PRMIA 8009 Exam Questions Instant Access - No Installation Required

Question 1

Which of the following are PRMIA Governance Principles?

I, Independence of Key Parties

II. Disclosure and Transparency

III. Internal Validation

IV. Solvency

AI and II only

BI, II and III only

CI, II and IV only

DAll are PRMIA Governance Principles

Answer : A

Question 2

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 3

Which of the following was NOT a factor in the Long Term Capital Management case?

AInadequate separation of front and back offices

BModel risk

CChanges/breakdowns in historical correlations

DUnwinding of liquid positions at the beginning of major losses

Answer : A

Question 4

According to the Group of 30 Report, option contracts:

AAlways generate credit risk to both counterparties

BCreate credit risk only for the buyer (due to default by the seller) provided the premium is due, and paid, at contract initiation

CCreate no credit risk, since the buyer need not exercise the option

DUsually create credit risk only for the seller (to default by the buyer)

Answer : B

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

When Fannie Mae and Freddie Mac were taken under US government conservatorship, which of the following was not included within their operating mandate?

AFannie Mae and Freddie Mac will continue to buy home loans from banks to repackage them as mortgage-backed securities

BThe US government will provide capital as needed in return for preferred shares in the companies

CThe US government will buy mortgage-backed securities in the open market as needed

DThere was a 2 year limit to the conservatorship

Answer : D

Question 7

Washington Mutual's acquisition of Long Beach Financial changed its business model and increased its credit loss profile because

AThe resulting loss rate for Washington Mutual was more than 3 times higher than other mortgage lenders tracked by the FDIC

Bthe two banks were focussed in different markets

CLong Beach Financial had losses which it hadn't realized at the time of the takeover

DOf a general deterioration of credit quality generally

Answer : A

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