Free PRMIA 8004 Exam Dumps Questions & Answers

The "normal" credit loss profile of Washington Mutual was increased by which of the following?

• A.  Catastrophic losses in its own credit card division
• B.  Acquisitions like Long Beach and Providian
• C.  By lowering its own credit underwriting standards
• D.  The general downturn in the economy of the US

The Chief Risk Officer is responsible for the management of the Risk Management Infrastructure, and as such helps the Board define, and then implements throughout the organization, the risk appetite of the organization.
Which of the following is also the responsibility of the Chief Risk Officer?

• A.  Ensures that reporting of risk and governance-related matters are produced in a timely and accurate manner
• B.  Acts as sponsor for risk throughout the organization and ensures that a risk culture is implemented, and maintained
• C.  ensuring that all employees understand the rules and regulations (both internal and external) with which they must comply and the implications, for them and for the organization, of non-compliance
• D.  Maintaining appropriate assurance measures to ensure that the Governance and Risk framework of the organization is effective, and, if any shortcomings are discovered, to escalate these to the Board so that remedial action can be taken in an appropriate and timely manner

Boards of Directors, including Audit and Risk Committees must review thoroughly compensation plans of potentially "highly compensated positions" for:
I competitive market conditions
II ensuring compliance with their corporate risk appetite and fiduciary responsibility to shareholders III ensuring any discretionary bonus plans are geared towards keeping high income / revenue generators IV reporting all such personnel to the local regulator

• A.  All of the above
• B.  I, II and IV only
• C.  I and II only
• D.  II, III and IV only

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.  Ignore local rules and regulations
• C.  Seek advice from a qualified party, being mindful of legal and confidentiality requirements
• D.  Respect local rules and regulations

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 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
• C.  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
• D.  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)