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Welcome to download the newest Exam4Tests 8009 PDF dumps: https://www.exam4tests.com/8009-valid-braindumps.html ( 112 Q&As)
NEW QUESTION 64
Which of the following was not considered to be a positive outcome of the Northern Rock Case Study?
- A. The role of the UK government and the possible underwriting of risks by tax-payers, and the general question of Moral Hazard
- B. The reform of the Deposit Protection Scheme because of its internal inconsistencies
- C. The original successful business model had not stress tested sufficiently for the incidence of Low Probability, High Impact incidents
- D. It emphasised the importance of effective governance arrangements within financial firms
Answer: C
NEW QUESTION 65
Barings failed to recognize that Nick Leeson's losses were increasing because:
- A. Leeson ran the front office
- B. The London office did not ask for any reports
- C. The margin report sent to London did not show the true margin needs
- D. Leeson hid his trades in a suspense account
Answer: D
NEW QUESTION 66
When considering the performance of Northern Rock within its peer group of banks, which of the following is not correct?
- 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.
Answer: D
NEW QUESTION 67
When Fannie Mae and Freddie Mac were taken under US government conservatorship, which of the following was not included within their operating mandate?
- A. Fannie Mae and Freddie Mac will continue to buy home loans from banks to repackage them as mortgage-backed securities
- B. The US government will provide capital as needed in return for preferred shares in the companies
- C. The US government will buy mortgage-backed securities in the open market as needed
- D. There was a 2 year limit to the conservatorship
Answer: D
NEW QUESTION 68
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 69
The early 2003 trading strategy of China Aviation oil was
- A. to buy calls and sell puts
- B. to buy puts and sell calls
- C. to sell puts and buy calls
- D. to sell calls and buy puts
Answer: A
NEW QUESTION 70
A VaR model for managing market risk at Barings Bank in London would most likely have:
- A. Been used if senior management had ever seen it
- B. Alerted senior management to the problems before the major losses occurred
- C. Helped very little as Nick Leeson hid many trades
- D. Not correctly assessed the risk in Nick Leeson's option trades as they have non-linear price characteristics
Answer: C
NEW QUESTION 71
What was the most important loss for Bankers Trust?
- A. Time spent on legal proceedings in courts
- B. Money due to unfavourable market moves
- C. Loss of market share due to their licenses being revoked
- D. Loss of its' reputation due to actions seen as detrimental to their clients
Answer: D
NEW QUESTION 72
A risk manager finds that a client is engaged in a practice that looks like money laundering.
According to the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct), the risk manager should:
- A. Report the findings immediately to authorities
- B. Report this conduct to their immediate supervisor
- C. Approach the client about the concern, regardless of what their reaction might be
- D. Respect the client's confidentiality as that takes precedence
Answer: B
NEW QUESTION 73
Several clients, including Procter and Gamble took legal action against Bankers Trust, claiming Bankers Trust
- A. did not honour its contractual obligations to pay
- B. sold them derivative products without properly advising them of the relevant risks
- C. hid profits
- D. was involved in accounting fraud
Answer: B
NEW QUESTION 74
Which of the following should NOT be part of the Risk Management Infrastructure?
- A. Include financial risk management, compliance and external reporting and, to the extent that resources allow, should exclude legal or accounting
- B. Be independently staffed and report to an employee who is on the Executive Committee (Operating Committee) but who is NOT a business unit leader
- C. Review continually the application of the Principles of Good Governance to the Risk Management Infrastructure, financial accounting and reporting infrastructure and the organization as a whole
- D. Define the organization's definition of risk management as articulated by the Board in clear and uncertain terms
Answer: C
NEW QUESTION 75
Select the one correct statement relative to Barings Bank.
- A. Proprietary and agency trading were combined and therefore did not increase risk.
- B. Proprietary and agency trading were separate and therefore did not increase risk.
- C. Proprietary and agency trading were separate and did increase risk.
- D. Proprietary and agency trading were combined and therefore did increase risk.
Answer: D
NEW QUESTION 76
The Fortress Re finite reinsurance model
- A. allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the future premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability
- B. allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, but as the risks were spread out over time the future premiums were not accounted for as current liabilities on the books of the pool members, thus giving a false impression of profitability
- C. allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid annual premiums to cover these policies, and as the risks were spread out over the year the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability
- D. allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability
Answer: B
NEW QUESTION 77
Employees shall be remunerated adequately for the roles that they perform, where 'adequately' is defined
- A. using the risk reward profile for each business line in the organization
- B. using external references and benchmarks, and in a framework which is consistent with the type of risk-taking behavior expected of employees
- C. as being the market norm for similarly situated personnel in competitive organizations
- D. as commensurate with policies to attract and retain high income / revenue earners
Answer: B
NEW QUESTION 78
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 79
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 80
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. Strategies that are not possible to explain to third parties should not be employed by the risk averse
- C. The Know Your Customer rule
- D. Where there are excess rewards, there must be risks
Answer: C
NEW QUESTION 81
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 82
The problems at WorldCom can best be characterized as related to:
- A. Market Risk
- B. All of the Above
- C. Credit Risk
- D. Operational and Regulatory Compliance Risk
Answer: D
NEW QUESTION 83
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 84
When local rules and regulations conflict with the PRMIA Standards of Best Practice, Conduct and Ethics the PRMIA member should ...
- A. Seek advice from a qualified party, being mindful of legal and confidentiality requirements
- B. Modify the interpretation of local rules and regulations to meet the situation
- C. Ignore local rules and regulations
- D. Respect local rules and regulations
Answer: A
NEW QUESTION 85
Which of the following are PRMIA Governance Principles?
I. Independence of Key Parties
II. Disclosure and Transparency
III. Internal Validation
IV. Solvency
- A. All are PRMIA Governance Principles
- B. I and II only
- C. I, II and III only
- D. I, II and IV only
Answer: B
NEW QUESTION 86
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