PDF Version DemoPRMIA Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition Sample Questions:
1. What was the main risk scenario on the Metallgesellschaft trading strategy?
A) Realized losses on short-term contracts against unrealized gains on the long-run contract
B) The short-term price of the underlying being higher than the long-run contract
C) The final price of the underlying being higher than the initial price
D) The initial price of the underlying being higher than the final price
2. 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) If the risk manager deems it appropriate, he / she should send a copy of the original report to the CEO
B) Escalation of the issue is against the Code of Conduct because one should respect the administrative structure of the organization
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) 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
3. Which of the following best characterize the problems that developed at Bankers Trust?
A) Excessive reliance on volatile and sophisticated derivatives
B) Volume growth at the expense of margin
C) Over exposure to the property market
D) A failure to try to protect their clients' interests
4. The problems at Bankers Trust can best be characterized as failures related to:
A) Operational and Regulatory Compliance Risk
B) All of the Above
C) Market Risk
D) Credit Risk
5. Bankgesellschaft Berlin's failures can be best characterised as
A) credit risk caused by overexposure to the property market
B) credit risk caused by a diversified portfolio of poor-quality loans
C) none of the above
D) both A and B
Solutions:
| Question # 1 Answer: A | Question # 2 Answer: D | Question # 3 Answer: D | Question # 4 Answer: A | Question # 5 Answer: A |
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