8009 Exam Dumps - Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition

Question # 4

In the case of National Australia Bank, which of the following was present?

A window of time between close of day for reporting purposes and back office checking that allowed traders to hide losses using fictitious trades

The Board received risk management information that was incorrect, incomplete or insufficiently detailed

Both A and B

Neither A nor B

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Question # 5

Which of the following was a key problem in the Barings Bank case?

Having the back office and front office operations under the same person

Difference in the contract sizes in the OSE and SIMEX

The different time zones that the office was trading in

Leeson was executing an arbitrage strategy even though he was not authorized to do so

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Question # 6

The retrocession insurance cover was provided by

Fortress Re and other insurers

The Fortress Re reinsurers only

The fronting insurance companies

Fortress Re and their reinsurers

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Question # 7

The key people involved in the application of good governance and risk management must:

I. be trustworthy

II. be honest

III. be approved by the local regulator

IV. treat others fairly at all times

I, II, and III only

III only

I, II, and IV only

I, II, III and IV above

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Question # 8

PRMIA is incorporated as:

A for-profit corporation

A non-profit corporation

A charitable trust

A non profit corporation with for profit subsidiaries

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Question # 9

Select the one correct statement relative to Barings Bank.

Proprietary and agency trading were combined and therefore did not increase risk.

Proprietary and agency trading were separate and therefore did not increase risk.

Proprietary and agency trading were combined and therefore did increase risk.

Proprietary and agency trading were separate and did increase risk.

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Question # 10

According to the PwC report China Aviation Oil, in order to avoid recording and reporting losses, the company adopted which approach covering up its losses?

selling short-term options with extremely low-risk profiles to generate premiums to cover the cost of closing out loss-making option positions

selling long-term options with extremely low-risk profiles to generate premiums to cover the cost of closing out loss-making option positions

selling short-term options with extremely high-risk profiles to generate premiums to cover the cost of closing out loss-making option positions

selling long-term options with extremely high-risk profiles to generate premiums to cover the cost of closing out loss-making option positions

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Question # 11

Which of the following was not cited within the chain of miscalculations and deferred decisions for the downfall of Fannie Mae and Freddie Mac

Extreme exposure to foreign currency exposures and losses from non-US$ mortgages

Lawmakers postponed strenghtening regulatory oversight due to partisan infighting

Under-management and under-measurement of market and liquidity risk

They did not raise enough capital to weather the storm as the housing slump expanded

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Question # 12

The Chair of the PRMIA Board of Directors may hold the following offices:

Parliamentarian

Secretary

Vice Chair

Chair only

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Question # 13

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

I, II and III only

I, III and IV only

I and III only

All of these are expected of the Financial Accounting and Reporting Infrastructure

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Question # 14

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

The general downturn in the economy of the US

By lowering its own credit underwriting standards

Acquisitions like Long Beach and Providian

Catastrophic losses in its own credit card division

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Question # 15

The early 2003 trading strategy of China Aviation oil was

to buy calls and sell puts

to buy puts and sell calls

to sell puts and buy calls

to sell calls and buy puts

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Question # 16

Every PRMIA chapter is designed to serve the local needs of members, so they often have fairly independent planning structures and ideas. According to the PRMIA Bylaws, Regional Chapters and Regional Directors:

Can have their own offices, bylaws and regulations provided they do not conflict with those of PRMIA

Can have meetings that only local members are allowed to attend

Can sign contracts on behalf of PRMIA without prior approval from the Board of Directors

All of the above

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