LATEST 8011 MOCK EXAM, 8011 VERIFIED ANSWERS

Latest 8011 Mock Exam, 8011 Verified Answers

Latest 8011 Mock Exam, 8011 Verified Answers

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PRMIA 8011 (Credit and Counterparty Manager (CCRM) Certificate) Exam is a globally recognized certification that demonstrates a professional's expertise in managing credit and counterparty risk. 8011 exam evaluates a candidate's knowledge of principles, practices, and regulations in credit risk management, counterparty risk management, and credit derivatives.

PRMIA 8011 CCRM Certificate exam is an essential certification for professionals who desire to work in the highly competitive field of risk management. The certificate offers a competitive advantage by providing candidates with a deep understanding of the latest techniques in credit and counterparty risk management. 8011 Exam equips candidates with the skills necessary to identify and evaluate risks associated with credit and counterparty transactions, enabling them to make informed decisions and contribute to the success of their organization.

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PRMIA 8011 Exam is widely recognized as a leading certification for professionals in the credit and counterparty risk management field. It is an internationally recognized certification that is trusted by financial institutions around the world. Achieving this certification demonstrates a commitment to professional development and a dedication to excellence in the field of credit and counterparty risk management.

PRMIA Credit and Counterparty Manager (CCRM) Certificate Exam Sample Questions (Q223-Q228):

NEW QUESTION # 223
Which of the following are valid approaches for extreme value analysis given a dataset:
I. The Block Maxima approach
II. Least squares approach
III. Maximum likelihood approach
IV. Peak-over-thresholds approach

  • A. All of the above
  • B. I, III and IV
  • C. II and III
  • D. I and IV

Answer: D

Explanation:
For EVT, we use the block maxima or the peaks-over-threshold methods. These provide us the data points that can be fitted to a GEV distribution.
Least squares and maximum likelihood are methods that are used for curve fitting, and they have a variety of applications across risk management.


NEW QUESTION # 224
Which of the following are measures of liquidity risk
I. Liquidity Coverage Ratio
II. Net Stable Funding Ratio
III. Book Value to Share Price
IV. Earnings Per Share

  • A. III and IV
  • B. I and II
  • C. II and III
  • D. I and IV

Answer: B

Explanation:
In December 2009 the BIS came out with a new consultative document on liquidity risk. Given the events of
2007 - 2009, it has been clear that a key characteristic of the financial crisis was the inaccurate and ineffective management of liquidity risk The paper two separate but complementary objectives in respect of liquidity risk management: The first objective relates to the short-term liquidity risk profile of institution, and the second objective is to promote resiliency over longer-term time horizons. The paper identifies the following two ratios - you should be aware of these - though I am not sure if these will show up in the PRMIA exam:
1. Liquidity Coverage Ratio addresses the ability of an institution to survive an acute liquidity risk stress scenario lasting one month. It is calculated as follows:
Liquidity Coverage Ratio = Stock of high quality liquid assets/Net cash outflows over a 30-day time period
2. Net Stable Funding Ratio has been developed to capture structural issues related to funding choices.
Net Stable Funding Ratio = Available amount of stable funding/Required amount of stable funding Both ratios should be equal to or greater than 1. The statement contains detailed definitions of what is included or excluded from each of the terms used in the calculations for each of the ratios. In addition, the standard also describes the what the 'acute' scenario should include (things such as a 3 notch credit downgrade, reduction in retail deposits etc) Therefore Choice 'b' is the correct answer. Book Value to Share Price and Earnings Per Share are accounting measures unrelated to liquidity.


NEW QUESTION # 225
If the 99% VaR of a portfolio is $82,000, what is the value of a single standard deviation move in the portfolio?

  • A. 0
  • B. 1
  • C. 2
  • D. 3

Answer: A

Explanation:
Remember that VaR is merely a multiple of the portfolio's standard deviation. The multiple is determined by the confidence level, and for a 99% confidence level this multiple is 2.3264 (=-NORMSINV(1%) in Excel).
Therefore one standard deviation at this level of confidence would be equal to VaR/2.3264.
In addition to the Z-value at 99% confidence, you should also remember what the Z value is for a 95% level of confidence, as PRM questions may expect you to know these. The standard Windows calculator allowed in the exam does not allow you to calculate these, so it is safer to just remember these values.


NEW QUESTION # 226
If the loss given default is denoted by L, and the recovery rate by R, then which of the following represents the relationship between loss given default and the recovery rate?

  • A. R = 1 - L
  • B. R = 1 / L
  • C. R = 1 + L
  • D. L = 1 + R

Answer: A

Explanation:
When a default occurs, the proportion of the exposure represented by the recovery rate is recovered. For example, if the recovery rate is 40% for a loan, the actual loss in the event of a default would be $60 for a
$100 loan. In other words, the loss given default = 1 - recovery rate. Hence Choice 'd' is the correct answer.
All other choices are incorrect.


NEW QUESTION # 227
As part of designing a reverse stress test, at what point should a bank's business plan be considered unviable (ie the point where it can be considered to have failed)?

  • A. Where EBITDA for the year is forecast to be negative
  • B. When the regulatory capital of the bank has been exhausted
  • C. Where large known losses have been incurred on the bank's positions
  • D. When the realization of risks leads market participants to lose confidence in the bank as a counterparty or a business worthy of funding

Answer: D

Explanation:
As part of a reverse stress test, a firm has to identify and assess the scenarios most likely to cause it to fail, or in other words using the language used by the FSA in the UK, for its current business plan to become unviable. A firm's business plan should be considered to become unviable at the point that crystallizing risks cause the market to lose confidence it it, with the consequence that counterparties and other stakeholders are unwilling to transact with it or provide capital to the firm and, where releant, that existing counterparties may seek to terminate their contracts. Recent experience suggests that this point is reached well before a firm's regulatory capital is exhausted.
Large known losses, or negative EBITDA (earnings before interest , tax, depreciation and amortization) may be indicators or contribute to the loss of confidence, but do not of themselves make the current business plan unviable. Therefore Choice 'd' is the correct answer.


NEW QUESTION # 228
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