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NEW QUESTION: 1
Senior management has decided to implement the Three Lines of Defense model for risk management. Which of the following best describes senior management's duties with regard to this model?
A. Identify emerging issues.
B. Ensure compliance with the model.
C. Set goals for implementation.
D. Identify management functions.
Answer: B

NEW QUESTION: 2
Which of the following are valid credit enhancements used for credit derivatives:
I. Overcollateralization
II. Excess spread
III. Cash reserves
IV. Margin requirements
A. I, II and IV
B. I, II, III and IV
C. I, II and III
D. II, III and IV
Answer: C
Explanation:
Explanation
Overcollateralization is when the notes issued by the special purpose vehicle are less in value compared to the underlying pool of assets, thereby providing a buffer to absorb losses. Excess spread implies that the notes issued carry a lower interest rate than the interest rate received on the underlying assets. Cash reserves are reserves intended to take first hits when losses happen. All of these are valid credit enhancements for structured products. Additionally, 'insurance wraps' are also used as a credit enhancement. Choice 'c' is the correct answer.
'Margin requirements' do not mean anything in this context and are not a valid credit enhancement used for credit derivatives.

NEW QUESTION: 3



A. Option E
B. Option C
C. Option A
D. Option D
E. Option B
Answer: C