PDF Version DemoPRMIA PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics Sample Questions:
1. Which of the following was not cited within the chain of miscalculations and deferred decisions for the downfall of Fannie Mae and Freddie Mac
A) Lawmakers postponed strenghtening regulatory oversight due to partisan infighting
B) Extreme exposure to foreign currency exposures and losses from non-US$ mortgages
C) Under-management and under-measurement of market and liquidity risk
D) They did not raise enough capital to weather the storm as the housing slump expanded
2. MGRM's losses due to "stacking" started to increase when
A) the oil market went from backwardation to contango
B) the oil market went from weak backwardation to strong backwardation
C) the oil market went from strong contango to weak contango
D) the oil market went from contango to backwardation
3. Which of the following does NOT relate to the Orange County case?
A) Fractured organisational structure and poor risk oversight mechanism make it easy for powerful individuals to hide risk in the gaps
B) The Know Your Customer rule
C) Strategies that are not possible to explain to third parties should not be employed by the risk averse
D) Where there are excess rewards, there must be risks
4. For the sentence
"The organization should have at its disposal employees who have adequate _________, ________ and _______ to perform the tasks assigned to them", Choose the correct combination of words from the following options:
A) track record, expertise, skills
B) experience, skills, previous successes
C) knowledge, skills, expertise
D) risk appetite, knowledge, expertise
5. When describing the reasons for the collapse of China Aviation Oil, which of the following was not cited?
A) No properly defined risk management policies in place and general lack of oversight by senior management
B) Senior management in China were aware of the positions but did not understand the complexities of risk managing them
C) Time value was not taken into account during the contract valuation process
D) Loss generating positions were rolled over by selling options on larger positions to generate cash premiums' to settle existing position losses
Solutions:
| Question # 1 Answer: B | Question # 2 Answer: A | Question # 3 Answer: B | Question # 4 Answer: C | Question # 5 Answer: B |
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