PRIMA 8004 2011 PRM Certification – Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics Online Training
PRIMA 8004 Online Training
The questions for 8004 were last updated at May 11,2024.
- Exam Code: 8004
- Exam Name: 2011 PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics
- Certification Provider: PRIMA
- Latest update: May 11,2024
John Smith wants to run for election to the Board of Directors of PRMIA.
To be nominated, he needs:
- A . The backing of three other members
- B . To go through a screening process conducted by the Nominations Committee
- C . The backing of 6% of local members
- D . The backing of five other members and to be serving on at least one PRMIA Committee
The Fortress Re finite reinsurance model
- A . allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability
- B . allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid annual premiums to cover these policies, and as the risks were spread out over the year the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability
- C . allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the future premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability
- D . allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, but as the risks were spread out over time the future premiums were not accounted for as current liabilities on the books of the pool members, thus giving a false impression of profitability
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
- A . I, II and III only
- B . I, III and IV only
- C . I and III only
- D . All of these are expected of the Financial Accounting and Reporting Infrastructure
The Q4 2003 trading strategy of China Aviation Oil was
- A . to buy puts and sell calls
- B . to buy calls and sell puts
- C . to sell puts and buy calls
- D . to sell calls and buy puts
Which of the following was NOT a factor in the National Australia Bank case?
- A . Rogue traders
- B . Improper or insufficient Board-level communication regarding the importance of risk management and oversight
- C . Inadequate back office procedures
- D . Money laundering using foreign exchange trades for political leaders
Select the one correct statement relative to Barings Bank.
- A . Proprietary and agency trading were combined and therefore did not increase risk.
- B . Proprietary and agency trading were separate and therefore did not increase risk.
- C . Proprietary and agency trading were combined and therefore did increase risk.
- D . Proprietary and agency trading were separate and did increase risk.
According to PRMIA governance principles, boards and audit committees should …
- A . Review compensation plans to ensure consistency with corporate risk appetite, competitive market conditions, and fiduciary responsibility to shareholders
- B . Collectively assume responsibility of understanding and reporting the effectiveness of the firm risk management infrastructure
- C . Be composed of key business unit representatives
- D . Leave shareholder accountability to senior management who decides strategic direction
According to the Northern Rock Case Study, what is Forced Insolvency?
- A . The bank is insolvent in that the current value of its assets (measured at book value) is less than the value of its liabilities; thus even if the bank were to liquidate all of its assets it would not be able to repay all depositors and other creditors
- B . The bank is legally solvent but if, because it cannot fund its operations, it is forced to liquidate assets it could do so only at less than nominal values (fire sale) and this would make it legally insolvent (value of assets falls below those of liabilities)
- C . The bank is legally solvent but its current funding costs (which are likely to continue) exceed the average rate of return on its assets and hence it would soon become insolvent as it would be making losses and would eventually exhaust its equity capital
- D . The bank is solvent in that the current value of its assets (measured at book value) is more than the value of its liabilities; so even if the bank were to liquidate all of its assets it would be able to repay all depositors and other creditors
Employees shall be remunerated adequately for the roles that they perform, where ‘adequately’ is defined
- A . as being the market norm for similarly situated personnel in competitive organizations
- B . using external references and benchmarks, and in a framework which is consistent with the type of risk-taking behavior expected of employees
- C . using the risk reward profile for each business line in the organization
- D . as commensurate with policies to attract and retain high income / revenue earners
Bankgesellschaft Berlin’s failures can be best characterised as
- A . credit risk caused by overexposure to the property market
- B . credit risk caused by a diversified portfolio of poor-quality loans
- C . both A and B
- D . none of the above