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PRMIA 8009 Exam Syllabus Topics:

SectionObjectives
Best Practices in Risk Management- Enterprise risk management implementation
- Risk monitoring and reporting
- Risk identification and assessment processes
Risk Management Standards- Regulatory and industry standards
- Global risk management frameworks
Ethics in Risk Management- Conflict of interest management
- Professional ethics and conduct standards
- Ethical decision-making in financial risk scenarios
Governance- Board responsibilities and oversight
- Corporate governance structures
- Internal controls and compliance systems

PRMIA Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition Sample Questions:

1. PwC concluded that the accounting policy adopted by China Aviation Oil was incorrect because it

A) 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
B) used neither the intrinsic value nor the time value
C) took into account both the intrinsic value and the time value
D) 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)


2. 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) All of the above
C) Recognition that large profits can be an indicator of higher risk
D) Separation of front and back offices


3. PRMIA Governance Principles

A) is a set of recommendations based on research and best practice
B) must be adhered to by all PRMIA member organizations
C) must be adhered to by all financial firms that are PRMIA members
D) must be adhered to by all PRM charter holders


4. According to the Group of 30 Report, option contracts:

A) Usually create credit risk only for the seller (to default by the buyer)
B) Create no credit risk, since the buyer need not exercise the option
C) Create credit risk only for the buyer (due to default by the seller) provided the premium is due, and paid, at contract initiation
D) Always generate credit risk to both counterparties


5. The Bankers Trust Case Study is about:

A) reliance on thinly traded derivatives to hedge
B) failure to guard its clients' best interests
C) large losses at the proprietary trading desk
D) overexposure to the real estate market


Solutions:

Question # 1
Answer: A
Question # 2
Answer: B
Question # 3
Answer: A
Question # 4
Answer: C
Question # 5
Answer: B

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