Free PRMIA 8010 Exam Questions

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Total 242 Questions | Updated On: Feb 02, 2022

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Question 1

Under the KMV Moody's approach to calculating expectingdefault frequencies (EDF), firms' default on obligations is likely when:

A : pected asset values one year hence are below total liabilities

B : et values reach a level below short term debt

C : et values reach a level below totalliabilities

D : et values reach a level between short term debt and total liabilities

Answer: D

Question 2

A financial institution is considering shedding a business unit to reduce its economic capital requirements. Which of the following is an appropriate measure of theresulting reduction in capital requirements?

A : cremental capital for the business unit in consideration

B : oportionate capital for the business unit in consideration

C : rcentage of total gross income contributed by the business unit in question

D : rginal capital for the business unit in consideration

Answer: A

Question 3

The Options Theoretic approach to calculating economic capital considers the value of capital as being equivalent to a call option with a strike price equal to:

A : notional value ofthe debt

B : market value of the debt

C : value of the firm

D : value of the assets

Answer: A

Question 4

Which of the following carry greater counterparty risk: a forward contract on a 10 year note, or a commercial paper carrying a AA credit rating with identicalmaturity and notional?

A : forward contract has greater credit risk as its future gains are unknown

B : edit risk can not be compared in these terms

C : ey both carry the same credit risk

D : commercial paper has greater credit risk as the entire notional is outstanding

Answer: D

Question 5

In respect of operational risk capital calculations, the Basel II accord recommends a confidence leveland time horizon of

A : 99.9% confidence level over a 10 day time horizon

B : 99% confidence level over a 10 year time horizon

C : 99% confidence level over a 1 year time horizon

D : 99.9% confidence level over a 1 year time horizon

Answer: D

Page: 1 / 49

Total 242 Questions | Updated On: Feb 02, 2022

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