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GARP Exam 2016-FRR Topic 1 Question 5 Discussion

Actual exam question for GARP's 2016-FRR exam
Question #: 5
Topic #: 1
[All 2016-FRR Questions]

Which one of the following four statements regarding counterparty credit risk is INCORRECT?

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Suggested Answer: D

by Lorita at May 01, 2025, 10:21 AM

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Salena
8 days ago
D all the way! Dynamic collateral provisions? Sounds like a recipe for disaster. Who comes up with these exam questions anyway?
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Lorenza
13 days ago
Hmm, this is a tough one. I'm going to have to go with C. The exposure at default can be negatively correlated to probability of default. Sounds counterintuitive, but it makes sense if you think about it.
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Karl
15 days ago
I'm going with B. The exposure at default is variable due to fluctuations in swap valuations. Seems pretty straightforward.
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Joaquin
22 days ago
I think the incorrect statement is D.
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Luz
26 days ago
I think the correct answer is D. Dynamic collateral provisions often increase counterparty risk considerably. That just doesn't make sense to me.
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