PRMIA 8009 Exam Practice Test Instant Access

Question 1

The early 2003 trading strategy of China Aviation oil was

Ato buy calls and sell puts

Bto buy puts and sell calls

Cto sell puts and buy calls

Dto sell calls and buy puts

Answer : A

Question 2

Which of the following is FALSE?

ANick Leeson also ran the back office for his trading area

BNick Leeson dealt in complex derivatives lacking transparency of pricing

CSIMEX made inquiries to Barings Bank about large margin calls on its positions

DNick Leeson claimed to be running an arbitrage book

Answer : B

Question 3

A risk assessment report generated by a PRMIA member creates an apparent conflict of interest between the PRMIA standards and those of the client organization.

Of the following, which is the correct hierarchy to follow to resolve the conflict?

I The decision of a superior within the organization

II. PRMIA Standards

III. Guidelines from the regulators in which the organization operates

IV. The laws of the country

AI, II, III, and IV

BIV, III, II, and I

CII, I, IV, and III

DIII, II, IV, and I

Answer : B

Question 4

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 5

According to the Group of 30 Report, deriving aggregate potential credit exposure for a counterparty by adding up the potential exposure of multiple transactions:

AGives an accurate result in most cases

BCaptures portfolio effects but not tenor differences

CCan easily reflect the impact of netting

DOverstates exposure in most cases

Answer : D

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 problems at Bankers Trust can best be characterized as failures related to:

AMarket Risk

BCredit Risk

COperational and Regulatory Compliance Risk

DAll of the Above

Answer : C

PRMIA 8009 Case Studies; Standards: Governance, Best Practices and Ethics – 2015 Edition Exam Practice Test