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FRM Part II · FRM Exam Part II · Tokenization and Financial Market Inefficiencies

A risk manager compares a permissionless distributed ledger with a permissioned one for a tokenized repo platform. Which statement is most accurate?

A permissioned ledger limits validation and participation to approved parties, which simplifies governance and accountability but concentrates control among them. Permissionless ledgers are open, and neither type replaces legal agreements or automatically guarantees legal finality.

  1. AA permissioned ledger restricts who can validate and participate, which eases governance and accountability but concentrates control among approved participantsCorrect
  2. BA permissionless ledger gives a single operator full control over validation and participant admission
  3. CA permissioned ledger removes any need for legal agreements because code governs all outcomes
  4. DA permissionless ledger guarantees legal finality of transfers in every jurisdiction

Explanation

Permissioned ledgers limit validators and users to approved parties, making governance and accountability clearer but concentrating control. Permissionless ledgers are open to anyone to validate, and neither design removes the need for legal frameworks or ensures legal finality.

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