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8004 PRMIA PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics Free Practice Exam Questions (2025 Updated)

Prepare effectively for your PRMIA 8004 PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics certification with our extensive collection of free, high-quality practice questions. Each question is designed to mirror the actual exam format and objectives, complete with comprehensive answers and detailed explanations. Our materials are regularly updated for 2025, ensuring you have the most current resources to build confidence and succeed on your first attempt.

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Total 110 questions

The Q4 2003 trading strategy of China Aviation Oil was

A.

to buy puts and sell calls

B.

to buy calls and sell puts

C.

to sell puts and buy calls

D.

to sell calls and buy puts

Which items below were at the core of the problems at Bankgesellschaft Berlin?

A.

Political corruption and poor management

B.

Over exposure to the property market

C.

Rash guarantees given to investors in property linked funds

D.

All of the above

Which of the following is FALSE?

A.

Nick Leeson also ran the back office for his trading area

B.

Nick Leeson dealt in complex derivatives lacking transparency of pricing

C.

SIMEX made inquiries to Barings Bank about large margin calls on its positions

D.

Nick Leeson claimed to be running an arbitrage book

The sensitivity analysis required under IFRS would have done what for China Aviation Oil?

A.

Provided investors and analysts with insight into the dynamics of value changes, and the sensitivity of fair value to the underlying drivers of interest rates, exchange rates, and commodity prices

B.

Only provided the intrinsic value of its outstanding option positions

C.

Only provided the time value of its outstanding option position

D.

None of the above

Which of the following is NOT part of the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct) Guidance on Ethical Behavior?

A.

Ensure globally accepted standards are adhered to at all costs

B.

Respect local customs

C.

Respect local laws and regulations

D.

Take responsibility for your work

As a result of the US government's intervention, which of the following is true?

A.

The cost of borrowing for Fannie Mae and Freddie Mac should decline because the government will be standing behind their debts and the buying and selling of mortgage debt will continue

B.

The cost of borrowing for house buyers will rise because of the risk premium now built into the cost of such a government guarantee

C.

The systemic risks still remain in the housing market because it increases the US government's debt

D.

Foreign Central Banks will continue to sell their holdings of Fannie Mae and Freddie Mac securities

Which of the following would have contributed to noticing and preventing Leeson's violations at Barings?

A.

Separation of front and back offices

B.

More senior level involvement at Barings regarding use of derivatives

C.

Recognition that large profits can be an indicator of higher risk

D.

All of the above

Washington Mutual's acquisition of Long Beach Financial changed its business model and increased its credit loss profile because

A.

The resulting loss rate for Washington Mutual was more than 3 times higher than other mortgage lenders tracked by the FDIC

B.

the two banks were focussed in different markets

C.

Long Beach Financial had losses which it hadn't realized at the time of the takeover

D.

Of a general deterioration of credit quality generally

Which of the following should NOT be part of the Risk Management Infrastructure?

A.

Define the organization's definition of risk management as articulated by the Board in clear and uncertain terms

B.

Include financial risk management, compliance and external reporting and, to the extent that resources allow, should exclude legal or accounting

C.

Be independently staffed and report to an employee who is on the Executive Committee (Operating Committee) but who is NOT a business unit leader

D.

Review continually the application of the Principles of Good Governance to the Risk Management Infrastructure, financial accounting and reporting infrastructure and the organization as a whole

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.

I, II, III, and IV

B.

IV, III, II, and I

C.

II, I, IV, and III

D.

III, II, IV, and I

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

A.

Vote in Board elections

B.

Attend at least one PRMIA chapter meeting per year

C.

Adhere to the PRMIA Standards of Best Practice, Conduct and Ethics

D.

All of the above

While doing a work assignment, a PRMIA member notices behaviour that is outside the ethical standards of their client organization and reports the matter to their immediate supervisor in the organization (if he or she wasn't the one engaging in such behaviour). The matter is neither progressed nor actioned.

The PRMIA member should:

A.

stay silent on the basis that they have reported it

B.

report the matter to their PRMIA chapter

C.

contact the Whistle-Blowing Hotline of the organization or, if none exits, to the PRMIA Ethics Committee for guidance and assistance

D.

report the matter to the organization's Compliance Dept.

The key people involved in the application of good governance and risk management must:

I. be trustworthy

II. be honest

III. be approved by the local regulator

IV. treat others fairly at all times

A.

I, II, and III only

B.

III only

C.

I, II, and IV only

D.

I, II, III and IV above

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