[Aug-2021] Pass 8009 Exam in First Attempt Updated8009 SureTorrent Exam Question
PRM Dumps 8009 Exam for Full Questions - Exam Study Guide
NEW QUESTION 57
Washington Mutual's acquisition of Long Beach Financial changed its business model and increased its credit loss profile because
- A. Long Beach Financial had losses which it hadn't realized at the time of the takeover
- B. the two banks were focussed in different markets
- C. The resulting loss rate for Washington Mutual was more than 3 times higher than other mortgage lenders tracked by the FDIC
- D. Of a general deterioration of credit quality generally
Answer: C
NEW QUESTION 58
John Smith wants to run for election to the Board of Directors of PRMIA. To be nominated, he needs:
- A. The backing of 6% of local members
- B. To go through a screening process conducted by the Nominations Committee
- C. The backing of three other members
- D. The backing of five other members and to be serving on at least one PRMIA Committee
Answer: C
NEW QUESTION 59
Which of the following was the key contributory risk factor to the problems at LTCM in the summer of 1998?
I. Model Risk
II. Lack of Transparency
III. Breakdown of Historical Correlations
IV. Over Regulation by Federal Regulators
- A. I and III only
- B. III and IV only
- C. All of these were key elements of the problems at LTCM
- D. III only
Answer: D
NEW QUESTION 60
The "Renewing the Dream" program signed into law by President George W Bush in 2002 was designed to
- A. Provide tax credits of nearly US$2.4 billion over the next 5 years to investors and builders who developed affordable single-family housing in poor and distressed areas
- B. Provide grants of US$800 million to help home buyers with down-payment and closing costs
- C. Allow risky, high-cost loans to be credited towards affordable housing goals
- D. Recapitalise Fannie Mae and Freddie Mac with US$2.4 billion of additional capital to ensure they weathered the risks associated with any future downturn in the housing markets
Answer: A
NEW QUESTION 61
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 62
A risk assessment report generated by a PRMIA member creates an apparent conflict of interest between the PRMIA standards and those of the client organization.
Of the following, which is the correct hierarchy to follow to resolve the conflict?
I. The decision of a superior within the organization
II. PRMIA Standards
III. Guidelines from the regulators in which the organization operates
IV. The laws of the country
- A. II, I, IV, and III
- B. III, II, IV, and I
- C. IV, III, II, and I
- D. I, II, III, and IV
Answer: C
NEW QUESTION 63
When supervising others, a PRMIA member must comply with
- A. the standards of the organization where the work is being performed
- B. his / her established personal standards of work approved in previous work situations
- C. local regulatory authority standards which may be less onerous than PRMIA standards
- D. PRMIA Standards
Answer: D
NEW QUESTION 64
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 65
Which of the following is part of the Group of 30 Report's market risk and stress testing recommendations?
- A. To be consistent with regulatory capital measures, 10-day holding periods should be standardized for VaR reporting
- B. 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
- C. Historic simulations are not effective methods of stress testing
- D. Stress tests should incorporate changes in liquidity
Answer: D
NEW QUESTION 66
According to the Group of 30 Report, option contracts:
- A. Create no credit risk, since the buyer need not exercise the option
- B. Create credit risk only for the buyer (due to default by the seller) provided the premium is due, and paid, at contract initiation
- C. Always generate credit risk to both counterparties
- D. Usually create credit risk only for the seller (to default by the buyer)
Answer: B
NEW QUESTION 67
A risk manager is asked to analyze the credit risk of a convertible bond. The risk manager has never analyzed convertible bonds, but does have significant expertise in credit risk. The risk manager accepts the assignment, finds a paper on the subject through the PRMIA web site and copies the method used there. The risk manager completes the assignment and delivers a report to his or her direct supervisor and the supervisor is quite pleased.
According to the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct), this was acceptable behavior if the following conditions were met:
I. The risk manager disclosed the lack of knowledge about convertible bonds II. The methodology employed is disclosed and explained III. The report was just to be used for analysis and not in practice IV. The risk manager was sure of his/her understanding of the paper found on the web
- A. I and II
- B. I only
- C. I, II and III
- D. I, II and IV
Answer: A
NEW QUESTION 68
The Chair of the PRMIA Board of Directors may hold the following offices:
- A. Secretary
- B. Vice Chair
- C. Chair only
- D. Parliamentarian
Answer: C
NEW QUESTION 69
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 70
Metallgesellschaft's retail contracts were
- A. fully hedged using exchange-traded futures of the same maturities as the retail contracts
- B. hedged using exchange-traded futures with shorter maturities than the retail contracts
- C. unhedged
- D. hedged using exchange-traded futures with longer maturities than the retail contracts
Answer: B
NEW QUESTION 71
Bankgesellschaft Berlin's failures can be best characterised as
- A. both A and B
- B. credit risk caused by a diversified portfolio of poor-quality loans
- C. none of the above
- D. credit risk caused by overexposure to the property market
Answer: D
NEW QUESTION 72
The condition where futures prices of an underlying asset are lower than cash (spot) prices is known as:
- A. Reverse backwardation
- B. Contango
- C. Backwardation
- D. Conchacha
Answer: C
NEW QUESTION 73
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 74
Which of the following would have contributed to noticing and preventing Leeson's violations at Barings?
- A. All of the above
- B. Recognition that large profits can be an indicator of higher risk
- C. Separation of front and back offices
- D. More senior level involvement at Barings regarding use of derivatives
Answer: A
NEW QUESTION 75
The sensitivity analysis required under IFRS would have done what for China Aviation Oil?
- A. Only provided the time value of its outstanding option position
- B. Only provided the intrinsic value of its outstanding option positions
- C. None of the above
- D. Provided investors and analysts with insight into the dynamics of value changes, and the sensitivity of fair value to the underlying drivers of interest rates, exchange rates, and commodity prices
Answer: D
NEW QUESTION 76
National Australia Bank and Barings cases are similar in that:
- A. Both A and B
- B. The back offices had inadequate procedures
- C. None of the above
- D. Losses kept increasing while rogue trader(s) hid their positions
Answer: A
NEW QUESTION 77
Every PRMIA chapter is designed to serve the local needs of members, so they often have fairly independent planning structures and ideas. According to the PRMIA Bylaws, Regional Chapters and Regional Directors:
- A. Can have their own offices, bylaws and regulations provided they do not conflict with those of PRMIA
- B. Can sign contracts on behalf of PRMIA without prior approval from the Board of Directors
- C. Can have meetings that only local members are allowed to attend
- D. All of the above
Answer: A
NEW QUESTION 78
Which of the following was NOT a factor in the National Australia Bank case?
- A. Inadequate back office procedures
- B. Money laundering using foreign exchange trades for political leaders
- C. Improper or insufficient Board-level communication regarding the importance of risk management and oversight
- D. Rogue traders
Answer: B
NEW QUESTION 79
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