PRMIA 8009 Exam Questions Instant Access - No Installation Required

Question 1

When considering the performance of Northern Rock within its peer group of banks, which of the following is not correct?

AOnly a few months previously it had reported record profits.

BThe quality of its' assets was never in question.

CFor many years it was regarded as a star-performer in the financial markets.

DIts' loan loss record was poor by industry standards.

Answer : D

Question 2

Which items below were at the core of the problems at Bankgesellschaft Berlin?

APolitical corruption and poor management

BOver exposure to the property market

CRash guarantees given to investors in property linked funds

DAll of the above

Answer : D

Question 3

An Organization as a Whole must:

I, Provide an environment in which an Escalation Policy can be effective

II. Commit itself to actual enforcement of corporate governance policies

III. Provide ongoing education and training to all employees on the role of risk management and corporate governance in the organization

IV. Publish an external auditor's opinion that the corporation is in compliance with the Board's publicly stated Standards of Corporate Governance

AI, II and III only

BI, III and IV only

CI, II and IV only

DAll of these are expectations of the Organization as a Whole

Answer : D

Question 4

Boards, including Audit and Risk Committees must:

I, Clearly articulate the corporate risk appetite to senior management

II. Thoroughly review compensation plans of potentially "highly compensated positions" for consistency with corporate risk appetite, competitive market conditions and fiduciary responsibility to shareholders

III. Have a single member formally given responsibility for understanding and reporting the effectiveness of the corporation's risk management infrastructure

IV. Be fully accountable to shareholders and work to the benefit of public good and financial stability

AI and II only

BI, II and IV only

CI, II and III only

DAll of these are responsibilities of Board and Audit Committees

Answer : D

Question 5

According to LTCM managers:

AStress Testing looked at the 12 biggest deals with each of their top 20 counterparties

BStress Testing was not conducted

CStress Testing was not necessary because their trades were hedged

DStress Testing was elaborate, complex and conducted on their entire portfolio. It included the assumptions of a major breakdown in historical correlations

Answer : A

Question 6

Corporate Governance ...

AEliminates risk to the greatest extent possible

BIs defined as the assembled knowledge and wisdom of the collective stakeholders in the organization, set to maximize shareholder value

CIs defined as business decision making predicated on a belief in potential rewards, balanced with the knowledge, understanding and appreciation of the risk taken to pursue those potential rewards

DIs defined as that which is best practiced within an enterprise risk management framework, guided by the PRMIA Standards of Best Practice, Conduct and Ethics above all else

Answer : C

Question 7

The condition where futures prices of an underlying asset are lower than cash (spot) prices is known as:

ABackwardation

BContango

CReverse backwardation

DConchacha

Answer : A

PRMIA Case Studies; Standards: Governance, Best Practices and Ethics â€“ 2015 Edition 8009 Exam Questions