PRMIA Risk Management Frameworks, Operational Risk, Credit Risk, Counterparty Risk, Market Risk, ALM, FTP – 2015 Edition Risk Management Frameworks, Operational Risk, Credit Risk, Counterparty Risk, Market Risk, ALM, FTP – 2015 Edition Exam Practice Test

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Total 362 questions

Question 1

Which of the following statements are true:

I,Stress tests should consider simultaneous pressures in funding and asset markets, and the impact of a reduction in liquidity

II,Judging the effectiveness of risk mitigation techniques is not a part of stress testing

III,A reverse stress test is useful for discovering hidden vulnerabilities and inconsistencies in hedging strategies

IV. Reputational risk, which is explicitly excluded from the definition of operational risk under Basel II, should still be considered as part of stress tests.



Answer : A

Question 2

In January, a bank buys a basket of mortgages with a view to securitize them by April. Due to an unexpected lack of investors in the securitization market, it is unable to do so and is left with the exposure to the mortgages on its books. This is an example of:



Answer : D

Question 3

The degree distribution of the nodes of the financial network is:



Answer : D

Question 4

Which of the following statements are true in relation to the current state of the financial network?

I,Interconnectivity between countries has reduced while that between institutions in the same country has increased significantly

II,The degrees of separation between institutions has gone up

III,The average path length connecting any two given institutions has shrunk

IV. Knife-edge dynamics imply that systemic risk arises from the financial system flipping from risk sharing to risk spreading



Answer : C

Question 5

Which of the following correctly describes survivorship bias:



Answer : C

Question 6

The systemic manifestation of the liquidity crisis during the current credit crisis took many forms. Which of the following is not one of those forms?



Answer : A

Question 7

Which of the following is not a consideration in determining the liquidity needs of a firm (as opposed to determining the time horizon for liquidity risk)?



Answer : A

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Total 362 questions