Erp Practice Exam4-2014 PDF

2014
ERP
Examination
Practice
Exam
PRACTICE Exam 4
2014 Global Association of Risk Professionals. All rights reserved. It is illegal to reproduce this material i
in any format without prior written approval of GARP, Global Association of Risk Professionals, Inc.
Energy Risk Professional Examination (ERP) Practice Exam 4
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ERP Practice Exam 4 Candidate Answer Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
ERP Practice Exam 4 Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
ERP Practice Exam 4 Answer Sheet/Answers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
ERP Practice Exam 4 Explanations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
TABLE OF CONTENTS
2014 Global Association of Risk Professionals. All rights reserved. It is illegal to reproduce this material 1
Introduction
The ERP Exam is a practice-oriented examination. Its ques-
tions are derived from a combination of theory, as set forth
in the core readings, and real-world work experience.
Candidates are expected to understand energy risk man-
agement concepts and approaches and how they would
apply to an energy risk managers day-to-day activities.
The ERP Examination is also a comprehensive examination,
testing an energy risk professional on a number of risk man-
agement concepts and approaches. It is very rare that an ener-
gy risk manager will be faced with an issue that can immedi-
ately be slotted into just one category. In the real world, an
energy risk manager must be able to identify any number of
risk-related issues and be able to deal with them efectively.
The ERP Practice Exam 4 has been developed to aid
candidates in their preparation for the ERP Examination.
This practice exam is based on a sample of actual questions
from past ERP Examinations and is suggestive of the ques-
tions that will be in the 2014 ERP Examination.
The ERP Practice Exam 4 contains 30 multiple choice
questions. Note that the 2014 ERP Examination will consist
of a morning and afternoon session, each containing 70
multiple choice questions. The practice exam is designed to
be shorter to allow candidates to calibrate their prepared-
ness for the exam without being overwhelming.
The ERP Practice Exam 4 does not necessarily cover
all topics to be tested in the 2014 ERP Examination. For
a complete list of topics and core readings, candidates
should refer to the 2014 ERP Examination Study Guide.
Core readings were selected in consultation with the Energy
Oversight Committee (EOC) to assist candidates in their
review of the subjects covered by the exam. Questions for
the ERP Examination are derived from these core readings
in their entirety. As such, it is strongly suggested that candi-
dates review all core readings listed in the 2014 ERP Study
Guide in-depth prior to sitting for the exam.
A Note About Question Content: We have included several
questions in this Practice Exam that are based on readings
that are no longer a part of the 2014 ERP curriculum.These
have been included to ofer content that has appeared on
prior ERP Exams and/or to provide fundamental concepts
and learning objectives about energy risk management that
are included in the 2014 ERP curriculum.
Suggested Use of Practice Exams
To maximize the efectiveness of the practice exams, candi-
dates are encouraged to follow these recommendations:
1. Plan a date and time to take the practice exam.
Set dates appropriately to give sufcient study/review
time for the practice exam prior to the actual exam.
2. Simulate the test environment as closely as possible.
Take the practice exam in a quiet place.
Have only the practice exam, candidate answer
sheet, calculator, and writing instruments (pencils,
erasers) available.
Minimize possible distractions from other people,
cell phones, televisions, etc.; put away any study
material before beginning the practice exam.
Allocate 3 minutes per question for the practice exam
and set an alarm to alert you when a total of 90 minutes
have passed. Complete the entire exam but note the
questions answered after the 90-minute mark.
Follow the ERP calculator policy. Candidates are only
allowed to bring certain types of calculators into the
exam room. The only calculators authorized for use
on the ERP Exam in 2014 are listed below, there will
be no exceptions to this policy. You will not be allowed
into the exam room with a personal calculator other
than the following: Texas Instruments BA II Plus
(including the BA II Plus Professional), Hewlett Packard
12C (including the HP 12C Platinum and the Anniversary
Edition), Hewlett Packard 10B II, Hewlett Packard 10B II+
and Hewlett Packard 20B.
3. After completing the ERP Practice Exam 4
Calculate your score by comparing your answer
sheet with the practice exam answer key. Only
include questions completed within the rst 90
minutes in your score.
Use the practice exam Answers and Explanations to
better understand the correct and incorrect answers
and to identify topics that require additional review.
Consult referenced core readings to prepare for
the exam.
Remember: pass/fail status for the actual exam is
based on the distribution of scores from all candi-
dates, so use your scores only to gauge your own
progress and level of preparedness.
Energy Risk
Professional(ERP
)
Examination
Practice Exam 4
Answer Sheet
a. b. c. d.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
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17.
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19.
a. b. c. d.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
Correct way to complete
1.
Wrong way to complete
1.
Energy Risk
Professional(ERP
)
Examination
Practice Exam 4
Questions
1. A large offshore natural gas field has been discovered in the Mediterranean Sea extending across the territori-
al waters of Cyprus and Greece. Both nations seek to develop the field in order to meet domestic demand
and earn LNG export revenues. What development plan, if implemented, would best maximize the future
commercial viability of the natural gas reserve and minimize the potential for a conflict over mineral rights?
a. Establish a sliding scale production arrangement based on a pro-rata allocation of the total projected
recoverable gas volume per square nautical mile.
b. Establish independent drilling rights on the reserve and designate a third-party arbitrator to settle future
production disputes.
c. Establish a proportional claim on mineral rights development based on the United Nations Convention on
the Law of the Sea.
d. Establish a joint development zone that includes the shared portion of the reserve before either country
begins exploitation.
2. Assume you have contracted to purchase 500,000 barrels of Bonny Light Crude Oil for physical delivery FOB
to a designated storage facility. What does FOB imply about this transaction?
a. The purchase price includes all transport fees; the seller is responsible for scheduling a tanker to make
final delivery of the crude to the storage facility.
b. The purchase price includes all transport fees; you are responsible for scheduling a tanker to make final
delivery of the crude to the storage facility.
c. The purchase price excludes all transport fees; the seller is responsible for scheduling a tanker to make
final delivery of the crude to your storage facility and will bill you separately for all delivery charges.
d. The purchase price excludes all transport fees; you are responsible for scheduling a tanker to make final
delivery of the crude oil to your storage facility and making payment of all delivery charges.
