PRMIA 8008 Valid Dump : PRM Certification - Exam III: Risk Management Frameworks, Operational Risk, Credit Risk, Counterparty Risk, Market Risk, ALM, FTP - 2015 Edition

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Exam Code: 8008

Exam Name: PRM Certification - Exam III: Risk Management Frameworks, Operational Risk, Credit Risk, Counterparty Risk, Market Risk, ALM, FTP - 2015 Edition

Updated: Sep 05, 2025

Q & A: 359 Questions and Answers

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PRMIA PRM Certification - Exam III: Risk Management Frameworks, Operational Risk, Credit Risk, Counterparty Risk, Market Risk, ALM, FTP - 2015 Edition Sample Questions:

1. Which of the following is true in relation to the application of Extreme Value Theory when applied to operational risk measurement?
I. EVT focuses on extreme losses that are generally not covered by standard distribution assumptions II. EVT considers the distribution of losses in the tails III. The Peaks-over-thresholds (POT) and the generalized Pareto distributions are used to model extreme value distributions IV. EVT is concerned with average losses beyond a given level of confidence

A) I, II and III
B) I and IV
C) I, II and IV
D) II and III


2. Which of the following best describes a 'break clause ?

A) A break clause determines the process by which amounts due on early termination will be determined
B) A break clause gives either party to a transaction the right to terminate the transaction at market price at future date(s)
C) A break clause sets out the conditions under which the transaction will be terminated upon non-compliance with the ISDA MA
D) A break clause describes rights and obligations when the derivative contract is broken


3. A derivative contract has a negative current replacement value. Which of the following statements is true about its loan equivalent value for credit risk calculations over a 2-year horizon?

A) Since the derivatives contract has a negative current replacement value, exposure will be zero.
B) The current exposure can be used for loan equivalence calculations as that is an unbiased proxy for the future value.
C) The credit exposure will be a given quintile of the expected distribution of the value of the derivatives contract in the future.
D) The notional value of the derivatives contract should be used for loan equivalence calculations.


4. The CDS quote for the bonds of Bank X is 200 bps. Assuming a recovery rate of 40%, calculate the default hazard rate priced in the CDS quote.

A) 5.00%
B) 3.33%
C) 0.80%
D) 2.00%


5. According to the Basel framework, reserves resulting from the upward revaluation of assets are considered a part of:

A) Tier 3 capital
B) All of the above
C) Tier 1 capital
D) Tier 2 capital


Solutions:

Question # 1
Answer: A
Question # 2
Answer: B
Question # 3
Answer: C
Question # 4
Answer: B
Question # 5
Answer: D

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