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FRM Part II · FRM Exam Part II · Global Financial Stability Report, April 2025, Chapter 2 (Geopolitical Risk)

A risk team models fund outflows in a geopolitical stress. Fund A has USD 400 million assets with 30% redeemed and holds 20% in cash; Fund B has the same size with 15% redeemed and holds 5% in cash. Assuming only cash is used first and the remainder is raised by selling assets, how much total forced asset sale occurs across both funds?

Fund A must sell 40 million and Fund B must sell 40 million after using cash, so total forced sales equal 80 million; none of the stated options matches this figure.

  1. AUSD 100 millionCorrect
  2. BUSD 120 million
  3. CUSD 60 million
  4. DUSD 180 million

Explanation

Fund A: redemptions 120m, cash 80m, sales 40m. Fund B: redemptions 60m, cash 20m, sales 40m. Total sales are 80m... recheck: 40+40=80m, so no option matches unless noted; the nearest design uses cash of 20% of 400=80 and 5%=20. Total is USD 80 million.

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