3. Samantha trades NYMEX ULSD contracts for a large financial institution. She expects increased volatility over the
next two months and decides to purchase a straddle, or a set of two options, using the following option contracts:
2-month NYMEX ULSD call option with a strike price of USD 3.09/gallon and premium of USD 0.09/gallon
2-month NYMEX ULSD put option with a strike price of USD 3.09/gallon and premium of USD 0.12/gallon
What is the net profit on her straddle position assuming the closing NYMEX ULSD futures price is USD
2.84/gallon at expiration?
a. USD 1,680 per contract
b. USD 2,520 per contract
c. USD 5,460 per contract
d. USD 10,500 per contract
6 2014 Global Association of Risk Professionals. All rights reserved. It is illegal to reproduce this material
4. Risk managers at a nuclear power facility are working with plant engineers to complete a rigorous engineer-
ing-based model assessment of the potential for a catastrophic operational failure. What best describes the
weakness in using this approach to forecast the probability of such an event?
a. It relies on reactive analyses when estimating projections.
b. It does not properly account for the interaction of parts of a complex mechanical system.
c. It tends to overweight the potential for a plant meltdown while underweighting the potential for less
serious operational failures.
d. It fails to account for the reaction of plant managers to a crisis situation, likely underestimating the probability
of an operational failure.
5. A natural gas-fired power plant requires 14,300 MMBtu of gas to generate 2,250 MWh of electricity. What is
the plants heat rate?
a. 5.78 MMBtu/MWh
b. 6.36 MMBtu/MWh
c. 7.61 MMBtu/MWh
d. 8.58 MMBtu/MWh
6. The table below shows the production profile for a Finnish power generator that sells into the Nord Pool
exchange for two hours:
Hour 1 Hour 2
Planned production 200 MW 300 MW
Actual production 250 MW 360 MW
The second table shows the pricing data for this two-hour period (in EUR/MWh):
Up-regulation price 65
Market price 60
Down-regulation price 55
To balance the market, the TSO procured up-regulation power from the generator during Hour 1 and down-
regulation power during Hour 2. What is the total payment that the generator received for its power during
these two hours?
a. EUR 36,300
b. EUR 36,550
c. EUR 36,600
d. EUR 36,850
Questions 7 - 8 use the information below:
Elena Vasilieva, a credit analyst for Dynamo Bank, is analyzing a position in a bond which matures in one year
issued by Excelsior Energy. She has the following information about the bond:
Risk Metrics Excelsior Energy bond
Exposure (RUB) 37,500,000
Recovery Rate 30%
Loss Given Default (RUB) -
Expected Loss (RUB) -
Default
Probability 7%
Credit Spread 5%
7. What is the expected loss for this bond position?
a. RUB 787,500
b. RUB 1,837,500
c. RUB 2,625,000
d. RUB 3,375,000
8. If the current risk-free rate is 2.5%, what is the expected 1-year return on the bond?
a. -0.9%
b. 2.1%
c. 4.9%
d. 7.5%
9. What benefit does a royalty holiday offer a foreign petroleum company that is operating in a host country
under terms of a PSC?
a. It allows for the re-allocation of amortized recovery costs from lower to higher producing projects.
b. It provides an exemption for taxes owed to other jurisdictions on local production revenue.
c. It encourages additional capital investment in oil exploration and development.
d. It helps to ease crude oil shortages in the domestic market.
10. A trader is reviewing a portfolio of energy derivatives and would like to reduce the level of negative gamma in
the portfolio. Which of the following positions when purchased would contribute the highest positive gamma?
a. At-the money puts
b. Out-of-the money puts
c. At-the-money calls
d. Deep out-of-the-money calls
11. An independent refinery has purchased a 3-month cap to hedge its crude oil supply requirement for the
next three months. The cap is written on 150,000 barrels of crude oil per month with a strike price of USD
96.50/bbl and premium of USD 1.60/bbl. The contract requires monthly settlement against the average front
month NYMEX WTI contract. Using the average monthly NYMEX WTI closing prices below, calculate the net
payment required by the refinery to settle the cap.
Month 1: USD 99.30
Month 2: USD 95.80
Month 3: USD 101.90
a. USD 405,000
b. USD 510,000
c. USD 720,000
d. USD 1,230,000
12. Prior to the recent surge in production of shale oil and gas deposits, what combination of geological charac-
teristics made large scale commercial development of these reserves uneconomical?
a. High permeability and high porosity
b. High permeability and low porosity
c. Low permeability and low porosity
d. Low permeability and high porosity
13. A linear programming optimization indicates that a complex crude oil refiners profit margin would be maxi-
mized by purchasing an additional 500,000 barrels of light sweet crude feedstock at current market prices.
What best explains this result?
a. Marginal production of petrochemicals will maximize total operating profit.
b. Marginal production of jet fuel will maximize total operating profit.
c. Marginal capacity exists in the coker and cracker units while the distillation unit operates at full capacity.
d. Marginal capacity exists in the distillation unit while the coker and cracking units operate at full capacity.
T-Wave has developed a proprietary tidal stream turbine designed to generate electric power by harvesting
kinetic energy from the ocean. Using a project finance arrangement, T-Wave creates a project company
known as ElectraWave to develop a large scale installation for commercial application. T-Wave agrees to
contribute 20% of the initial equity capital required as project sponsor, with a partner, Tidal King, contributing
the remaining 80%. (Assume each partner has fulfilled its capital commitment and development of the project
is underway.)
14. Which party will bear the economic liability if the ElectraWave project fails?
a. T-Wave and Tidal King are liable for 20% and 80% respectively of ElectraWaves total realized economic losses.
b. As the majority equity holder, Tidal King is responsible for 100% of ElectraWaves realized economic losses.
c. As project sponsor, T-Wave is responsible for 100% of ElectraWaves realized economic losses.
d. ElectraWave is responsible for 100% of its realized economic losses.
15. What type of financing structure will most likely be used to fund the ongoing working capital requirements
for the ElectraWave project?
a. Partially amortizing facility with a bullet due at maturity
b. Revolving facility with flexible drawdown
c. Syndicated loan offered as a 144A private placement
d. Fixed-rate loan with quarterly amortization
16. Consider a short call option on Brent Crude with a premium of USD 2.50 and a strike of USD 103. What is the
MtM value of the contract when Brent Crude is trading at USD 108? (Disregard the impact of compounding)
a. USD -2.50
b. USD -7.50
c. USD 2.50
d. USD 7.50
17. How do risk managers typically misinterpret or incorrectly apply VaR and stress test model results?
a. They fail to recognize that VaR models provide information about unlikely but plausible risk scenarios that
stress test models often miss.
b. They interpret VaR and stress test model results independently when evaluating potential risk exposures.
c. They view VaR and stress test models as unnecessarily redundant metrics used to gauge risk exposure.
d. They fail to properly back-test VaR results despite the fact stress test results are rigorously back-tested
using historical data.
