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PRMIA 8009 - Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition

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Total 110 questions

The Financial Accounting and Reporting Infrastructure of any organization must:

I. Accurately represent the corporation's current and known financial condition in a timely manner

II. Only use off-balance sheet transactions which have a legitimate economic, tax, risk transfer or risk mitigating purpose

III. Provide a detailed description of the Risk Management Infrastructure in the organization's Annual Report to Shareholders

IV. Provide an auditable Annual Statement of Compliance with the Board's publicly stated Standards of Corporate Governance to the Board and Audit Committee

A.

I, II and III only

B.

I, III and IV only

C.

I and III only

D.

All of these are expected of the Financial Accounting and Reporting Infrastructure

The Risk Management Infrastructure of an organization must:

I. To the extent possible, avoid silos of control and oversight

II. Have budgets set by the business unit leaders

III. Actively provide ongoing professional development for risk management staff and require them to be committed to standards of best practice, conduct and ethics in their work

IV. Provide general risk management and related corporate governance training for employees of the organization as a Whole

A.

I only

B.

I, III and IV only

C.

I and III only

D.

All of these are expected of the Risk Management Infrastructure

Which of the following best characterize the problems that developed at Bankers Trust?

A.

Volume growth at the expense of margin

B.

Excessive reliance on volatile and sophisticated derivatives

C.

A failure to try to protect their clients' interests

D.

Over exposure to the property market

Which of the following was NOT a factor in the National Australia Bank case?

A.

Rogue traders

B.

Improper or insufficient Board-level communication regarding the importance of risk management and oversight

C.

Inadequate back office procedures

D.

Money laundering using foreign exchange trades for political leaders

The Fortress Re accounting risk transfer procedures

A.

made it straightforward for TFMI to determine whether risk had actually been transferred and they decided not to take out more catastrophe insurance cover

B.

made it difficult for TFMI to determine whether risk had actually been transferred so they had to take out additional catastrophe insurance cover

C.

made it straightforward for TFMI to determine when the risk had been transferred and to take out additional catastrophe insurance cover

D.

made it difficult for TFMI to determine whether risk had actually been transferred and whether it had sufficient catastrophe insurance cover

Which of the following was NOT a factor in the WorldCom collapse?

A.

Failed corporate governance

B.

Accounting abuses

C.

Unfair pricing to customers

D.

Over stating actual sales

Which of the following is NOT part of the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct) Guidance on Ethical Behavior?

A.

Ensure globally accepted standards are adhered to at all costs

B.

Respect local customs

C.

Respect local laws and regulations

D.

Take responsibility for your work

MGRM's losses due to "stacking" started to increase when

A.

the oil market went from contango to backwardation

B.

the oil market went from backwardation to contango

C.

the oil market went from weak backwardation to strong backwardation

D.

the oil market went from strong contango to weak contango

Select the one correct statement relative to Barings Bank.

A.

Proprietary and agency trading were combined and therefore did not increase risk.

B.

Proprietary and agency trading were separate and therefore did not increase risk.

C.

Proprietary and agency trading were combined and therefore did increase risk.

D.

Proprietary and agency trading were separate and did increase risk.

Which of the following was not received by Northern Rock as official support from the UK banking and government authorities?

A.

A covert money market support operation designed to cover up the difficulties Northern Rock was facing

B.

The Bank of England's role as Lender-Of-Last-resort was activated at a penalty interest rate of 150 basis points above the Bank Rate

C.

The UK government offered to guarantee all existing and new retail deposits, and to most other creditors

D.

The Bank of England provided an additional unlimited facility secured on the collateral of all Northern Rock assets