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 Jul 18,2025.
- Exam Code: 8004
- Exam Name: 2011 PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics
- Certification Provider: PRIMA
- Latest update: Jul 18,2025
Which of the following was the key contributory risk factor to the problems at LTCM in the summer of 1998?
I. Model Risk
II. Lack of Transparency
III. Breakdown of Historical Correlations
IV. Over Regulation by Federal Regulators
- A . I and III only
- B . III only
- C . III and IV only
- D . All of these were key elements of the problems at LTCM
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
Which of the following was not received by Northern Rock as official support from the UK banking and government authorities?
- A . A covert money market support operation designed to cover up the difficulties Northern Rock was facing
- B . 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
- C . The UK government offered to guarantee all existing and new retail deposits, and to most other creditors
- D . The Bank of England provided an additional unlimited facility secured on the collateral of all Northern Rock assets
TMFI’s internal procedures and management were
- A . fully aware of the uninsured risks Fortress Re were taking
- B . absolutely unaware of their uninsured liabilities
- C . aware that they had some uninsured liabilities but thought they had enough capital to withstand any uninsured losses
- D . None of the above
As a result of the US government’s intervention, which of the following is true?
- A . The cost of borrowing for Fannie Mae and Freddie Mac should decline because the government will be standing behind their debts and the buying and selling of mortgage debt will continue
- B . The cost of borrowing for house buyers will rise because of the risk premium now built into the cost of such a government guarantee
- C . The systemic risks still remain in the housing market because it increases the US government’s debt
- D . Foreign Central Banks will continue to sell their holdings of Fannie Mae and Freddie Mac securities
How much of Washington Mutual’s assets were funded by customer deposits for the decade ending in 2006?
- A . 30%
- B . 40%
- C . 50%
- D . 60%
Which of the following is FALSE?
- A . Nick Leeson also ran the back office for his trading area
- B . Nick Leeson dealt in complex derivatives lacking transparency of pricing
- C . SIMEX made inquiries to Barings Bank about large margin calls on its positions
- D . Nick Leeson claimed to be running an arbitrage book
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?
- A . Perform the assignment, noting in the final report the standards to which the assignment was done
- B . Accept the assignment, produce and deliver two reports according to both standards
- C . Accept the assignment, and prior to doing any work, report the conflict of interest to the organization’s compliance department
- D . 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
When describing the reasons for the collapse of China Aviation Oil, which of the following was not cited?
- A . No properly defined risk management policies in place and general lack of oversight by senior management
- B . Time value was not taken into account during the contract valuation process
- C . Loss generating positions were rolled over by selling options on larger positions to generate cash premiums’ to settle existing position losses
- D . Senior management in China were aware of the positions but did not understand the complexities of risk managing them
According to the G-30 Study, the risk management infrastructure’s funding must be
- A . determined by business-unit leaders
- B . determined at the Board level with inputs from business unit leaders
- C . determined at the Board level without influence by business unit leaders
- D . determined by the regulators
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