18. You have purchased a monthly 100 MW on-peak power call option with the following terms:
Strike price: USD 75/MWh
Premium: USD 5/MWh
Tenor: 20 business days
Settlement index: average on-peak power price for the month
What would be the gross settlement amount if you exercised the call option when the average on-peak power
price was USD 85/MWh?
a. USD 160,000
b. USD 240,000
c. USD 320,000
d. USD 480,000
19. Concordia Exploration agrees to pay a 10% royalty fee to lease an oil field. It then sells a Production Payment
Interest (PPI) to Tallgrass Industries under the following terms:
PPI Size: 15%
PPI Payment to Concordia: Cash
Year one operating revenues: USD 12,000,000
Year one operating costs: USD 5,000,000
Under terms of the PPI, what share of revenues and operating costs will accrue to Tallgrass at the end of year one?
a. USD 1,620,000 of revenues and zero operating costs
b. USD 1,620,000 of revenues and USD 750,000 in operating costs
c. USD 1,800,000 of revenues and zero operating costs
d. USD 1,800,000 of revenues and USD 750,000 in operating costs
20. A credit analyst is assessing the risk associated with a holding in Perak Wind bonds using the following information
expressed in Malaysian ringgit (MYR):
Exposure: 12,100,000
Loss given default: 7,500,000
Expected loss: 1,125,000
Credit spread: 7%
What is the recovery rate on the bond exposure?
a. 15%
b. 38%
c. 55%
d. 63%
21. Which best describes a method of storing low-level radioactive waste?
a. Compacting the waste into smaller volumes and storing in cemented steel drums.
b. Embedding the waste in a glass matrix and storing in deep geological disposal facilities.
c. Compacting the waste into smaller volumes and storing in deep geological disposal facilities.
d. Embedding the waste in a glass matrix and storing in cemented steel drums.
22. Long-term LNG supply contracts increase the risk that a buyer will fail to take physical delivery of natural gas
due to an adverse change in market supply and demand fundamentals. Suppliers (sellers) can mitigate this
risk by inserting which of the following clauses in their LNG supply contracts?
a. Force majeure clause
b. Liquidated damage clause
c. Default termination clause
d. Take-or-pay clause
23. The equilibrium price of electricity on a power grid with total demand of 425 MW has been set at USD
46/MWh using a merit order curve. Which of the following generation plants will be dispatched?
Plant Variable Cost Capacity
A USD 38/MWh 300 MW
B USD 55/MWh 150 MW
C USD 45/MWh 200 MW
a. Plant B only
b. Plant C only
c. Plant A and Plant C
d. All plants are dispatched
24. In April Emile, an experienced trader, observes that the August gasoline contract is selling at USD 2.60/gal
and the December contract is selling at USD 2.72/gal. Emile thinks this spread is too wide and executes a ten-
contract position in an attempt to profit from the opportunity. In June, the August contract increases to USD
2.64/gal, while the December contract decreases to USD 2.69/gal. What is his profit/loss (ignoring broker
costs, margin requirements and other expenses) if he decides to close out his position in June?
a. USD 5,040
b. USD 29,400
c. USD 50,400
d. USD 294,000
25. A Texas based refiner purchases NYMEX WTI futures contracts that lock in a price for its crude oil supply for
the next three months. The refiner executes an Exchange Futures for Physical (EFP) contract to ensure physical
delivery of crude at the Port of Houston. Under Dodd-Frank, how will the refiner report the EFP transaction?
a. The refiner must report the market value of the EFP as a swap at the time it is purchased.
b. The refiner must report the notional value of the underlying physical crude oil.
c. The refiner must first register as a swap dealer before entering into an EFP contract.
d. The refiner is exempt from reporting the EFP under Dodd-Frank.
26. An LNG distributor provides customers a weekly LNG price quote based on the closing NYMEX Henry Hub
futures settlement each Monday. The weekly price quote includes a cap and floor equivalent to +/- 20% of the
average NYMEX Henry Hub price for the previous month.
The November average closing price and weekly pricing data for February are shown below:
January average closing price: USD 4.18/MMBtu
NYMEX Henry Hub Monday closing price for February
Week 1: USD 4.38/MMBtu
Assuming the distributor sells 100,000 MMBtu of gas per day, seven days per week, what will be the total
sales revenue for the four weeks of December?
a. USD 1,810,000
b. USD 1,823,000
c. USD 12,670,000
d. USD 12,761,000
27. The following table summarizes the cumulative 4-year implied probability of default associated with four
midsize oil exploration and production companies.
Company Year 1 Year 2 Year 3 Year 4
Sun Valley Petroleum 0.04% 0.17% 0.37% 0.53%
Tex Star Production 0.42% 1.05% 1.61% 2.32%
North Line Exploration 4.68% 8.41% 11.6% 13.8%
Goldwell Drilling 26.5% 33.1% 39.0% 44.2%
What company is most likely to have a Moodys/Standard & Poors rating of B1/B+?
a. Sun Valley Petroleum
b. Tex Star Production
c. North Line Exploration
d. Goldwell Drilling
28 What is the expected production pattern for a well drilled into a field believed to contain sizeable quantities
of crude oil and associated natural gas?
a. The well will produce both oil and gas in roughly the same proportion throughout the duration of its
operating life.
b. The well will primarily produce oil initially, but as it matures, oil production will decline and natural gas
production will increase.
c. The well will primarily produce natural gas initially, but as it matures, gas production will decline and oil
d. The well can only be configured to produce either oil or gas due to the impact unique subsurface structures
have on well configuration and oil or gas production.
