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With respect to the Purpose of Professional Standards, in the event of any difference in standards between local laws/rules and those of PRMIA, members must

A.

use their best judgment

B.

abide by the applicable laws, rules, and regulations of PRMIA and any government and/or regulatory bodies

C.

comply with the higher standard under all circumstances

D.

refer the matter to their supervisor

Finite insurance is reinsurance which

A.

transfers only a limited amount of risk at the usual reinsurance price

B.

transfers the total risk at less cost than traditional reinsurance

C.

transfers the total risk at the usual reinsurance price

D.

transfers only a limited amount of risk at less cost than traditional reinsurance

The problems which initiated the crisis at Northern Rock during the summer of 2007 were:

A.

Large customer withdrawals despite the UK regulator and the UK Treasury giving assurances that the bank was solvent

B.

Doubts arising about the viability of the business model which necessitated Bank of England intervention

C.

A general lack of confidence in mortgage backed securities associated in large part with developments in the US sub-prime mortgage market, and doubts emerging about the viability of the Northern Rock business model

D.

A depositor run on the bank, following doubts about the viability of the Northern Rock business model

Several clients, including Procter and Gamble took legal action against Bankers Trust, claiming Bankers Trust

A.

sold them derivative products without properly advising them of the relevant risks

B.

did not honour its contractual obligations to pay

C.

was involved in accounting fraud

D.

hid profits

For the sentence

"The organization should have at its disposal employees who have adequate _________, ________ and _______ to perform the tasks assigned to them",

Choose the correct combination of words from the following options:

A.

knowledge, skills, expertise

B.

experience, skills, previous successes

C.

risk appetite, knowledge, expertise

D.

track record, expertise, skills

The Fortress Re finite reinsurance model

A.

allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability

B.

allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid annual premiums to cover these policies, and as the risks were spread out over the year the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability

C.

allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the future premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability

D.

allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, but as the risks were spread out over time the future premiums were not accounted for as current liabilities on the books of the pool members, thus giving a false impression of profitability

According to the Group of 30 Report, dealers and end-users are encouraged to:

A.

Use separate trading agreements for interest rate derivatives, equity derivatives and foreign exchange transactions.

B.

Use a common trading agreement for interest rate and equity derivatives but a separate agreement for foreign exchange transactions.

C.

Use one trading agreement for foreign exchange forwards and another for foreign exchange options.

D.

Use a single master trading agreement as widely as possible with each counter party.

The multi-dimensional risk problem at Northern Rock did not include which one of the combinations of the following?

A.

LPHI Risk; Business Model; Solvency vs. Liquidity: and Deposit Protection

B.

Corporate Governance; Moral Hazard; Role of Government; and Credit Risk

C.

Deposit Protection; Moral Hazard; Business Model; and LPHI Risk

D.

Business Model; Corporate Governance; Moral Hazard; and Deposit Protection

The Risk Management Infrastructure of an organization must:

I. To the extent possible, avoid silos of control and oversight

II. Have budgets set by the business unit leaders

III. Actively provide ongoing professional development for risk management staff and require them to be committed to standards of best practice, conduct and ethics in their work

IV. Provide general risk management and related corporate governance training for employees of the organization as a Whole

A.

I only

B.

I, III and IV only

C.

I and III only

D.

All of these are expected of the Risk Management Infrastructure

The Bankers Trust Case Study is about:

A.

overexposure to the real estate market

B.

large losses at the proprietary trading desk

C.

reliance on thinly traded derivatives to hedge

D.

failure to guard its clients' best interests