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Effective Study Techniques for the PRMIA 8004 Exam

Questions 1

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

Options:

A.

Volume growth at the expense of margin

B.

Excessive reliance on volatile and sophisticated derivatives

C.

A failure to try to protect their clients' interests

D.

Over exposure to the property market

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Questions 2

Taisei Fire and Marine Insurance Co

Options:

A.

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

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.

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

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Questions 3

Metallgesellschaft's retail contracts were

Options:

A.

unhedged

B.

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

C.

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

D.

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

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Questions 4

When supervising others, a PRMIA member must comply with

Options:

A.

PRMIA Standards

B.

the standards of the organization where the work is being performed

C.

his / her established personal standards of work approved in previous work situations

D.

local regulatory authority standards which may be less onerous than PRMIA standards

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Questions 5

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:

Options:

A.

The risk manager has submitted the report to their direct supervisor and their obligation ends at this point, nothing further should be done

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.

Escalation of the issue is against the Code of Conduct because one should respect the administrative structure of the organization

D.

If the risk manager deems it appropriate, he / she should send a copy of the original report to the CEO

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Questions 6

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

Options:

A.

Only a few months previously it had reported record profits.

B.

The quality of its' assets was never in question.

C.

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

D.

Its' loan loss record was poor by industry standards.

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Questions 7

Corporate Governance …

Options:

A.

Eliminates risk to the greatest extent possible

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.

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

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Questions 8

Which items below were at the core of the problems at Bankgesellschaft Berlin?

Options:

A.

Political corruption and poor management

B.

Over exposure to the property market

C.

Rash guarantees given to investors in property linked funds

D.

All of the above

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Questions 9

Barings failed to recognize that Nick Leeson's losses were increasing because:

Options:

A.

Leeson ran the front office

B.

The London office did not ask for any reports

C.

Leeson hid his trades in a suspense account

D.

The margin report sent to London did not show the true margin needs

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Questions 10

The Fortress Re accounting risk transfer procedures

Options:

A.

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

B.

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

C.

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

D.

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

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Exam Code: 8004
Exam Name: PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics
Last Update: Dec 2, 2024
Questions: 110

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