29. An Independent Power Producer (IPP) has agreed to sell a local utility company 200 MW of electricity at USD
40/MWh with any imbalances settled through a contract for differences (CfD). At the time of dispatch the
Independent System Operator (ISO) notes that the spot price for electricity is USD 52/MWh and the utilitys
actual consumption is 215 MW of power. What will be the CfD settlement?
a. USD 600
b. USD 780
c. USD 8,600
d. USD 11,180
30. A new LNG train is projected to produce 3 Million Tons per Annum (MTA) of LNG. Using historical experience
as a reference, what will realized production likely be four years after the LNG train goes into operation?
a. Less than 3 MTA due to thermal inefficiencies.
b. More than 3 MTA as efficiencies are achieved through debottlenecking.
c. Approximately 3 MTA; the efficiency of new LNG trains is carefully modeled due to high capital costs.
d. Annual production will vary; the LNG production amounts correspond to levels set by long-term gas service
agreements.
Energy Risk
Professional(ERP
)
Examination
Practice Exam 4
Answers
a. b. c. d.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
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18.
19.
a. b. c. d.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
Correct way to complete
1.
Wrong way to complete
1.
Energy Risk
Professional(ERP
)
Examination
Practice Exam 4
Explanations
1. A large offshore natural gas field has been discovered in the Mediterranean Sea extending across the territori-
al waters of Cyprus and Greece. Both nations seek to develop the field in order to meet domestic demand
and earn LNG export revenues. What development plan, if implemented, would best maximize the future
commercial viability of the natural gas reserve and minimize the potential for a conflict over mineral rights?
a. Establish a sliding scale production arrangement based on a pro-rata allocation of the total projected
recoverable gas volume per square nautical mile.
b. Establish independent drilling rights on the reserve and designate a third-party arbitrator to settle future
production disputes.
c. Establish a proportional claim on mineral rights development based on the United Nations Convention on
the Law of the Sea.
d. Establish a joint development zone that includes the shared portion of the reserve before either country
begins exploitation.
Correct answer: d
Explanation: Answer d is correct. The best strategy, and one that has been used successfully in many occa-
sions, is for the two nations to establish a joint development zone (JDZ) that encompasses the portions of the
reserve in both countrys territorial waters. The JDZ will include definitions of each nations claim and a uniti-
zation agreement to maximize production for the entire reserve.
Reading reference: Andrew Inkpen and Michael Moffett. The Global Oil and Gas Industry: Management,
Strategy and Finance, Chapter 4, pages 138-141.
2. Assume you have contracted to purchase 500,000 barrels of Bonny Light Crude Oil for physical delivery FOB
to a designated storage facility. What does FOB imply about this transaction?
a. The purchase price includes all transport fees; the seller is responsible for scheduling a tanker to make
final delivery of the crude to the storage facility.
b. The purchase price includes all transport fees; you are responsible for scheduling a tanker to make final
delivery of the crude to the storage facility.
c. The purchase price excludes all transport fees; the seller is responsible for scheduling a tanker to make
final delivery of the crude to your storage facility and will bill you separately for all delivery charges.
d. The purchase price excludes all transport fees; you are responsible for scheduling a tanker to make final
delivery of the crude oil to your storage facility and making payment of all delivery charges.
Correct answer: d
Explanation: The correct answer is d. The term FOB stands for Free On Board, meaning the cargo is delivered
to a specified shipment point, it is then the buyers responsibility to pay for shipment to the cargos final des-
tination, along with any insurance costs, tariffs, fees, etc., so you will be responsible to make the arrangements
to have the crude delivered to your refinery.
Reading reference: Andrew Inkpen and Michael H. Moffett. The Global Oil and Gas Industry: Management,
Strategy and Finance, Chapter 9, page 42.1.
3. Samantha trades NYMEX ULSD contracts for a large financial institution. She expects increased volatility over the
next two months and decides to purchase a straddle, or a set of two options, using the following option contracts:
2-month NYMEX ULSD call option with a strike price of USD 3.09/gallon and premium of USD 0.09/gallon
2-month NYMEX ULSD put option with a strike price of USD 3.09/gallon and premium of USD 0.12/gallon
What is the net profit on her straddle position assuming the closing NYMEX ULSD futures price is USD
2.84/gallon at expiration?
a. USD 1,680 per contract
b. USD 2,520 per contract
c. USD 5,460 per contract
d. USD 10,500 per contract
Correct answer: a
Explanation: Answer a is correct because: at 2.84, the profit is 3.09 - 2.84 - 0.09 - 0.12 = 0.04 multiplied by
42,000 gallons per contract. In this situation the long put provided the profit, while the premium payments
reduced the profit.
Reading reference: IEA, The Mechanics of the Derivatives Markets: What They Are and How They Function.
(Special Supplement to the Oil Market Report, April 2011).
4. Risk managers at a nuclear power facility are working with plant engineers to complete a rigorous engineer-
ing-based model assessment of the potential for a catastrophic operational failure. What best describes the
weakness in using this approach to forecast the probability of such an event?
a. It relies on reactive analyses when estimating projections.
b. It does not properly account for the interaction of parts of a complex mechanical system.
c. It tends to overweight the potential for a plant meltdown while underweighting the potential for less
serious operational failures.
d. It fails to account for the reaction of plant managers to a crisis situation, likely underestimating the probability
of an operational failure.
Correct answer: d
Explanation: The correct answer is d. Engineering models focus on physical processes and materials, they do
not account for the reaction of the humans who operate the equipment during times of crisis. As such,
according to the authors, these models may under-report the likelihood of failure by a factor of 10, or more.
Reading reference: Robert Bea, Ian Mitroff, Daniel Farber, Howard Foster and Karlene H. Roberts, A New
Approach to Risk: The Implications of E3, pages 36-37.
5. A natural gas-fired power plant requires 14,300 MMBtu of gas to generate 2,250 MWh of electricity. What is
the plants heat rate?
a. 5.78 MMBtu/MWh
b. 6.36 MMBtu/MWh
c. 7.61 MMBtu/MWh
d. 8.58 MMBtu/MWh
Correct answer: b
Explanation: The heat rate is determined by dividing the quantity of fuel used by the quantity of power pro-
duced, in this example 14,300 MMBtu divided by 2,250 MWh = 6.36 MMBtu/MWh.
Reading reference: Vincent Kaminski, Energy Markets, Chapter 22: Analytical Tools.
