Pass Your 8004 Dumps as PDF Updated on 2024 With 112 Questions
PRMIA 8004 Real Exam Questions and Answers FREE
NEW QUESTION # 44
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. 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
- D. 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
Answer: D
NEW QUESTION # 45
Which of the following should NOT be part of the Risk Management Infrastructure?
- A. Be independently staffed and report to an employee who is on the Executive Committee (Operating Committee) but who is NOT a business unit leader
- B. Define the organization's definition of risk management as articulated by the Board in clear and uncertain terms
- C. Include financial risk management, compliance and external reporting and, to the extent that resources allow, should exclude legal or accounting
- D. 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
Answer: D
NEW QUESTION # 46
Which of the following was a key problem in the Barings Bank case?
- A. Having the back office and front office operations under the same person
- B. The different time zones that the office was trading in
- C. Difference in the contract sizes in the OSE and SIMEX
- D. Leeson was executing an arbitrage strategy even though he was not authorized to do so
Answer: A
NEW QUESTION # 47
Metallgesellschaft's retail contracts were
- A. hedged using exchange-traded futures with shorter maturities than the retail contracts
- B. hedged using exchange-traded futures with longer maturities than the retail contracts
- C. fully hedged using exchange-traded futures of the same maturities as the retail contracts
- D. unhedged
Answer: A
NEW QUESTION # 48
According to the PwC report China Aviation Oil, in order to avoid recording and reporting losses, the company adopted which approach covering up its losses?
- A. selling short-term options with extremely high-risk profiles to generate premiums to cover the cost of closing out loss-making option positions
- B. selling long-term options with extremely high-risk profiles to generate premiums to cover the cost of closing out loss-making option positions
- C. selling long-term options with extremely low-risk profiles to generate premiums to cover the cost of closing out loss-making option positions
- D. selling short-term options with extremely low-risk profiles to generate premiums to cover the cost of closing out loss-making option positions
Answer: B
NEW QUESTION # 49
As a result of the US government's intervention, which of the following is true?
- A. The cost of borrowing for Fannie Mae and Freddie Mac should decline because the government will be standing behind their debts and the buying and selling of mortgage debt will continue
- B. The systemic risks still remain in the housing market because it increases the US government's debt
- C. Foreign Central Banks will continue to sell their holdings of Fannie Mae and Freddie Mac securities
- D. The cost of borrowing for house buyers will rise because of the risk premium now built into the cost of such a government guarantee
Answer: A
NEW QUESTION # 50
PRMIA is incorporated as:
- A. A non profit corporation with for profit subsidiaries
- B. A charitable trust
- C. A for-profit corporation
- D. A non-profit corporation
Answer: D
NEW QUESTION # 51
National Australia Bank and Barings cases are similar in that:
- A. The back offices had inadequate procedures
- B. Losses kept increasing while rogue trader(s) hid their positions
- C. Both A and B
- D. None of the above
Answer: C
NEW QUESTION # 52
The retrocession insurance cover was provided by
- A. The Fortress Re reinsurers only
- B. The fronting insurance companies
- C. Fortress Re and their reinsurers
- D. Fortress Re and other insurers
Answer: A
NEW QUESTION # 53
The problems at WorldCom can best be characterized as related to:
- A. Market Risk
- B. Credit Risk
- C. All of the Above
- D. Operational and Regulatory Compliance Risk
Answer: D
NEW QUESTION # 54
The multi-dimensional risk problem at Northern Rock did not include which one of the combinations of the following?
- A. Deposit Protection; Moral Hazard; Business Model; and LPHI Risk
- B. Business Model; Corporate Governance; Moral Hazard; and Deposit Protection
- C. LPHI Risk; Business Model; Solvency vs. Liquidity: and Deposit Protection
- D. Corporate Governance; Moral Hazard; Role of Government; and Credit Risk
Answer: D
NEW QUESTION # 55
Select the one correct statement relative to Barings Bank.
- A. Proprietary and agency trading were separate and therefore did not increase risk.
- B. Proprietary and agency trading were separate and did increase risk.
- C. Proprietary and agency trading were combined and therefore did not increase risk.
- D. Proprietary and agency trading were combined and therefore did increase risk.
Answer: D
NEW QUESTION # 56
The Chair, Vice Chair, Secretary and Treasurer of the PRMIA Board of Directors are elected by:
- A. All PRMIA Fellow Members
- B. The Regional Directors
- C. The Blue Ribbon Advisory Panel
- D. A two-thirds affirmative vote of all members
Answer: B
NEW QUESTION # 57
As a PRMIA member, you have certain responsibilities. Among these are the requirement(s) to:
- A. All of the above
- B. Attend at least one PRMIA chapter meeting per year
- C. Vote in Board elections
- D. Adhere to the PRMIA Standards of Best Practice, Conduct and Ethics
Answer: D
NEW QUESTION # 58
The Chair of the PRMIA Board of Directors may hold the following offices:
- A. Secretary
- B. Chair only
- C. Vice Chair
- D. Parliamentarian
Answer: B
NEW QUESTION # 59
Which of the following was NOT a factor in the WorldCom collapse?
- A. Unfair pricing to customers
- B. Failed corporate governance
- C. Over stating actual sales
- D. Accounting abuses
Answer: A
NEW QUESTION # 60
What was the main type of risk that Metallgesellschaft was exposed to?
- A. Basis Risk
- B. Interest Rate
- C. Inflation
- D. Currency Settlement
Answer: A
NEW QUESTION # 61
Barings failed to recognize that Nick Leeson's losses were increasing because:
- A. Leeson ran the front office
- B. The margin report sent to London did not show the true margin needs
- C. Leeson hid his trades in a suspense account
- D. The London office did not ask for any reports
Answer: C
NEW QUESTION # 62
The problems in the Orange County case can best be characterized as failures related to:
- A. Market Risk
- B. Operational and Regulatory Compliance Risk
- C. Credit Risk
- D. All of the Above
Answer: A
NEW QUESTION # 63
Which of the following is part of the Group of 30 Report's market risk and stress testing recommendations?
- A. 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
- B. To be consistent with regulatory capital measures, 10-day holding periods should be standardized for VaR reporting
- C. Stress tests should incorporate changes in liquidity
- D. Historic simulations are not effective methods of stress testing
Answer: C
NEW QUESTION # 64
PwC concluded that the accounting policy adopted by China Aviation Oil was incorrect because it
- A. took into account both the intrinsic value and the time value
- B. 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
- C. 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)
- D. used neither the intrinsic value nor the time value
Answer: B
NEW QUESTION # 65
According to the Group of 30 Report, dealers and end-users are encouraged to:
- A. Use one trading agreement for foreign exchange forwards and another for foreign exchange options.
- B. Use a single master trading agreement as widely as possible with each counter party.
- C. Use separate trading agreements for interest rate derivatives, equity derivatives and foreign exchange transactions.
- D. Use a common trading agreement for interest rate and equity derivatives but a separate agreement for foreign exchange transactions.
Answer: B
NEW QUESTION # 66
Which of the following would have contributed to noticing and preventing Leeson's violations at Barings?
- A. More senior level involvement at Barings regarding use of derivatives
- B. Recognition that large profits can be an indicator of higher risk
- C. Separation of front and back offices
- D. All of the above
Answer: D
NEW QUESTION # 67
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