[Q18-Q35] Dumps for Free PRMIA 8004 Practice Exam Questions [Dec 04, 2023]

4.5/5 - (2 votes)

Dumps for Free PRMIA 8004 Practice Exam Questions [Dec 04, 2023]

8004 Dumps PDF And Certification Training

NEW QUESTION 18
According to the Group of 30 Report, option contracts:

Always generate credit risk to both counterparties

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

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

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

NEW QUESTION 19
Which of the following are PRMIA Governance Principles?
I.Independence of Key Parties II.Disclosure and Transparency III.Internal Validation IV.Solvency

I and II only

I, II and III only

I, II and IV only

All are PRMIA Governance Principles

NEW QUESTION 20
The steps which the US Treasury Department and the Federal Reserve took in July 2008 to boost confidence in both Fannie Mae and Freddie Mac did not include which one of the following:

Access to the Federal Reserve discount window

Removing the prohibition on the Treasury Department to buy both companies stock

Restricting the sale of new Fannie Mae and Freddie Mac securities only to US citizens

Reiterating their belief that both companies played a central role in the US housing finance system

NEW QUESTION 21
According to the Northern Rock Case Study, what is Forced Insolvency?

The bank is insolvent in that the current value of its assets (measured at book value) is less than the value of its liabilities; thus even if the bank were to liquidate all of its assets it would not be able to repay all depositors and other creditors

The bank is legally solvent but if, because it cannot fund its operations, it is forced to liquidate assets it could do so only at less than nominal values (fire sale) and this would make it legally insolvent (value of assets falls below those of liabilities)

The bank is legally solvent but its current funding costs (which are likely to continue) exceed the average rate of return on its assets and hence it would soon become insolvent as it would be making losses and would eventually exhaust its equity capital

The bank is solvent in that the current value of its assets (measured at book value) is more than the value of its liabilities; so even if the bank were to liquidate all of its assets it would be able to repay all depositors and other creditors

NEW QUESTION 22
A PRMIA member is offered a highly paid work assignment on the condition that some aspects of assignment are not to be done according to PRMIA standards.
What should they do?

Perform the assignment, noting in the final report the standards to which the assignment was done

Accept the assignment, produce and deliver two reports according to both standards

Accept the assignment, and prior to doing any work, report the conflict of interest to the organization’s compliance department

The PRMIA member should place the integrity of the risk management profession and users of risk management above their own personal interests, and refuse the work

NEW QUESTION 23
As a result of the US government’s intervention, which of the following is true?

The cost of borrowing for Fannie Mae and Freddie Mac should decline because the government will be standing behind their debts and the buying and selling of mortgage debt will continue

The cost of borrowing for house buyers will rise because of the risk premium now built into the cost of such a government guarantee

The systemic risks still remain in the housing market because it increases the US government’s debt

Foreign Central Banks will continue to sell their holdings of Fannie Mae and Freddie Mac securities

NEW QUESTION 24
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

I only

I, III and IV only

I and III only

All of these are expected of the Risk Management Infrastructure

NEW QUESTION 25
Several clients, including Procter and Gamble took legal action against Bankers Trust, claiming Bankers Trust

sold them derivative products without properly advising them of the relevant risks

did not honour its contractual obligations to pay

was involved in accounting fraud

hid profits

NEW QUESTION 26
MGRM’s losses due to “stacking” started to increase when

the oil market went from contango to backwardation

the oil market went from backwardation to contango

the oil market went from weak backwardation to strong backwardation

the oil market went from strong contango to weak contango

NEW QUESTION 27
When considering the performance of Northern Rock within its peer group of banks, which of the following is not correct?

Only a few months previously it had reported record profits.

The quality of its’ assets was never in question.

For many years it was regarded as a star-performer in the financial markets.

Its’ loan loss record was poor by industry standards.

NEW QUESTION 28
The condition where futures prices of an underlying asset are lower than cash (spot) prices is known as:

Backwardation

Contango

Reverse backwardation

Conchacha

NEW QUESTION 29
Corporate Governance …

Eliminates risk to the greatest extent possible

Is defined as the assembled knowledge and wisdom of the collective stakeholders in the organization, set to maximize shareholder value

Is 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

Is 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

NEW QUESTION 30
The retrocession insurance cover was provided by

Fortress Re and other insurers

The Fortress Re reinsurers only

The fronting insurance companies

Fortress Re and their reinsurers

NEW QUESTION 31
Which of the following best characterize the problems that developed at Bankers Trust?

Volume growth at the expense of margin

Excessive reliance on volatile and sophisticated derivatives

A failure to try to protect their clients’ interests

Over exposure to the property market

NEW QUESTION 32
John Smith wants to run for election to the Board of Directors of PRMIA. To be nominated, he needs:

The backing of three other members

To go through a screening process conducted by the Nominations Committee

The backing of 6% of local members

The backing of five other members and to be serving on at least one PRMIA Committee

NEW QUESTION 33
With respect to the Purpose of Professional Standards, in the event of any difference in standards between local laws/rules and those of PRMIA, members must

use their best judgment

abide by the applicable laws, rules, and regulations of PRMIA and any government and/or regulatory bodies

comply with the higher standard under all circumstances

refer the matter to their supervisor

NEW QUESTION 34
Which of the following is part of the Group of 30 Report’s market risk and stress testing recommendations?

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

NEW QUESTION 35
When Fannie Mae and Freddie Mac were taken under US government conservatorship, which of the following was not included within their operating mandate?

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

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

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

There was a 2 year limit to the conservatorship

Check your preparation for PRMIA 8004 On-Demand Exam: https://www.trainingquiz.com/8004-practice-quiz.html

Quiz Training Materials

[Q18-Q35] Dumps for Free PRMIA 8004 Practice Exam Questions [Dec 04, 2023]

Leave a Reply Cancel reply