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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

As LTCM started to have major losses, it compounded its problems by doing what?

A.

Trying to borrow more money from major money centre banks

B.

Issuing Subordinated Debt

C.

Returning capital to the general partners before others

D.

Unwinding its' more liquid trades thereby creating more liquidity risk overall

The financial intermediary services provided by Fannie Mae and Freddie Mac were designed to

A.

Offer loans directly to the consumer

B.

Compete directly with banks in selling mortgaged to would-be home owners

C.

Repackage mortgage loans made by banks and sell them on to investors as asset backed securities

D.

Buy mortgage-backed loans for banks and keep them all on their books, using them as collateral for the US government to borrow

National Australia Bank and Barings cases are similar in that:

A.

Losses kept increasing while rogue trader(s) hid their positions

B.

The back offices had inadequate procedures

C.

Both A and B

D.

None of the above

A PRMIA member is offered a highly paid work assignment on the condition that some aspects of assignment are not to be done according to PRMIA standards.

What should they do?

A.

Perform the assignment, noting in the final report the standards to which the assignment was done

B.

Accept the assignment, produce and deliver two reports according to both standards

C.

Accept the assignment, and prior to doing any work, report the conflict of interest to the organization's compliance department

D.

The PRMIA member should place the integrity of the risk management profession and users of risk management above their own personal interests, and refuse the work

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

When Fannie Mae and Freddie Mac were taken under US government conservatorship, which of the following was not included within their operating mandate?

A.

Fannie Mae and Freddie Mac will continue to buy home loans from banks to repackage them as mortgage-backed securities

B.

The US government will provide capital as needed in return for preferred shares in the companies

C.

The US government will buy mortgage-backed securities in the open market as needed

D.

There was a 2 year limit to the conservatorship

Unlike the case at Barings Bank, National Australia Bank:

A.

Had a risk management infrastructure that was credited with doing its' job well, despite the losses

B.

Was not dealing in derivatives

C.

Had a Board of Directors that was unaware of the true nature of trading activities

D.

Had a separation of duties between trading and back office

Which US regulatory authority resolved the restructuring of Washington Mutual?

A.

The Office of Thrift Supervision

B.

Federal Deposit Insurance Corporation

C.

The Federal Reserve Bank

D.

None of the above

Metallgesellschaft's retail contracts were

A.

unhedged

B.

hedged using exchange-traded futures with longer maturities than the retail contracts

C.

hedged using exchange-traded futures with shorter maturities than the retail contracts

D.

fully hedged using exchange-traded futures of the same maturities as the retail contracts