Prepare 8004 Question Answers - 8004 Exam Dumps
Real PRMIA 8004 Exam Questions [Updated 2023]
NEW QUESTION # 54
Which of the following does NOT relate to the Orange County case?
- A. Strategies that are not possible to explain to third parties should not be employed by the risk averse
- B. Where there are excess rewards, there must be risks
- C. Fractured organisational structure and poor risk oversight mechanism make it easy for powerful individuals to hide risk in the gaps
- D. The Know Your Customer rule
Answer: D
NEW QUESTION # 55
Unlike the case at Barings Bank, National Australia Bank:
- A. Had a separation of duties between trading and back office
- B. Had a risk management infrastructure that was credited with doing its' job well, despite the losses
- C. Had a Board of Directors that was unaware of the true nature of trading activities
- D. Was not dealing in derivatives
Answer: A
NEW QUESTION # 56
According to the Group of 30 Report, deriving aggregate potential credit exposure for a counterparty by adding up the potential exposure of multiple transactions:
- A. Can easily reflect the impact of netting
- B. Captures portfolio effects but not tenor differences
- C. Gives an accurate result in most cases
- D. Overstates exposure in most cases
Answer: D
NEW QUESTION # 57
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, II and III
- B. I and II
- C. I, II and IV
- D. I only
Answer: B
NEW QUESTION # 58
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. Extreme exposure to foreign currency exposures and losses from non-US$ mortgages
- B. Under-management and under-measurement of market and liquidity risk
- C. They did not raise enough capital to weather the storm as the housing slump expanded
- D. Lawmakers postponed strenghtening regulatory oversight due to partisan infighting
Answer: A
NEW QUESTION # 59
In the case of National Australia Bank, which of the following was present?
- A. Both A and B
- B. The Board received risk management information that was incorrect, incomplete or insufficiently detailed
- C. A window of time between close of day for reporting purposes and back office checking that allowed traders to hide losses using fictitious trades
- D. Neither A nor B
Answer: A
NEW QUESTION # 60
Which of the following are PRMIA Governance Principles?
I Independence of Key Parties
II Disclosure and Transparency
III Internal Validation
IV Solvency
- A. I, II and III only
- B. I and II only
- C. All are PRMIA Governance Principles
- D. I, II and IV only
Answer: B
NEW QUESTION # 61
Taisei Fire and Marine Insurance Co
- A. had a full understanding from other members of the pool of the pool's liabilities
- B. relied almost entirely on Fortress Re's management team for information on the risks in its portfolio
- C. had a full understanding from Fortress Re of the risks in the pool
- D. relied on the information it received from other members of the reinsurance pool to manage its risks
Answer: B
NEW QUESTION # 62
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, 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
- B. 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
- C. 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
- 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 future premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability
Answer: A
NEW QUESTION # 63
A PRMIA member is offered a highly paid work assignment on the condition that some aspects of assignment are not to be done according to PRMIA standards.
What should they do?
- A. Accept the assignment, produce and deliver two reports according to both standards
- B. 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
- C. Perform the assignment, noting in the final report the standards to which the assignment was done
- D. Accept the assignment, and prior to doing any work, report the conflict of interest to the organization's compliance department
Answer: B
NEW QUESTION # 64
The failure of Washington Mutual was NOT due to which one of the following?
- A. Using a combination of subprime mortgage loans and credit cards
- B. Low lending standards and bad quality acquisitions
- C. A run on its deposits by bank customers
- D. It failed due to the poor quality of its assets
Answer: C
NEW QUESTION # 65
With a PRMIA member's need to reconcile their internal and external responsibility to perform their work in an independent and appropriate fiduciary manner, which of the following options must be taken into consideration when performing risk management duties?
- A. The local regulator, internal controls, and shareholders
- B. Internal controls, and the expectations of stakeholders, shareholders, and the general public
- C. Internal controls of the organization, and the local regulator
- D. Only the internal controls and compliance standards
Answer: B
NEW QUESTION # 66
The Chief Risk Officer is responsible for the management of the Risk Management Infrastructure, and as such helps the Board define, and then implements throughout the organization, the risk appetite of the organization.
Which of the following is also the responsibility of the Chief Risk Officer?
- A. Acts as sponsor for risk throughout the organization and ensures that a risk culture is implemented, and maintained
- B. Ensures that reporting of risk and governance-related matters are produced in a timely and accurate manner
- C. 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
- D. 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
Answer: B
NEW QUESTION # 67
Which of the following was not received by Northern Rock as official support from the UK banking and government authorities?
- A. A covert money market support operation designed to cover up the difficulties Northern Rock was facing
- B. The Bank of England provided an additional unlimited facility secured on the collateral of all Northern Rock assets
- C. The Bank of England's role as Lender-Of-Last-resort was activated at a penalty interest rate of 150 basis points above the Bank Rate
- D. The UK government offered to guarantee all existing and new retail deposits, and to most other creditors
Answer: A
NEW QUESTION # 68
The "Renewing the Dream" program signed into law by President George W Bush in 2002 was designed to
- A. Allow risky, high-cost loans to be credited towards affordable housing goals
- B. Provide grants of US$800 million to help home buyers with down-payment and closing costs
- C. 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
- 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: C
NEW QUESTION # 69
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