PRMIA 8004 Exam Practice Test Instant Access

Question 1

Which of the following was not cited within the chain of miscalculations and deferred decisions for the downfall of Fannie Mae and Freddie Mac

AExtreme exposure to foreign currency exposures and losses from non-US$ mortgages

BLawmakers postponed strenghtening regulatory oversight due to partisan infighting

CUnder-management and under-measurement of market and liquidity risk

DThey did not raise enough capital to weather the storm as the housing slump expanded

Answer : A

Question 2

The failure of Washington Mutual was NOT due to which one of the following?

AUsing a combination of subprime mortgage loans and credit cards

BIt failed due to the poor quality of its assets

CLow lending standards and bad quality acquisitions

DA run on its deposits by bank customers

Answer : D

Question 3

The retrocession insurance cover was provided by

AFortress Re and other insurers

BThe Fortress Re reinsurers only

CThe fronting insurance companies

DFortress Re and their reinsurers

Answer : B

Question 4

For the sentence

"The organization shall encourage all employees to keep abreast of the latest developments in their particular areas of expertise, through ____________, _____________, and _____________ and shall make adequate resources available to enable this to occur,"

Choose the correct combinations of words from the following options:

Acourses, conferences, journals

Bconferences, discussion groups, blog sites

Ccourses, educational certification, journals

Djournals, courses, compliance mandates

Answer : A

Question 5

The Fortress Re accounting risk transfer procedures

Amade it straightforward for TFMI to determine whether risk had actually been transferred and they decided not to take out more catastrophe insurance cover

Bmade it difficult for TFMI to determine whether risk had actually been transferred so they had to take out additional catastrophe insurance cover

Cmade it straightforward for TFMI to determine when the risk had been transferred and to take out additional catastrophe insurance cover

Dmade it difficult for TFMI to determine whether risk had actually been transferred and whether it had sufficient catastrophe insurance cover

Answer : D

Question 6

Barings failed to recognize that Nick Leeson's losses were increasing because:

ALeeson ran the front office

BThe London office did not ask for any reports

CLeeson hid his trades in a suspense account

DThe margin report sent to London did not show the true margin needs

Answer : C

Question 7

Up until 2006, which of the following was not a primary driver for Washington Mutual's earning?

ALending to consumers and small businesses.

BDeposit taking activities which generated net interest income.

CThe provision of fee based services to its customers.

DComplex derivative trades based on volatility indices.

Answer : D

PRMIA 8004 Case Studies; Standards: Governance, Best Practices and Ethics Exam Practice Test