Free Access PRMIA.8009.v2022-03-04.q40 Practice Test (Page 4)

Question 11

When describing the reasons for the collapse of China Aviation Oil, which of the following was not cited?

A.Time value was not taken into account during the contract valuation process

B.Loss generating positions were rolled over by selling options on larger positions to generate cash premiums' to settle existing position losses

C.No properly defined risk management policies in place and general lack of oversight by senior management

D.Senior management in China were aware of the positions but did not understand the complexities of risk managing them

Question 12

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.Leave shareholder accountability to senior management who decides strategic direction

C.Be composed of key business unit representatives

D.Collectively assume responsibility of understanding and reporting the effectiveness of the firm risk management infrastructure

Question 13

Which of the following should NOT be part of the Risk Management Infrastructure?

A.Review continually the application of the Principles of Good Governance to the Risk Management Infrastructure, financial accounting and reporting infrastructure and the organization as a whole

B.Include financial risk management, compliance and external reporting and, to the extent that resources allow, should exclude legal or accounting

C.Be independently staffed and report to an employee who is on the Executive Committee (Operating Committee) but who is NOT a business unit leader

D.Define the organization's definition of risk management as articulated by the Board in clear and uncertain terms

Question 14

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

Question 15

Which of the following are PRMIA Governance Principles?
I. Sufficiency of Key Resources and Process
II. State of the Art Risk Management Technology
III. Ongoing Education and Discernment
IV. Sufficiency of Key Competencies

A.All of these are PRMIA Governance Principles

B.I and II only

C.I, III and IV only

D.I, II and IV only

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Question 11

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