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PRMIA 8004 - PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics

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Total 110 questions

Which of the following are PRMIA Governance Principles?

I. Sufficiency of Key Resources and Process

II. State of the Art Risk Management Technology

III. Ongoing Education and Discernment

IV. Sufficiency of Key Competencies

A.

I, II and IV only

B.

I and II only

C.

I, III and IV only

D.

All of these are PRMIA Governance Principles

PwC concluded that the accounting policy adopted by China Aviation Oil was incorrect because it

A.

only regarded the intrinsic value (i.e. the difference between the strike price and the forward price of the underlying commodity) as the fair value of its options

B.

took into account both the intrinsic value and the time value

C.

only took into account the time value of the option (which includes recognizing the time left to maturity of the option, the volatility of the spot price of the underlying commodity, interest rates and other factors)

D.

used neither the intrinsic value nor the time value

The Chair, Vice Chair, Secretary and Treasurer of the PRMIA Board of Directors are elected by:

A.

All PRMIA Fellow Members

B.

The Regional Directors

C.

The Blue Ribbon Advisory Panel

D.

A two-thirds affirmative vote of all members

According to the Group of 30 Report, important risks associated with dynamic hedging are:

A.

Greater volatility than expected over the life of an option

B.

Sudden gaps in market prices

C.

Both A and B

D.

Neither A nor B

The multi-dimensional risk problem at Northern Rock did not include which one of the combinations of the following?

A.

LPHI Risk; Business Model; Solvency vs. Liquidity: and Deposit Protection

B.

Corporate Governance; Moral Hazard; Role of Government; and Credit Risk

C.

Deposit Protection; Moral Hazard; Business Model; and LPHI Risk

D.

Business Model; Corporate Governance; Moral Hazard; and Deposit Protection

PRMIA Governance Principles

A.

must be adhered to by all PRMIA member organizations

B.

is a set of recommendations based on research and best practice

C.

must be adhered to by all PRM charter holders

D.

must be adhered to by all financial firms that are PRMIA members

When supervising others, a PRMIA member must comply with

A.

PRMIA Standards

B.

the standards of the organization where the work is being performed

C.

his / her established personal standards of work approved in previous work situations

D.

local regulatory authority standards which may be less onerous than PRMIA standards

TMFI's internal procedures and management were

A.

fully aware of the uninsured risks Fortress Re were taking

B.

absolutely unaware of their uninsured liabilities

C.

aware that they had some uninsured liabilities but thought they had enough capital to withstand any uninsured losses

D.

None of the above

The Chief Risk Officer is responsible for the management of the Risk Management Infrastructure, and as such helps the Board define, and then implements throughout the organization, the risk appetite of the organization.

Which of the following is also the responsibility of the Chief Risk Officer?

A.

Maintaining appropriate assurance measures to ensure that the Governance and Risk framework of the organization is effective, and, if any shortcomings are discovered, to escalate these to the Board so that remedial action can be taken in an appropriate and timely manner

B.

ensuring that all employees understand the rules and regulations (both internal and external) with which they must comply and the implications, for them and for the organization, of non-compliance

C.

Ensures that reporting of risk and governance-related matters are produced in a timely and accurate manner

D.

Acts as sponsor for risk throughout the organization and ensures that a risk culture is implemented, and maintained

Which of the following would have contributed to noticing and preventing Leeson's violations at Barings?

A.

Separation of front and back offices

B.

More senior level involvement at Barings regarding use of derivatives

C.

Recognition that large profits can be an indicator of higher risk

D.

All of the above