Free PRMIA 8009 Practice Exam with Questions & Answers | Set: 3

I and III only

III only

III and IV only

All of these were key elements of the problems at LTCM

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

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

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

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

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

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

Ensures that reporting of risk and governance-related matters are produced in a timely and accurate manner

Acts as sponsor for risk throughout the organization and ensures that a risk culture is implemented, and maintained

transfers only a limited amount of risk at the usual reinsurance price

transfers the total risk at less cost than traditional reinsurance

transfers the total risk at the usual reinsurance price

transfers only a limited amount of risk at less cost than traditional reinsurance

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

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

Inadequate separation of front and back offices

Model risk

Changes/breakdowns in historical correlations

Unwinding of liquid positions at the beginning of major losses