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PRMIA 8004 Exam Syllabus Topics:

SectionObjectives
Topic 1: Standards & Practices- Principles of Good Governance Principles, PRMIA
- Standards of Best Practice, Conduct and Ethics, PRMIA Ethics Committee
- Bylaws of Professional Risk Managers' International Association, PRMIA
- Group of Thirty Best Practices, Global Derivatives Study Group
Topic 2: Case Studies- National Australia Bank (NAB) - FX Options
- Silicon Valley Bank
- WorldCom
- Northern Rock
- Bankers Trust
- Metallgesellschaft
- Orange County
- Fannie Mae and Freddie Mac
- FTX
- American Insurance Group (AIG)
- Washington Mutual (Wamu)
- Lehman Brothers
- Long Term Capital Management (LTCM)
- Operational Resilience at TSB
- Barings

PRMIA PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics Sample Questions:

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

A) 30%
B) 60%
C) 40%
D) 50%


2. According to the Group of 30 Report, important risks associated with dynamic hedging are:

A) Greater volatility than expected over the life of an option
B) Neither A nor B
C) Sudden gaps in market prices
D) Both A and B


3. 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) I, II, III, and IV
B) II, I, IV, and III
C) III, II, IV, and I
D) IV, III, II, and I


4. Which of the following was not received by Northern Rock as official support from the UK banking and government authorities?

A) The Bank of England provided an additional unlimited facility secured on the collateral of all Northern Rock assets
B) A covert money market support operation designed to cover up the difficulties Northern Rock was facing
C) The Bank of England's role as Lender-Of-Last-resort was activated at a penalty interest rate of 150 basis points above the Bank Rate
D) The UK government offered to guarantee all existing and new retail deposits, and to most other creditors


5. With respect to the Purpose of Professional Standards, in the event of any difference in standards between local laws/rules and those of PRMIA, members must

A) refer the matter to their supervisor
B) use their best judgment
C) comply with the higher standard under all circumstances
D) abide by the applicable laws, rules, and regulations of PRMIA and any government and/or regulatory bodies


Solutions:

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

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