SAP C_ARSCC Q&A - in .pdf

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NEW QUESTION: 1
Which of the following are valid approaches to calculating potential future exposure (PFE) for counterparty risk:
I. Add a percentage of the notional to the mark-to-market value
II. Monte Carlo simulation
III. Maximum Likelihood Estimation
IV. Parametric Estimation
A. I, III and IV
B. All of the able
C. I and II
D. III and IV
Answer: C
Explanation:
Explanation
When a derivative position is entered into, its mark-to-market value is generally close to zero (though the notional may be high). With the passage of time, the derivative's value fluctuates in an unpredictable way, creating a counterparty exposure that may be difficult to estimate and risk manage. Counterparty risk in such cases is estimated based on Potential Future Exposure, which may be calculated using either:
a) Take the mark-to-market at present, and add a certain percentage of the notional, or b) Perform a Monte Carlo simulation, capturing the stochastic nature of the PFE.
Therefore I and II are valid choices. MLE and parametric estimation are not methods for calculating PFE.

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NEW QUESTION: 3
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D. An IPv6 node sends an NS message to inform a node undergoing autoconfiguration that it is already using a particular address.
Answer: A

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