6. The table below shows the production profile for a Finnish power generator that sells into the Nord Pool
exchange for two hours:
Hour 1 Hour 2
Planned production 200 MW 300 MW
Actual production 250 MW 360 MW
The second table shows the pricing data for this two-hour period (in EUR/MWh):
Up-regulation price 65
Market price 60
Down-regulation price 55
To balance the market, the TSO procured up-regulation power from the generator during Hour 1 and down-
regulation power during Hour 2. What is the total payment that the generator received for its power during
these two hours?
a. EUR 36,300
b. EUR 36,550
c. EUR 36,600
d. EUR 36,850
Correct answer: a
Explanation: In the balancing market, the Nord Pool exchange has special payment rules for generators which
produce too much compared to their plan. In hours when the TSO procures up-regulation power, it only pays
the market price and not the up-regulation price. In hours when the TSO procures down-regulation power, it
pays the down-regulation price.
First, the generator sold 500 MWh of power at the market price during the two hours. It receives 500 * 60, or
EUR 30,000 for this power. During hour 1, the generator produced 50 MWh of power in excess of its plan. Even
though the TSO procured up-regulation power during this hour, it will only receive market price, for a total of
50 * 60, or EUR 3,000 for the additional 50 MWh. During hour 2, the TSO procured down-regulation power and
the generator produced 60 MWh of power in excess of its plan. The TSO would pay 60 * 55, or 3,300.
Therefore the generator would receive a total of 30,000 + 3,000 + 3,300, or 36,300 during these 2 hours.
Reading reference: Nord Pool Spot. The Nordic Electricity Exchange and Model for a Liberalized Electricity
Market, page 8.
Elena Vasilieva, a credit analyst for Dynamo Bank, is analyzing a position in a bond which matures in one year
issued by Excelsior Energy. She has the following information about the bond:
Risk Metrics Excelsior Energy bond
Exposure (RUB) 37,500,000
Recovery Rate 30%
Loss Given Default (RUB) -
Expected Loss (RUB) -
Default
Probability 7%
Credit Spread 5%
7. What is the expected loss for this bond position?
a. RUB 787,500
b. RUB 1,837,500
c. RUB 2,625,000
d. RUB 3,375,000
Correct answer: b
Explanation: In order to get the expected loss, first we have to calculate the loss given default (LGD). This is
equal to Exposure * (1-Recovery Rate). In this case the LGD is 37,500,000 * (1-30%), or 26,250,000.
The expected loss equals the loss given default times the probability of default. Therefore, the expected loss
is 26,250,000 * 7%, or 1,837,500.
Reading reference: Allan Malz, Financial Risk Management, Chapter 6, pages 201 - 203.
8. If the current risk-free rate is 2.5%, what is the expected 1-year return on the bond?
a. -0.9%
b. 2.1%
c. 4.9%
d. 7.5%
Correct answer: b
Explanation: The expected return of the bond, in percent, can be calculated using the following equation:
E
R
= [(1-) (1+r+z) + (R)] 1
where represents the probability of default, r is the risk free rate, z represents the credit spread, and R rep-
resents the recovery rate. The credit spread is the additional yield above the risk free rate that the investor
will receive in order to compensate for the risk of the bond, but since it is determined by the market, it may
not adequately compensate the investor for that risk.
In this case, if the bond does not default, the investor will receive 1 + 2.5% + 5% at the end of the year, reflect-
ing a 7.5% return on investment. If the bond defaults, the investor will receive R or 30% of their investment
back and incur a loss on their investment of (1-R), or 70%. The equation above probability weights the two
outcomes and results in an expected return of 2.1%.
Reading reference: Allan Malz. Financial Risk Management, Chapter 6, pages 201 203.
9. What benefit does a royalty holiday offer a foreign petroleum company that is operating in a host country
under terms of a PSC?
a. It allows for the re-allocation of amortized recovery costs from lower to higher producing projects.
b. It provides an exemption for taxes owed to other jurisdictions on local production revenue.
c. It encourages additional capital investment in oil exploration and development.
d. It helps to ease crude oil shortages in the domestic market.
Correct answer: c
Explanation: The correct answer is c. Royalty holidays (along with tax holidays) are incentives that countries
may offer to foreign petroleum companies to help maximize their investment in domestic oil/gas projects. The
rationale is that if the contractor does not have to pay royalties for a period of time, they will have additional
capital to invest in the exploration and development of the oil/gas field.
Reading reference: Charlotte Wright & Rebecca Gallun. Fundamentals of Oil & Gas Accounting, Chapter 15,
pages 688-689.
10. A trader is reviewing a portfolio of energy derivatives and would like to reduce the level of negative gamma in
the portfolio. Which of the following positions when purchased would contribute the highest positive gamma?
a. At-the money puts
b. Out-of-the money puts
c. At-the-money calls
d. Deep out-of-the-money calls
Correct answer: c
Explanation: The correct answer is c. Buying at-the-money calls will produce the greatest increase on the
gamma of the portfolio.
Reading reference: Les Clewlow and Chris Strickland. Energy Derivatives: Pricing and Risk Management,
Chapter 9.
11. An independent refinery has purchased a 3-month cap to hedge its crude oil supply requirement for the
next three months. The cap is written on 150,000 barrels of crude oil per month with a strike price of USD
96.50/bbl and premium of USD 1.60/bbl. The contract requires monthly settlement against the average front
month NYMEX WTI contract. Using the average monthly NYMEX WTI closing prices below, calculate the net
payment required by the refinery to settle the cap.
Month 1: USD 99.30
Month 2: USD 95.80
Month 3: USD 101.90
a. USD 405,000
b. USD 510,000
c. USD 720,000
d. USD 1,230,000
Correct answer: b
Explanation: The correct answer is b. By selling a cap, if the settlement price of crude oil is above the strike
price in a given month, the difference between the prices must be paid to the refinery. In this case, the first
and third months are above the strike price; the difference for month 1 is USD 2.80, the difference for month 3
is USD 5.40. Multiplying by the contract size of 150,000/bbl per month gives totals of USD 420,000 and USD
810,000 respectively for a total of USD 1,230,000, we then must subtract the premium paid for the cap (USD
1.60 x 150,000 bbl x 3 months = 720,000) from the cap total for a net settlement payment of USD 510,000.
Note: no payment is made in month 2 because the settlement price (USD 95.80) is below the strike price
(USD 96.50), though the cap premium is still paid for month 2.
Reading reference: Vincent Kaminski, Energy Markets, Chapter 18 Transactions in the Oil Markets.
