[2021] 8009 PDF Questions - Perfect Prospect To Go With Pass4sureCert Practice Exam
PRMIA 8009 Pdf Questions - Outstanding Practice To your Exam
NEW QUESTION 43
John Smith wants to run for election to the Board of Directors of PRMIA. To be nominated, he needs:
- A. The backing of 6% of local members
- B. To go through a screening process conducted by the Nominations Committee
- C. The backing of three other members
- D. The backing of five other members and to be serving on at least one PRMIA Committee
Answer: C
NEW QUESTION 44
The Chair, Vice Chair, Secretary and Treasurer of the PRMIA Board of Directors are elected by:
- A. The Blue Ribbon Advisory Panel
- B. A two-thirds affirmative vote of all members
- C. All PRMIA Fellow Members
- D. The Regional Directors
Answer: D
NEW QUESTION 45
MGRM's losses due to "stacking" started to increase when
- A. the oil market went from strong contango to weak contango
- 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 contango to backwardation
Answer: B
NEW QUESTION 46
PwC concluded that the accounting policy adopted by China Aviation Oil was incorrect because it
- A. 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)
- B. used neither the intrinsic value nor the time value
- C. took into account both the intrinsic value and the time value
- D. 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
Answer: D
NEW QUESTION 47
The problems at WorldCom can best be characterized as related to:
- A. Market Risk
- B. All of the Above
- C. Credit Risk
- D. Operational and Regulatory Compliance Risk
Answer: D
NEW QUESTION 48
A risk manager is asked to analyze the credit risk of a convertible bond. The risk manager has never analyzed convertible bonds, but does have significant expertise in credit risk. The risk manager accepts the assignment, finds a paper on the subject through the PRMIA web site and copies the method used there. The risk manager completes the assignment and delivers a report to his or her direct supervisor and the supervisor is quite pleased.
According to the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct), this was acceptable behavior if the following conditions were met:
I. The risk manager disclosed the lack of knowledge about convertible bonds II. The methodology employed is disclosed and explained III. The report was just to be used for analysis and not in practice IV. The risk manager was sure of his/her understanding of the paper found on the web
- A. I and II
- B. I only
- C. I, II and III
- D. I, II and IV
Answer: A
NEW QUESTION 49
Up until 2006, which of the following was not a primary driver for Washington Mutual's earning?
- A. Lending to consumers and small businesses.
- B. Complex derivative trades based on volatility indices.
- C. The provision of fee based services to its customers.
- D. Deposit taking activities which generated net interest income.
Answer: B
NEW QUESTION 50
Taisei Fire and Marine Insurance Co
- A. had a full understanding from other members of the pool of the pool's liabilities
- B. relied on the information it received from other members of the reinsurance pool to manage its risks
- C. had a full understanding from Fortress Re of the risks in the pool
- D. relied almost entirely on Fortress Re's management team for information on the risks in its portfolio
Answer: D
NEW QUESTION 51
As LTCM started to have major losses, it compounded its problems by doing what?
- A. Returning capital to the general partners before others
- B. Unwinding its' more liquid trades thereby creating more liquidity risk overall
- C. Issuing Subordinated Debt
- D. Trying to borrow more money from major money centre banks
Answer: B
NEW QUESTION 52
Which of the following should NOT be part of the Risk Management Infrastructure?
- A. Include financial risk management, compliance and external reporting and, to the extent that resources allow, should exclude legal or accounting
- B. Be independently staffed and report to an employee who is on the Executive Committee (Operating Committee) but who is NOT a business unit leader
- C. Review continually the application of the Principles of Good Governance to the Risk Management Infrastructure, financial accounting and reporting infrastructure and the organization as a whole
- D. Define the organization's definition of risk management as articulated by the Board in clear and uncertain terms
Answer: C
NEW QUESTION 53
According to the PwC report China Aviation Oil, in order to avoid recording and reporting losses, the company adopted which approach covering up its losses?
- A. selling short-term options with extremely high-risk profiles to generate premiums to cover the cost of closing out loss-making option positions
- B. selling long-term options with extremely high-risk profiles to generate premiums to cover the cost of closing out loss-making option positions
- C. selling long-term options with extremely low-risk profiles to generate premiums to cover the cost of closing out loss-making option positions
- D. selling short-term options with extremely low-risk profiles to generate premiums to cover the cost of closing out loss-making option positions
Answer: B
NEW QUESTION 54
Which of the following was not received by Northern Rock as official support from the UK banking and government authorities?
- A. 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
- B. A covert money market support operation designed to cover up the difficulties Northern Rock was facing
- C. The Bank of England provided an additional unlimited facility secured on the collateral of all Northern Rock assets
- D. The UK government offered to guarantee all existing and new retail deposits, and to most other creditors
Answer: B
NEW QUESTION 55
The sensitivity analysis required under IFRS would have done what for China Aviation Oil?
- A. Only provided the time value of its outstanding option position
- B. Only provided the intrinsic value of its outstanding option positions
- C. None of the above
- D. Provided investors and analysts with insight into the dynamics of value changes, and the sensitivity of fair value to the underlying drivers of interest rates, exchange rates, and commodity prices
Answer: D
NEW QUESTION 56
What is (are) the lesson(s) of the Barings' failure?
- A. All of the above
- B. Front and back offices need to be independent
- C. Incentive plans have risk management implications
- D. Large profits can be an indicator of risk
Answer: A
NEW QUESTION 57
The early 2003 trading strategy of China Aviation oil was
- A. to buy calls and sell puts
- B. to buy puts and sell calls
- C. to sell puts and buy calls
- D. to sell calls and buy puts
Answer: A
NEW QUESTION 58
Washington Mutual's acquisition of Long Beach Financial changed its business model and increased its credit loss profile because
- A. Long Beach Financial had losses which it hadn't realized at the time of the takeover
- B. the two banks were focussed in different markets
- C. The resulting loss rate for Washington Mutual was more than 3 times higher than other mortgage lenders tracked by the FDIC
- D. Of a general deterioration of credit quality generally
Answer: C
NEW QUESTION 59
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