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

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Viewing questions 11-20 out of questions

Questions # 11:

The early 2003 trading strategy of China Aviation oil was

Options:

to buy calls and sell puts

to buy puts and sell calls

to sell puts and buy calls

to sell calls and buy puts

Answer

Questions # 12:

Mary Jones wants the Bylaws of PRMIA to be changed so that people can't join PRMIA unless they meet a set of criteria she has devised with her colleagues. She can do this by getting which of the following approvals:

Options:

The Board of Directors, but only if the Blue Ribbon Panel affirms the change

The Board of Directors and a majority of the Members

The Board of Directors alone

34 of all Members

Answer

Questions # 13:

A risk manager finds that a client is engaged in a practice that looks like money laundering.

According to the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct), the risk manager should:

Options:

Approach the client about the concern, regardless of what their reaction might be

Respect the client's confidentiality as that takes precedence

Report this conduct to their immediate supervisor

Report the findings immediately to authorities

Answer

Questions # 14:

Metallgesellschaft's retail contracts were

Options:

unhedged

hedged using exchange-traded futures with longer maturities than the retail contracts

hedged using exchange-traded futures with shorter maturities than the retail contracts

fully hedged using exchange-traded futures of the same maturities as the retail contracts

Answer

Questions # 15:

Which of the following is part of the Group of 30 Report's market risk and stress testing recommendations?

Options:

To be consistent with regulatory capital measures, 10-day holding periods should be standardized for VaR reporting

Historic simulations are not effective methods of stress testing

Stress tests should incorporate changes in liquidity

Market risk VaR measures should be multiplied by 3 to get to a stress test figure, as long as the VaR model has been back-tested

Answer

Questions # 16:

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?

Options:

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

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

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

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

Answer

Questions # 17:

The Chair of the PRMIA Board of Directors may hold the following offices:

Options:

Parliamentarian

Secretary

Vice Chair

Chair only

Answer

Questions # 18:

The failure of Washington Mutual was NOT due to which one of the following?

Options:

Using a combination of subprime mortgage loans and credit cards

It failed due to the poor quality of its assets

Low lending standards and bad quality acquisitions

A run on its deposits by bank customers

Answer

Questions # 19:

The "Renewing the Dream" program signed into law by President George W Bush in 2002 was designed to

Options:

Recapitalise Fannie Mae and Freddie Mac with US$2.4 billion of additional capital to ensure they weathered the risks associated with any future downturn in the housing markets

Provide grants of US$800 million to help home buyers with down-payment and closing costs

Allow risky, high-cost loans to be credited towards affordable housing goals

Provide tax credits of nearly US$2.4 billion over the next 5 years to investors and builders who developed affordable single-family housing in poor and distressed areas

Answer

Questions # 20:

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