12. Prior to the recent surge in production of shale oil and gas deposits, what combination of geological charac-
teristics made large scale commercial development of these reserves uneconomical?
a. High permeability and high porosity
b. High permeability and low porosity
c. Low permeability and low porosity
d. Low permeability and high porosity
Correct answer: d
Explanation: The correct answer is d. Porosity is a volumetric measure of how much oil or gas a reservoir rock
can contain; permeability is a measure of how easily oil or gas can flow through a subsurface reservoir. So an
ideal combination would be rocks that with high porosity that can hold a large amount of oil/gas that also have
high permeability so that oil and gas can easily pass through them. While shale is a porous rock that can hold
large quantities of oil and gas, it has low permeability, so the oil and gas has difficulty migrating through the
rock unless a technique like hydrofracking is employed, which limited shale oil/gas production until recently.
Reading reference: Vivek Chandra. Fundamentals of Natural Gas: An International Perspective, Chapter 1,
pages 14-15.
13. A linear programming optimization indicates that a complex crude oil refiners profit margin would be maxi-
mized by purchasing an additional 500,000 barrels of light sweet crude feedstock at current market prices.
What best explains this result?
a. Marginal production of petrochemicals will maximize total operating profit.
b. Marginal production of jet fuel will maximize total operating profit.
c. Marginal capacity exists in the coker and cracker units while the distillation unit operates at full capacity.
d. Marginal capacity exists in the distillation unit while the coker and cracking units operate at full capacity.
Correct answer: d
Explanation: The correct answer is d. As Leffler explains, a very complex refinery can operate in several
modes on the margin as various units like the coker and cracker fill up. In the case of this refinery, the other
units were filled, but there was still refining capacity left in the distillation column. This unit is best suited to
process light, sweet crude, so the refinery will buy a cargo in order to optimize its output (in this case the
refinery will operate as a simple refinery since the crackers and cokers are not being utilized).
Reading reference: William L. Leffler. Petroleum Refining in Nontechnical Language, 3rd Edition, Chapter 20,
pages 202 and 203.
T-Wave has developed a proprietary tidal stream turbine designed to generate electric power by harvesting
kinetic energy from the ocean. Using a project finance arrangement, T-Wave creates a project company
known as ElectraWave to develop a large scale installation for commercial application. T-Wave agrees to
contribute 20% of the initial equity capital required as project sponsor, with a partner, Tidal King, contributing
the remaining 80%. (Assume each partner has fulfilled its capital commitment and development of the project
is underway.)
14. Which party will bear the economic liability if the ElectraWave project fails?
a. T-Wave and Tidal King are liable for 20% and 80% respectively of ElectraWaves total realized economic losses.
b. As the majority equity holder, Tidal King is responsible for 100% of ElectraWaves realized economic losses.
c. As project sponsor, T-Wave is responsible for 100% of ElectraWaves realized economic losses.
d. ElectraWave is responsible for 100% of its realized economic losses.
Correct answer: d
Explanation: The correct answer is d. In a project finance arrangement, the main purpose of creating a project
company is to contain economic liability, insulating equity investors from downside risk. Therefore the project
company, ElectraWave, will have the primary liability in the bankruptcy. The equity investors, T-Wave and Tidal
King, have no further liability with regard to the project.
Reading reference: Chris Groobey, John Pierce, Michael Faber and Greg Broome. Project Finance Primer for
Renewable Energy and Clean Tech Projects, page 4.
15. What type of financing structure will most likely be used to fund the ongoing working capital requirements
for the ElectraWave project?
a. Partially amortizing facility with a bullet due at maturity
b. Revolving facility with flexible drawdown
c. Syndicated loan offered as a 144A private placement
d. Fixed-rate loan with quarterly amortization
Correct answer: b
Explanation: Working capital loans typically have smaller loan amounts than term or construction loans and
are usually revolving in nature, so amounts which are paid back can be reborrowed. They are used to pay
everyday expenses such as the purchase of inventory and the amount of a working capital loan is typically
limited to a percentage of the firms cash and inventory on hand less any outstanding letters of credit.
Reading reference: Chris Groobey, John Pierce, Michael Faber and Greg Broome. Project Finance Primer for
Renewable Energy and Clean Tech Projects, page 9.
16. Consider a short call option on Brent Crude with a premium of USD 2.50 and a strike of USD 103. What is the
MtM value of the contract when Brent Crude is trading at USD 108? (Disregard the impact of compounding)
a. USD -2.50
b. USD -7.50
c. USD 2.50
d. USD 7.50
Correct answer: a
Explanation: This option contract is a short call position so the profit is: Max (St-K,0) +P or USD 108 + USD 103
+ USD 2.50 = USD -2.50. Note this question calls for the profit not the payoff.
17. How do risk managers typically misinterpret or incorrectly apply VaR and stress test model results?
a. They fail to recognize that VaR models provide information about unlikely but plausible risk scenarios that
stress test models often miss.
b. They interpret VaR and stress test model results independently when evaluating potential risk exposures.
c. They view VaR and stress test models as unnecessarily redundant metrics used to gauge risk exposure.
d. They fail to properly back-test VaR results despite the fact stress test results are rigorously back-tested
using historical data.
Correct answer: b
Explanation: The correct answer is b. A flaw in stress testing is that the stress test scenarios do not assign
probability that the stressing event will occur, which can lead to a reluctance to accept the stress test results
over the belief that it just wont happen, risk managers often feel the need to chose between the results of
stress tests and VaR calculations, rather than using both metrics to evaluate risk. The other answers are incor-
rect: stress testing, not VaR, provides information about unlikely but plausible events; use of both metrics is
not redundant since they examine risk differently and focus on different aspects of risk; it is actually much
harder to backtest a stress test than it is a VaR calculation.
Reading reference: Kevin Dowd. Measuring Market Risk, Second Edition, Chapter 13.
18. You have purchased a monthly 100 MW on-peak power call option with the following terms:
Strike price: USD 75/MWh
Premium: USD 5/MWh
Tenor: 20 business days
Settlement index: average on-peak power price for the month
What would be the gross settlement amount if you exercised the call option when the average on-peak power
price was USD 85/MWh?
a. USD 160,000
b. USD 240,000
c. USD 320,000
d. USD 480,000
Correct answer: c
Explanation: The gross settlement can be calculated using the following formula:
Payout = max(k S
t
,0) x Q
where k = the average power price, S
t
= strike price and Q = quantity in MWh. Given that an on-peak power
call option represents 16 hours per day, Q can be calculated as follows: 100 MW * 20 business days * 16
hours/day = 32,000 MWh.
