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NEW QUESTION # 64
What was the most important loss for Bankers Trust?
- A. Loss of its' reputation due to actions seen as detrimental to their clients
- B. Time spent on legal proceedings in courts
- C. Money due to unfavourable market moves
- D. Loss of market share due to their licenses being revoked
Answer: A
NEW QUESTION # 65
For the sentence
"The organization should have at its disposal employees who have adequate _________, ________ and _______ to perform the tasks assigned to them", Choose the correct combination of words from the following options:
- A. track record, expertise, skills
- B. experience, skills, previous successes
- C. risk appetite, knowledge, expertise
- D. knowledge, skills, expertise
Answer: D
NEW QUESTION # 66
MGRM's losses due to "stacking" started to increase when
- A. the oil market went from backwardation to contango
- B. the oil market went from contango to backwardation
- C. the oil market went from weak backwardation to strong backwardation
- D. the oil market went from strong contango to weak contango
Answer: A
NEW QUESTION # 67
The hedging strategy employed by MG Refining & Marketing has been called:
- A. Nothing because MG Refining & Marketing did not hedge its position
- B. Dynamic hedging
- C. A differential hedge
- D. A stacked hedge
Answer: D
NEW QUESTION # 68
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. No properly defined risk management policies in place and general lack of oversight by senior management
- C. Senior management in China were aware of the positions but did not understand the complexities of risk managing them
- D. Time value was not taken into account during the contract valuation process
Answer: C
NEW QUESTION # 69
When local rules and regulations conflict with the PRMIA Standards of Best Practice, Conduct and Ethics the PRMIA member should ...
- A. Modify the interpretation of local rules and regulations to meet the situation
- B. Seek advice from a qualified party, being mindful of legal and confidentiality requirements
- C. Respect local rules and regulations
- D. Ignore local rules and regulations
Answer: B
NEW QUESTION # 70
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. courses, conferences, journals
- B. courses, educational certification, journals
- C. journals, courses, compliance mandates
- D. conferences, discussion groups, blog sites
Answer: A
NEW QUESTION # 71
The problems at Bankers Trust can best be characterized as failures related to:
- A. Credit Risk
- B. Operational and Regulatory Compliance Risk
- C. Market Risk
- D. All of the Above
Answer: B
NEW QUESTION # 72
The hedging strategy employed by MG Refining & Marketing has been called:
- A. Nothing because MG Refining & Marketing did not hedge its position
- B. Dynamic hedging
- C. A differential hedge
- D. A stacked hedge
Answer: D
NEW QUESTION # 73
As a PRMIA member, you have certain responsibilities. Among these are the requirement(s) to:
- A. Adhere to the PRMIA Standards of Best Practice, Conduct and Ethics
- B. Vote in Board elections
- C. Attend at least one PRMIA chapter meeting per year
- D. All of the above
Answer: A
NEW QUESTION # 74
A VaR model for managing market risk at Barings Bank in London would most likely have:
- A. Been used if senior management had ever seen it
- B. Helped very little as Nick Leeson hid many trades
- C. Not correctly assessed the risk in Nick Leeson's option trades as they have non-linear price characteristics
- D. Alerted senior management to the problems before the major losses occurred
Answer: B
NEW QUESTION # 75
According to the Group of 30 Report, dealers and end-users are encouraged to:
- A. Use a single master trading agreement as widely as possible with each counter party.
- B. Use a common trading agreement for interest rate and equity derivatives but a separate agreement for foreign exchange transactions.
- C. Use one trading agreement for foreign exchange forwards and another for foreign exchange options.
- D. Use separate trading agreements for interest rate derivatives, equity derivatives and foreign exchange transactions.
Answer: A
NEW QUESTION # 76
Taisei Fire and Marine Insurance Co
- A. relied on the information it received from other members of the reinsurance pool to manage its risks
- B. had a full understanding from Fortress Re of the risks in the pool
- C. relied almost entirely on Fortress Re's management team for information on the risks in its portfolio
- D. had a full understanding from other members of the pool of the pool's liabilities
Answer: C
NEW QUESTION # 77
With a PRMIA member's need to reconcile their internal and external responsibility to perform their work in an independent and appropriate fiduciary manner, which of the following options must be taken into consideration when performing risk management duties?
- A. Only the internal controls and compliance standards
- B. Internal controls of the organization, and the local regulator
- C. The local regulator, internal controls, and shareholders
- D. Internal controls, and the expectations of stakeholders, shareholders, and the general public
Answer: D
NEW QUESTION # 78
The problems at WorldCom can best be characterized as related to:
- A. Credit Risk
- B. Operational and Regulatory Compliance Risk
- C. Market Risk
- D. All of the Above
Answer: B
NEW QUESTION # 79
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