Ultimate Guide to Prepare 8009 Certification Exam for PRM in 2021
Use Real 8009 Dumps - PRMIA Correct Answers updated on 2021
NEW QUESTION 11
According to the Group of 30 Report, dealers and end-users are encouraged to:
- A. Use one trading agreement for foreign exchange forwards and another for foreign exchange options.
- B. Use separate trading agreements for interest rate derivatives, equity derivatives and foreign exchange transactions.
- C. Use a single master trading agreement as widely as possible with each counter party.
- D. Use a common trading agreement for interest rate and equity derivatives but a separate agreement for foreign exchange transactions.
Answer: C
NEW QUESTION 12
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 13
When describing the reasons for the collapse of China Aviation Oil, which of the following was not cited?
- A. Loss generating positions were rolled over by selling options on larger positions to generate cash premiums' to settle existing position losses
- B. No properly defined risk management policies in place and general lack of oversight by senior management
- C. Time value was not taken into account during the contract valuation process
- D. Senior management in China were aware of the positions but did not understand the complexities of risk managing them
Answer: D
NEW QUESTION 14
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?
- A. Ensures that reporting of risk and governance-related matters are produced in a timely and accurate manner
- B. 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
- C. 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
- D. Acts as sponsor for risk throughout the organization and ensures that a risk culture is implemented, and maintained
Answer: A
NEW QUESTION 15
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 16
The "normal" credit loss profile of Washington Mutual was increased by which of the following?
- A. Acquisitions like Long Beach and Providian
- B. By lowering its own credit underwriting standards
- C. The general downturn in the economy of the US
- D. Catastrophic losses in its own credit card division
Answer: A
NEW QUESTION 17
A risk manager has just completed a risk assessment project. The report has been given to the risk manager's direct supervisor, who refuses to escalate the material issues raised in the report. Further, the direct supervisor edits the report to remove the section describing the material risk, who then submits it to the firm's Executive Committee.
According to the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct), which of the following actions is most appropriate:
- A. Escalation of the issue is against the Code of Conduct because one should respect the administrative structure of the organization
- B. The risk manager should attempt to resolve the conflict with the direct supervisor, but if that does not work, they should contact the Whistle-Blowing Hotline of the organization. If no such hot-line is in place, they should contact the PRMIA Ethics Committee
- C. The risk manager has submitted the report to their direct supervisor and their obligation ends at this point, nothing further should be done
- D. If the risk manager deems it appropriate, he / she should send a copy of the original report to the CEO
Answer: B
NEW QUESTION 18
Which of the following was NOT a factor in the WorldCom collapse?
- A. Accounting abuses
- B. Over stating actual sales
- C. Unfair pricing to customers
- D. Failed corporate governance
Answer: C
NEW QUESTION 19
TMFI's internal procedures and management were
- A. fully aware of the uninsured risks Fortress Re were taking
- B. aware that they had some uninsured liabilities but thought they had enough capital to withstand any uninsured losses
- C. None of the above
- D. absolutely unaware of their uninsured liabilities
Answer: D
NEW QUESTION 20
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 and III only
- B. I, III and IV only
- C. All of these are expected of the Risk Management Infrastructure
- D. I only
Answer: B
NEW QUESTION 21
Corporate Governance ...
- A. 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
- B. Is defined as the assembled knowledge and wisdom of the collective stakeholders in the organization, set to maximize shareholder value
- C. 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
- D. Eliminates risk to the greatest extent possible
Answer: C
NEW QUESTION 22
The Q4 2003 trading strategy of China Aviation Oil was
- A. to buy puts and sell calls
- B. to sell calls and buy puts
- C. to buy calls and sell puts
- D. to sell puts and buy calls
Answer: B
NEW QUESTION 23
PRMIA is incorporated as:
- A. A non profit corporation with for profit subsidiaries
- B. A non-profit corporation
- C. A for-profit corporation
- D. A charitable trust
Answer: B
NEW QUESTION 24
Every PRMIA chapter is designed to serve the local needs of members, so they often have fairly independent planning structures and ideas. According to the PRMIA Bylaws, Regional Chapters and Regional Directors:
- A. Can have their own offices, bylaws and regulations provided they do not conflict with those of PRMIA
- B. Can sign contracts on behalf of PRMIA without prior approval from the Board of Directors
- C. Can have meetings that only local members are allowed to attend
- D. All of the above
Answer: A
NEW QUESTION 25
A risk assessment report generated by a PRMIA member creates an apparent conflict of interest between the PRMIA standards and those of the client organization.
Of the following, which is the correct hierarchy to follow to resolve the conflict?
I. The decision of a superior within the organization
II. PRMIA Standards
III. Guidelines from the regulators in which the organization operates
IV. The laws of the country
- A. II, I, IV, and III
- B. III, II, IV, and I
- C. IV, III, II, and I
- D. I, II, III, and IV
Answer: C
NEW QUESTION 26
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 27
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
- A. use their best judgment
- B. refer the matter to their supervisor
- C. abide by the applicable laws, rules, and regulations of PRMIA and any government and/or regulatory bodies
- D. comply with the higher standard under all circumstances
Answer: D
NEW QUESTION 28
The retrocession insurance cover was provided by
- A. Fortress Re and their reinsurers
- B. Fortress Re and other insurers
- C. The fronting insurance companies
- D. The Fortress Re reinsurers only
Answer: D
NEW QUESTION 29
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