Hence the payout equals 32,000 MWh x (USD 85 USD 75), or USD 320,000. The gross settlement does not
include the amount of the premium.
*Assumes knowledge that an on-peak power call option represents 16 hours per day.
19. Concordia Exploration agrees to pay a 10% royalty fee to lease an oil field. It then sells a Production Payment
Interest (PPI) to Tallgrass Industries under the following terms:
PPI Size: 15%
PPI Payment to Concordia: Cash
Year one operating revenues: USD 12,000,000
Year one operating costs: USD 5,000,000
Under terms of the PPI, what share of revenues and operating costs will accrue to Tallgrass at the end of year one?
a. USD 1,620,000 of revenues and zero operating costs
b. USD 1,620,000 of revenues and USD 750,000 in operating costs
c. USD 1,800,000 of revenues and zero operating costs
d. USD 1,800,000 of revenues and USD 750,000 in operating costs
Correct answer: a
Explanation: A production payment interest (PPI) is a nonworking interest. Therefore zero costs will accrue to
the holder of the PPI (Tallgrass), and all of the costs will accrue to the working interest holder Concordia.
The revenue stream is as follows:
Concordia will pay 12,000,000 * 10% or USD 1,200,000 in royalties. That leaves USD 10,800,000 to be allocated
to Concordias working interest. The PPI entitles Tallgrass to 15% of the working interests share of revenue, so
Tallgrass will then be allocated (15% * 10,800,000), or USD 1,620,000 for their PPI.
Reading reference: Wright and Gallun, Fundamentals of Oil and Gas Accounting, Chapter 1, pages 14-15.
20. A credit analyst is assessing the risk associated with a holding in Perak Wind bonds using the following information
expressed in Malaysian ringgit (MYR):
Exposure: 12,100,000
Loss given default: 7,500,000
Expected loss: 1,125,000
Credit spread: 7%
What is the recovery rate on the bond exposure?
a. 15%
b. 38%
c. 55%
d. 63%
Correct answer: b
Explanation: The recovery rate can be calculated as (Original exposure Loss given default) / Original
exposure = (12,100,000-7,500,000)/12,100,000 = 38%.
Reading reference: Allan Malz. Financial Risk Management: Models, History, and Institutions, Chapter 6, pages 201-202.
21. Which best describes a method of storing low-level radioactive waste?
a. Compacting the waste into smaller volumes and storing in cemented steel drums.
b. Embedding the waste in a glass matrix and storing in deep geological disposal facilities.
c. Compacting the waste into smaller volumes and storing in deep geological disposal facilities.
d. Embedding the waste in a glass matrix and storing in cemented steel drums.
Correct answer: a
Explanation: Low-level radioactive waste consists of items which have come into contact with radioactive material
through incidental methods, such as clothing, containers, and syringes. This type of waste is typically compacted
and placed in steel drums and sent to dedicated storage facilities which are typically close to the surface.
Reading reference: NEA, Nuclear Energy Today, Chapter 6, pages 61-66.
22. Long-term LNG supply contracts increase the risk that a buyer will fail to take physical delivery of natural gas
due to an adverse change in market supply and demand fundamentals. Suppliers (sellers) can mitigate this
risk by inserting which of the following clauses in their LNG supply contracts?
a. Force majeure clause
b. Liquidated damage clause
c. Default termination clause
d. Take-or-pay clause
Correct answer: d
Explanation: A take-or-pay clause obligates buyers to either take physical delivery of a product or pay a pre-
determined price in lieu of delivery.
Reading reference: Vivek Chandra. Fundamentals of Natural Gas: An International Perspective, Chapter 4, page 118.
23. The equilibrium price of electricity on a power grid with total demand of 425 MW has been set at USD
46/MWh using a merit order curve. Which of the following generation plants will be dispatched?
Plant Variable Cost Capacity
A USD 38/MWh 300 MW
B USD 55/MWh 150 MW
C USD 45/MWh 200 MW
a. Plant B only
b. Plant C only
c. Plant A and Plant C
d. All plants are dispatched
Correct answer: c
Explanation: The merit order curve dispatches generation in order of variable operating costs until total
capacity for the system is met. The last plant dispatched that fulfills the capacity requirement will set the
equilibrium price. In this case, Plant Cs entire capacity will be dispatched plus 125 MW of capacity from Plant
A in order to fulfill total grid demand.
Reading reference: Daniel Kirschen and Goran Strbac, Fundamentals of Power System Economics, Chapter 3.
24. In April Emile, an experienced trader, observes that the August gasoline contract is selling at USD 2.60/gal
and the December contract is selling at USD 2.72/gal. Emile thinks this spread is too wide and executes a ten-
contract position in an attempt to profit from the opportunity. In June, the August contract increases to USD
2.64/gal, while the December contract decreases to USD 2.69/gal. What is his profit/loss (ignoring broker
costs, margin requirements and other expenses) if he decides to close out his position in June?
a. USD 5,040
b. USD 29,400
c. USD 50,400
d. USD 294,000
Correct answer: b
Explanation: Answer b is correct. Emiles expectation was that the spread of USD 0.12/gal would narrow;
therefore he buys the low price contract and sells the high price contract. He bought the August contract
(USD 2.60) and sold the December contract (USD 2.72) for a spread of USD 0.12/gal. In May, he closes out his
position by selling the August contract for USD 2.64/gal and buys the December contract for USD 2.69/gal.
Since he transacted for 10 contracts at 42,000 gallons per contract, his net profit is 420,000 x USD 0.07, or
USD 29,400. Had Emile thought the spread would widen, he would have reversed the transactions.
Reading reference: Vincent Kaminski, Energy Markets, Chapter 4, pages 142-144, 149.
25. A Texas based refiner purchases NYMEX WTI futures contracts that lock in a price for its crude oil supply for
the next three months. The refiner executes an Exchange Futures for Physical (EFP) contract to ensure physical
delivery of crude at the Port of Houston. Under Dodd-Frank, how will the refiner report the EFP transaction?
a. The refiner must report the market value of the EFP as a swap at the time it is purchased.
b. The refiner must report the notional value of the underlying physical crude oil.
c. The refiner must first register as a swap dealer before entering into an EFP contract.
d. The refiner is exempt from reporting the EFP under Dodd-Frank.
