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Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition

Last Update 23 hours ago Total Questions : 110

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Question # 4

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.

Internal controls of the organization, and the local regulator

B.

Internal controls, and the expectations of stakeholders, shareholders, and the general public

C.

The local regulator, internal controls, and shareholders

D.

Only the internal controls and compliance standards

Question # 5

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

A.

Backwardation

B.

Contango

C.

Reverse backwardation

D.

Conchacha

Question # 6

PRMIA Governance Principles

A.

must be adhered to by all PRMIA member organizations

B.

is a set of recommendations based on research and best practice

C.

must be adhered to by all PRM charter holders

D.

must be adhered to by all financial firms that are PRMIA members

Question # 7

According to the Group of 30 Report, dealers and end-users are encouraged to:

A.

Use separate trading agreements for interest rate derivatives, equity derivatives and foreign exchange transactions.

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 a single master trading agreement as widely as possible with each counter party.

Question # 8

The multi-dimensional risk problem at Northern Rock did not include which one of the combinations of the following?

A.

LPHI Risk; Business Model; Solvency vs. Liquidity: and Deposit Protection

B.

Corporate Governance; Moral Hazard; Role of Government; and Credit Risk

C.

Deposit Protection; Moral Hazard; Business Model; and LPHI Risk

D.

Business Model; Corporate Governance; Moral Hazard; and Deposit Protection

Question # 9

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

A.

Market Risk

B.

Credit Risk

C.

Operational Risk

D.

Both B and C

Question # 10

A risk manager finds that a client is engaged in a practice that looks like money laundering.

According to the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct), the risk manager should:

A.

Approach the client about the concern, regardless of what their reaction might be

B.

Respect the client ' s confidentiality as that takes precedence

C.

Report this conduct to their immediate supervisor

D.

Report the findings immediately to authorities

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