSR HW
What is the lowest acceptable category in which a financial institution should be classified after a stress test? - ANSWERSAdequately capitalized
What set of scenarios is considered for stress testing financial institutions? - ANSWERSBaseline, Stress, and Severely adverse scenarios
Stress tes...
FSR Final HW EXAM QUESTIONS &
ANSWERS 100% CORRECT!!
What is the lowest acceptable category in which a financial institution should be
classified after a stress test? - ANSWERSAdequately capitalized
What set of scenarios is considered for stress testing financial institutions? -
ANSWERSBaseline, Stress, and Severely adverse scenarios
Stress testing financial institutions is primarily considered with their risk exposure to -
ANSWERSCapital and liquidity risks
A financial institution that conducts its own company-run stress test is engaged in a -
ANSWERSICAAP
A financial institution's CCAR is conducted by the Federal Reserve on a/an
_____________ basis. - ANSWERSannual
Which of the following is not required to be included in a Capital Plan submitted to the
Federal Reserve?
A. A Capital Policy.
B. A description of how the financial institution assesses capital adequacy.
C. A description of how changes in the financial institution's business plan may affect its
capital.
D. A description of how the financial institutions intends to comply with the minimum
regulatory capital requirement.
E. A description of how the financial institution intends to request a waiver from
submitting a Capital Plan. - ANSWERSE
Which of the following statements is incorrect regarding a financial institution's stress
testing framework?
A. Stress testing must be included a part of the financial institution's risk management
framework.
B. The board of directors does not need to approve the financial institution's stress
testing framework.
C. The financial institution's stress testing framework must have a governance structure.
D. The financial institutions' stress testing framework does not need to capture all risks.
E. Stress testing by financial institutions should consider historical data. - ANSWERSB
Which of the following is NOT a PCA category?
A. Significantly undercapitalized
B. Critically undercapitalized
C. Adversely undercapitalized
, D. Adequately capitalized
E. Well capitalized - ANSWERSC
Why should financial institutions engage in stress testing?
A. To ensure their employees do not suffer from high blood pressure on the job.
B. To ensure they have enough assets to pay their creditors when due. C. To ensure
they can generate profits to pay dividends to shareholders.
D. To ensure they have enough capital during economically stressful times.
E. To ensure they can afford to pay taxes to the federal government. - ANSWERSD
What type of banks are required to engage in a CCAR?
A. All US banks with branches outside of the United States
B. All Community Banks
C. All large US Bank Holding Companies
D. All Foreign banks operating in the United States
E. All banks that are members of the Federal Reserve System - ANSWERSC
Supervisory oversight that tests whether financial institutions are operating in
accordance with the laws governing financing institutions is characterized as
___________.
A. Supervision of Laws
B. Compliance-based Supervision
C. Financial Legal Supervision
D. Risk-based Supervision
E. Law-abiding Supervision - ANSWERSB
What is a financial institution's first line of defense of protecting itself from the realization
of risks?
A. Cash flows
B. Shareholders
C. Anti-virus software
D. Earnings
E. Sword and shield - ANSWERSD
Risk-based Supervision allows financial sector regulators to rate financial institutions as
________________________.
A. High risk, Medium risk, or Low risk
B. 1 - 5 on a rating scale
C. High risk, Medium high risk, Medium low risk, or Low risk
D. Primary risk, Secondary risk, or Tertiary risk
E. Tier 1 risk, Tier 2 risk, and Tier 3 risk - ANSWERSC
Which of the following would likely decrease the riskiness of a financial institution?
A. Fewer relationships with other financial institutions
B. Concentration in consumer credit cards and consumer loans
C. Expanding engagements with other financial institutions
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