100% Real 8004 dumps - Brilliant 8004 Exam Questions PDF [Q23-Q46] : Free valid test braindumps : http://free.validbraindumps.com

Q23. Corporate Governance …

Eliminates risk to the greatest extent possible

Is defined as the assembled knowledge and wisdom of the collective stakeholders in the organization, set to maximize shareholder value

Is defined as business decision making predicated on a belief in potential rewards, balanced with the knowledge, understanding and appreciation of the risk taken to pursue those potential rewards

Is defined as that which is best practiced within an enterprise risk management framework, guided by the PRMIA Standards of Best Practice, Conduct and Ethics above all else

Q24. The problems at Bankers Trust can best be characterized as failures related to:

Market Risk

Credit Risk

Operational and Regulatory Compliance Risk

All of the Above

Q25. How much of Washington Mutual’s assets were funded by customer deposits for the decade ending in 2006?

30%

40%

50%

60%

Q26. What was the most important loss for Bankers Trust?

Money due to unfavourable market moves

Loss of its’ reputation due to actions seen as detrimental to their clients

Loss of market share due to their licenses being revoked

Time spent on legal proceedings in courts

Q27. 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?

Perform the assignment, noting in the final report the standards to which the assignment was done

Accept the assignment, produce and deliver two reports according to both standards

Accept the assignment, and prior to doing any work, report the conflict of interest to the organization’s compliance department

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

Q28. Metallgesellschaft’s retail contracts were

unhedged

hedged using exchange-traded futures with longer maturities than the retail contracts

hedged using exchange-traded futures with shorter maturities than the retail contracts

fully hedged using exchange-traded futures of the same maturities as the retail contracts

Q29. The condition where futures prices of an underlying asset are lower than cash (spot) prices is known as:

Backwardation

Contango

Reverse backwardation

Conchacha

Q30. PwC concluded that the accounting policy adopted by China Aviation Oil was incorrect because it

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

took into account both the intrinsic value and the time value

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)

used neither the intrinsic value nor the time value

Q31. Which is NOT part of the guidance on Professional Conduct in the PRMIA Standards of
Best Practice, Conduct and Ethics (Code of Conduct)?

Know and abide by applicable rules and regulations

Clearly inform all affected parties of any apparent or actual conflicts of interest

Report to the Regulator any departures from generally accepted methodology or practices

Provide advice that is clear and accurate

Q32. Which of the following is FALSE?

Nick Leeson also ran the back office for his trading area

Nick Leeson dealt in complex derivatives lacking transparency of pricing

SIMEX made inquiries to Barings Bank about large margin calls on its positions

Nick Leeson claimed to be running an arbitrage book

Q33. The problems at Bankgesellschaft Berlin can best be characterized as failures related to:

Market Risk

Credit Risk

Operational Risk

Both B and C

Q34. Which of the following would have contributed to noticing and preventing Leeson’s violations at Barings?

Separation of front and back offices

More senior level involvement at Barings regarding use of derivatives

Recognition that large profits can be an indicator of higher risk

All of the above

Q35. The problems at WorldCom can best be characterized as related to:

Market Risk

Credit Risk

Operational and Regulatory Compliance Risk

All of the Above

Q36. A VaR model for managing market risk at Barings Bank in London would most likely have:

Alerted senior management to the problems before the major losses occurred

Helped very little as Nick Leeson hid many trades

Not correctly assessed the risk in Nick Leeson’s option trades as they have non-linear price characteristics

Been used if senior management had ever seen it

Q37. The failure of Washington Mutual was NOT due to which one of the following?

Using a combination of subprime mortgage loans and credit cards

It failed due to the poor quality of its assets

Low lending standards and bad quality acquisitions

A run on its deposits by bank customers

Q38. In the case of National Australia Bank, which of the following was present?

A window of time between close of day for reporting purposes and back office checking that allowed traders to hide losses using fictitious trades

The Board received risk management information that was incorrect, incomplete or insufficiently detailed

Both A and B

Neither A nor B

Q39. 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

I and II

I, II and IV

I, II and III

I only

Q40. The retrocession insurance cover was provided by

Fortress Re and other insurers

The Fortress Re reinsurers only

The fronting insurance companies

Fortress Re and their reinsurers

Q41. Which of the following is NOT part of the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct) Guidance on Ethical Behavior?

Ensure globally accepted standards are adhered to at all costs

Respect local customs

Respect local laws and regulations

Take responsibility for your work

Q42. Which of the following is FALSE?

Nick Leeson also ran the back office for his trading area

Nick Leeson dealt in complex derivatives lacking transparency of pricing

SIMEX made inquiries to Barings Bank about large margin calls on its positions

Nick Leeson claimed to be running an arbitrage book

Q43. The Financial Accounting and Reporting Infrastructure of any organization must:
I Accurately represent the corporation’s current and known financial condition in a timely manner II Only use off-balance sheet transactions which have a legitimate economic, tax, risk transfer or risk mitigating purpose III Provide a detailed description of the Risk Management Infrastructure in the organization’s Annual Report to Shareholders IV Provide an auditable Annual Statement of Compliance with the Board’s publicly stated Standards of Corporate Governance to the Board and Audit Committee

I, II and III only

I, III and IV only

I and III only

All of these are expected of the Financial Accounting and Reporting Infrastructure

Q44. Which of the following is part of the Group of 30 Report’s market risk and stress testing recommendations?

To be consistent with regulatory capital measures, 10-day holding periods should be standardized for VaR reporting

Historic simulations are not effective methods of stress testing

Stress tests should incorporate changes in liquidity

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

Q45. Metallgesellschaft’s retail contracts were

unhedged

hedged using exchange-traded futures with longer maturities than the retail contracts

hedged using exchange-traded futures with shorter maturities than the retail contracts

fully hedged using exchange-traded futures of the same maturities as the retail contracts

Q46. Which of the following should NOT be part of the Risk Management Infrastructure?

Define the organization’s definition of risk management as articulated by the Board in clear and uncertain terms

Include financial risk management, compliance and external reporting and, to the extent that resources allow, should exclude legal or accounting

Be independently staffed and report to an employee who is on the Executive Committee (Operating Committee) but who is NOT a business unit leader

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