New 2024 Latest Questions 8004 Dumps - Use Updated PRMIA Exam [Q13-Q31] : Exam for engine : http://blog.test4engine.com

QUESTION 13
What was the most important loss for Bankers Trust?

Money due to unfavourable market moves

Loss of its’ reputation due to actions seen as detrimental to their clients

Loss of market share due to their licenses being revoked

Time spent on legal proceedings in courts

QUESTION 14
Metallgesellschaft’s retail contracts were

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

QUESTION 15
When local rules and regulations conflict with the PRMIA Standards of Best Practice, Conduct and Ethics the PRMIA member should …

Seek advice from a qualified party, being mindful of legal and confidentiality requirements

Modify the interpretation of local rules and regulations to meet the situation

Ignore local rules and regulations

Respect local rules and regulations

QUESTION 16
The Fortress Re accounting risk transfer procedures

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

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

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

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

QUESTION 17
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:

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

QUESTION 18
According to the Group of 30 Report, important risks associated with dynamic hedging are:

Greater volatility than expected over the life of an option

Sudden gaps in market prices

Both A and B

Neither A nor B

QUESTION 19
The problems at Bankers Trust can best be characterized as failures related to:

Market Risk

Credit Risk

Operational and Regulatory Compliance Risk

All of the Above

QUESTION 20
Which of the following was NOT a factor in the Long Term Capital Management case?

Inadequate separation of front and back offices

Model risk

Changes/breakdowns in historical correlations

Unwinding of liquid positions at the beginning of major losses

QUESTION 21
The problems at Bankgesellschaft Berlin can best be characterized as failures related to:

Market Risk

Credit Risk

Operational Risk

Both B and C

QUESTION 22
What was the main type of risk that Metallgesellschaft was exposed to?

Basis Risk

Currency Settlement

Interest Rate

Inflation

QUESTION 23
A VaR model for managing market risk at Barings Bank in London would most likely have:

Alerted senior management to the problems before the major losses occurred

Helped very little as Nick Leeson hid many trades

Not correctly assessed the risk in Nick Leeson’s option trades as they have non-linear price characteristics

Been used if senior management had ever seen it

QUESTION 24
Taisei Fire and Marine Insurance Co

relied almost entirely on Fortress Re’s management team for information on the risks in its portfolio

relied on the information it received from other members of the reinsurance pool to manage its risks

had a full understanding from Fortress Re of the risks in the pool

had a full understanding from other members of the pool of the pool’s liabilities

QUESTION 25
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

QUESTION 26
Washington Mutual’s acquisition of Long Beach Financial changed its business model and increased its credit loss profile because

The resulting loss rate for Washington Mutual was more than 3 times higher than other mortgage lenders tracked by the FDIC

the two banks were focussed in different markets

Long Beach Financial had losses which it hadn’t realized at the time of the takeover

Of a general deterioration of credit quality generally

QUESTION 27
The hedging strategy employed by MG Refining & Marketing has been called:

Dynamic hedging

A stacked hedge

A differential hedge

Nothing because MG Refining & Marketing did not hedge its position

QUESTION 28
The Q4 2003 trading strategy of China Aviation Oil was

to buy puts and sell calls

to buy calls and sell puts

to sell puts and buy calls

to sell calls and buy puts

QUESTION 29
Which of the following was NOT a factor in the National Australia Bank case?

Rogue traders

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

Inadequate back office procedures

Money laundering using foreign exchange trades for political leaders

QUESTION 30
Which of the following would have contributed to noticing and preventing Leeson’s violations at Barings?

Separation of front and back offices

More senior level involvement at Barings regarding use of derivatives

Recognition that large profits can be an indicator of higher risk

All of the above

QUESTION 31
The Chair of the PRMIA Board of Directors may hold the following offices:

Parliamentarian

Secretary

Vice Chair

Chair only