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NEW QUESTION: 1
A derivative contract has a negative current replacement value. Which of the following statements is true about its loan equivalent value for credit risk calculations over a 2-year horizon?
A. Since the derivatives contract has a negative current replacement value, exposure will be zero.
B. The credit exposure will be a given quintile of the expected distribution of the value of the derivatives contract in the future.
C. The notional value of the derivatives contract should be used for loan equivalence calculations.
D. The current exposure can be used for loan equivalence calculations as that is an unbiased proxy for the future value.
Answer: B
Explanation:
Explanation
The current exposure is negative, so there is no immediate credit exposure. However, since the price of the derivative is volatile, we can reasonably expect the value to be greater than zero sometime in the future. This is a stochastic variable which will have a distribution, and not just a unique value, in the future that will represent the credit exposure. Since there is no unique value, a conservative approach is to pick a quintile of the distribution, and use that as the future value of the derivative contract, with the assurance that the probability of the credit exposure exceeding that quintile is known and has been consciously selected. This number can then be converted to a loan equivalent amount for credit risk purposes. Therefore Choice 'b' is the correct answer. Choice 'a', Choice 'd' and Choice 'c' are incorrect for these reasons.

NEW QUESTION: 2
A user reports that their laptop's keyboard has areas where the keys always get stuck together. After disassembling the keyboard to clean it, which of the following processes would be the FIRST step to properly reassemble the keyboard?
A. Refer to manufacturer documentation
B. Use appropriate hand tools
C. Test on another machine
D. Power on laptop to verify functionality
Answer: A

NEW QUESTION: 3
A security analyst for a financial services firm is monitoring blogs and reads about a zero-day vulnerability
being exploited by a little-known group of hackers. The analyst wishes to independently validate and
corroborate the blog's posting. Which of the following sources of information will provide the MOST
credible supporting threat intelligence in this situation?
A. Computer emergency response team press release
B. Internet searches on zero-day exploits
C. Similar cybersecurity blogs
D. Threat intelligence sharing groups
Answer: A

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