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PRMIA Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition Sample Questions:

1. Which of the following are PRMIA Governance Principles?
I. Independence of Key Parties
II. Disclosure and Transparency
III. Internal Validation
IV. Solvency

A) I, II and III only
B) I, II and IV only
C) All are PRMIA Governance Principles
D) I and II only


2. The steps which the US Treasury Department and the Federal Reserve took in July 2008 to boost confidence in both Fannie Mae and Freddie Mac did not include which one of the following:

A) Reiterating their belief that both companies played a central role in the US housing finance system
B) Restricting the sale of new Fannie Mae and Freddie Mac securities only to US citizens
C) Removing the prohibition on the Treasury Department to buy both companies stock
D) Access to the Federal Reserve discount window


3. A risk assessment report generated by a PRMIA member creates an apparent conflict of interest between the PRMIA standards and those of the client organization.
Of the following, which is the correct hierarchy to follow to resolve the conflict?
I. The decision of a superior within the organization
II. PRMIA Standards
III. Guidelines from the regulators in which the organization operates
IV. The laws of the country

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


4. As a PRMIA member, you have certain responsibilities. Among these are the requirement(s) to:

A) Attend at least one PRMIA chapter meeting per year
B) All of the above
C) Adhere to the PRMIA Standards of Best Practice, Conduct and Ethics
D) Vote in Board elections


5. According to LTCM managers:

A) Stress Testing looked at the 12 biggest deals with each of their top 20 counterparties
B) Stress Testing was not necessary because their trades were hedged
C) Stress Testing was not conducted
D) Stress Testing was elaborate, complex and conducted on their entire portfolio. It included the assumptions of a major breakdown in historical correlations


Solutions:

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

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