Correct answer: d
Explanation: The correct answer is d. The CFTC determined that a swap of this nature (a physical exchange
transaction) is conducted so that the party engaging in the transaction may take physical delivery of the
contracted commodity. The transaction therefore is considered part of a physical settlement and not a finan-
cial swap transaction therefore it is exempt from Dodd-Frank reporting requirements.
Reading reference: Cleary and Gottlieb. Navigating Key Dodd-Frank Rules Related to the Use of Swaps by
End Users. (April 9, 2013).
26. An LNG distributor provides customers a weekly LNG price quote based on the closing NYMEX Henry Hub
futures settlement each Monday. The weekly price quote includes a cap and floor equivalent to +/- 20% of the
average NYMEX Henry Hub price for the previous month.
The November average closing price and weekly pricing data for February are shown below:
January average closing price: USD 4.18/MMBtu
NYMEX Henry Hub Monday closing price for February
Assuming the distributor sells 100,000 MMBtu of gas per day, seven days per week, what will be the total
sales revenue for the four weeks of December?
a. USD 1,810,000
b. USD 1,823,000
c. USD 12,670,000
d. USD 12,761,000
Correct answer: c
Explanation: The correct answer is c. For the calculation, the weekly price must be multiplied by 7, for the
days of the week, and then by a factor of 100,000 for the MMBtu per day amount. Week 2 will finish above
the cap established by the pricing scheme USD 4.18 plus 20% = USD 5.02 therefore this figure must be
used for this week, rather than the NYMEX closing price of USD 5.15. Therefore, the total for the four weeks is
USD 12,670,000.
Reading reference: Vivek Chandra. Fundamentals of Natural Gas: An International Perspective, Chapter 4,
pages 113-114.
27. The following table summarizes the cumulative 4-year implied probability of default associated with four
midsize oil exploration and production companies.
Company Year 1 Year 2 Year 3 Year 4
Sun Valley Petroleum 0.04% 0.17% 0.37% 0.53%
Tex Star Production 0.42% 1.05% 1.61% 2.32%
North Line Exploration 4.68% 8.41% 11.6% 13.8%
Goldwell Drilling 26.5% 33.1% 39.0% 44.2%
What company is most likely to have a Moodys/Standard & Poors rating of B1/B+?
a. Sun Valley Petroleum
b. Tex Star Production
c. North Line Exploration
d. Goldwell Drilling
Correct answer: c
Explanation: A B1/B+ rating is a speculative, or junk, credit rating, which would typically reflect a significant 4-year
probability of default such as the 13.8% in North Lines case. It is not an investment grade rating, but is also one of
the higher speculative ratings. The probabilities of default implied by different ratings might change very slightly
year by year, but generally a 4-year default probability of 0.5% will correspond to a medium investment grade rating
(potentially A2/A or A3/A-), a 2.3% probability would fall into the low investment grade category (Baa/BBB), and a
44.25% probability would correspond to a much lower speculative grade rating in the Caa2/CCC range.
Reading reference: Burger, Graeber and Schindlmayr, Managing Energy Risk: An Integrated View of Power and
Other Energy Markets, Chapter 6.3, p. 270.
28 What is the expected production pattern for a well drilled into a field believed to contain sizeable quantities
of crude oil and associated natural gas?
a. The well will produce both oil and gas in roughly the same proportion throughout the duration of its
operating life.
b. The well will primarily produce oil initially, but as it matures, oil production will decline and natural gas
c. The well will primarily produce natural gas initially, but as it matures, gas production will decline and oil
d. The well can only be configured to produce either oil or gas due to the impact unique subsurface structures
have on well configuration and oil or gas production.
Correct answer: b
Explanation: The correct answer is b. Typically oil will flow from such a well first, but as the oil begins to become
depleted, natural gas within the reservoir will expand, and will come out of the well in greater volumes. Answer d
is incorrect because wells in associated fields typically produce natural gas along with oil; this gas can either be
collected for sale or flared burned on-site as a waste product.
29. An Independent Power Producer (IPP) has agreed to sell a local utility company 200 MW of electricity at USD
40/MWh with any imbalances settled through a contract for differences (CfD). At the time of dispatch the
Independent System Operator (ISO) notes that the spot price for electricity is USD 52/MWh and the utilitys
actual consumption is 215 MW of power. What will be the CfD settlement?
a. USD 600
b. USD 780
c. USD 8,600
d. USD 11,180
Correct answer: b
Explanation: The correct answer is b. Under a CfD agreement, the amount beyond the contracted volume is
settled at the spot market price; in this case 15 MWh (215-200) at USD 52/MWh, or USD 780. The other 200
MW is paid for at a rate of USD 40/MWh as specified in the contract and is not part of the CfD settlement.
Reading reference: Steven Stoft. Power System Economics: Designing Markets for Electricity. Chapter 3.2.
30. A new LNG train is projected to produce 3 Million Tons per Annum (MTA) of LNG. Using historical experience
as a reference, what will realized production likely be four years after the LNG train goes into operation?
a. Less than 3 MTA due to thermal inefficiencies.
b. More than 3 MTA as efficiencies are achieved through debottlenecking.
c. Approximately 3 MTA; the efficiency of new LNG trains is carefully modeled due to high capital costs.
d. Annual production will vary; the LNG production amounts correspond to levels set by long-term gas service
agreements.
Correct answer: b
Explanation: The correct answer is b. An important consideration with the economics of LNG plants is that
initial estimates of market production levels are typically less than the amount of LNG produced by a LNG
train. Additional volumes of gas are typically produced once the train goes into production thanks to modifi-
cations, upgrades and refinements to the production process that are collectively known as debottlenecking,
making b the correct answer. In the case of choice d; any additional LNG produced beyond the amount speci-
fied in a GSA can be sold on the spot market.
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risk awareness
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Risk Professionals
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www.garp.org
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About GARP | The Global Association of Risk Professionals (GARP) is a not-for-prot global membership organization dedicated to
preparing professionals and organizations to make better informed risk decisions. Membership represents over 150,000 risk manage-
ment practitioners and researchers from banks, investment management rms, government agencies, academic institutions, and
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