8009 by PRMIA Actual Free Exam Q&As

Question 1

In the case of National Australia Bank, which of the following was present?

A. The Board received risk management information that was incorrect, incomplete or insufficiently detailed B. Both A and B 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

Discussion 0

Correct Answer: B Vote an answer

Question 2

Barings failed to recognize that Nick Leeson's losses were increasing because:

A. The London office did not ask for any reports B. The margin report sent to London did not show the true margin needs C. Leeson ran the front office D. Leeson hid his trades in a suspense account

Discussion 0

Correct Answer: D Vote an answer

Question 3

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 long-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 low-risk profiles to generate premiums to cover the cost of closing out loss-making option positions C. selling short-term options with extremely high-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

Discussion 0

Correct Answer: A Vote an answer

Question 4

For the sentence
"The organization shall encourage all employees to keep abreast of the latest developments in their particular areas of expertise, through ____________, _____________, and _____________ and shall make adequate resources available to enable this to occur," Choose the correct combinations of words from the following options:

A. conferences, discussion groups, blog sites B. journals, courses, compliance mandates C. courses, conferences, journals D. courses, educational certification, journals

Discussion 0

Correct Answer: C Vote an answer

Question 5

When describing the reasons for the collapse of China Aviation Oil, which of the following was not cited?

A. Loss generating positions were rolled over by selling options on larger positions to generate cash premiums' to settle existing position losses B. Time value was not taken into account during the contract valuation process C. No properly defined risk management policies in place and general lack of oversight by senior management D. Senior management in China were aware of the positions but did not understand the complexities of risk managing them

Discussion 0

Correct Answer: D Vote an answer

Question 6

Boards, including Audit and Risk Committees must:
I. Clearly articulate the corporate risk appetite to senior management
II. Thoroughly review compensation plans of potentially "highly compensated positions" for consistency with corporate risk appetite, competitive market conditions and fiduciary responsibility to shareholders III. Have a single member formally given responsibility for understanding and reporting the effectiveness of the corporation's risk management infrastructure IV. Be fully accountable to shareholders and work to the benefit of public good and financial stability

A. I and II only B. All of these are responsibilities of Board and Audit Committees C. I, II and III only D. I, II and IV only

Discussion 0

Correct Answer: B Vote an answer

Question 7

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

Discussion 0

Correct Answer: A Vote an answer

Question 8

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. They did not raise enough capital to weather the storm as the housing slump expanded B. Lawmakers postponed strenghtening regulatory oversight due to partisan infighting C. Extreme exposure to foreign currency exposures and losses from non-US$ mortgages D. Under-management and under-measurement of market and liquidity risk

Discussion 0

Correct Answer: C Vote an answer

Question 9

The key people involved in the application of good governance and risk management must:
I. be trustworthy
II. be honest
III. be approved by the local regulator
IV. treat others fairly at all times

A. I, II, III and IV above B. I, II, and III only C. I, II, and IV only D. III only

Discussion 0

Correct Answer: C Vote an answer

Question 10

The condition where futures prices of an underlying asset are lower than cash (spot) prices is known as:

A. Contango B. Conchacha C. Reverse backwardation D. Backwardation

Discussion 0

Correct Answer: D Vote an answer

PRMIA Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition - 8009 Exam Practice Test