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PRMIA 8004 Exam Syllabus Topics:
| Section | Objectives |
| Case Studies | - Barings
- Northern Rock
- National Australia Bank (NAB) - FX Options
- Washington Mutual (Wamu)
- Metallgesellschaft
- Lehman Brothers
- FTX
- Orange County
- Fannie Mae and Freddie Mac
- American Insurance Group (AIG)
- Bankers Trust
- Silicon Valley Bank
- Operational Resilience at TSB
- WorldCom
- Long Term Capital Management (LTCM)
|
| Standards & Practices | - Bylaws of Professional Risk Managers' International Association, PRMIA
- Principles of Good Governance Principles, PRMIA
- Standards of Best Practice, Conduct and Ethics, PRMIA Ethics Committee
- Group of Thirty Best Practices, Global Derivatives Study Group
|
PRMIA PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics Sample Questions:
1. 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) IV, III, II, and I
C) I, II, III, and IV
D) III, II, IV, and I
2. The problems at WorldCom can best be characterized as related to:
A) Operational and Regulatory Compliance Risk
B) Market Risk
C) All of the Above
D) Credit Risk
3. Employees shall be remunerated adequately for the roles that they perform, where 'adequately' is defined
A) as being the market norm for similarly situated personnel in competitive organizations
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 commensurate with policies to attract and retain high income / revenue earners
D) using the risk reward profile for each business line in the organization
4. Which of the following regarding Orange County is FALSE?
A) Bob Citron heavily leveraged his positions using repos
B) Bob Citron engaged in risky strategies to benefit personally
C) Citron's losses were eventually exposed by massive margin calls
D) Bob Citron tried to "ride the yield curve"
5. 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) took into account both the intrinsic value and the time value
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
Solutions:
Question # 1 Answer: B | Question # 2 Answer: A | Question # 3 Answer: B | Question # 4 Answer: B | Question # 5 Answer: A |