PRMIA PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics Sample Questions:
1. The financial intermediary services provided by Fannie Mae and Freddie Mac were designed to
A) Buy mortgage-backed loans for banks and keep them all on their books, using them as collateral for the US government to borrow
B) Compete directly with banks in selling mortgaged to would-be home owners
C) Offer loans directly to the consumer
D) Repackage mortgage loans made by banks and sell them on to investors as asset backed securities
2. John Smith wants to run for election to the Board of Directors of PRMIA. To be nominated, he needs:
A) The backing of five other members and to be serving on at least one PRMIA Committee
B) To go through a screening process conducted by the Nominations Committee
C) The backing of 6% of local members
D) The backing of three other members
3. Select the one correct statement relative to Barings Bank.
A) Proprietary and agency trading were combined and therefore did increase risk.
B) Proprietary and agency trading were separate and did increase risk.
C) Proprietary and agency trading were combined and therefore did not increase risk.
D) Proprietary and agency trading were separate and therefore did not increase risk.
4. Which of the following was not considered to be a positive outcome of the Northern Rock Case Study?
A) The role of the UK government and the possible underwriting of risks by tax-payers, and the general question of Moral Hazard
B) The reform of the Deposit Protection Scheme because of its internal inconsistencies
C) The original successful business model had not stress tested sufficiently for the incidence of Low Probability, High Impact incidents
D) It emphasised the importance of effective governance arrangements within financial firms
5. 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) I, III and IV only
B) I, II and IV only
C) All of these are PRMIA Governance Principles
D) I and II only
Solutions:
| Question # 1 Answer: D | Question # 2 Answer: D | Question # 3 Answer: A | Question # 4 Answer: C | Question # 5 Answer: A |
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