8011 EXAM PREP, PRACTICE TEST 8011 PDF

8011 Exam Prep, Practice Test 8011 Pdf

8011 Exam Prep, Practice Test 8011 Pdf

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Thus, it leads to making your practice quite convenient. PRMIA 8011 desktop software functions on Windows-based computers and works without a functional internet connection. PRMIA 8011 Exam Questions always provide ease to their consumers. therefore, the committed team is present around the clock to fix any problem.

The CCRM exam covers a range of topics related to credit and counterparty risk management, including credit analysis, financial statement analysis, credit structuring and pricing, credit risk mitigation techniques, counterparty risk management, and regulatory requirements. 8011 Exam is designed to test the candidate's knowledge of these topics and their ability to apply this knowledge in practical situations.

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At present, PRMIA certification exam is the most popular test. Have you obtained PRMIA exam certificate? For example, have you taken PRMIA 8011 certification exam？If not, you should take action as soon as possible. The certificate is very important, so you must get 8011 certificate. Here I would like to tell you how to effectively prepare for PRMIA 8011 exam and pass the test first time to get the certificate.

PRMIA Credit and Counterparty Manager (CCRM) Certificate Exam Sample Questions (Q94-Q99):

NEW QUESTION # 94
Which of the following best describes a 'break clause ?

  • A. A break clause determines the process by which amounts due on early termination will be determined
  • B. A break clause gives either party to a transaction the right to terminate the transaction at market price at future date(s)
  • C. A break clause describes rights and obligations when the derivative contract is broken
  • D. A break clause sets out the conditions under which the transaction will be terminated upon non- compliance with the ISDA MA

Answer: B

Explanation:
A break close, also called a 'mutual put', gives either party the right to terminate a transaction at market price at a given date, or dates in the future. These are usually availed of in longer dated transactions, eg 10 years and over. For example, a 15-year swap might have a mutual put in year 5, and every 2 years thereafter.
All other choices are incorrect.


NEW QUESTION # 95
A Bank Holding Company (BHC) is invested in an investment bank and a retail bank. The BHC defaults for certain if either the investment bank or the retail bank defaults. However, the BHC can also default on its own without either the investment bank or the retail bank defaulting. The investment bank and the retail bank's defaults are independent of each other, with a probability of default of 0.05 each. The BHC's probability of default is 0.11.
What is the probability of default of both the BHC and the investment bank? What is the probability of the BHC's default provided both the investment bank and the retail bank survive?

  • A. 0.05 and 0.0125
  • B. 0.0475 and 0.10
  • C. 0.08 and 0.0475
  • D. 0.11 and 0

Answer: A

Explanation:
Since the BHC always fails when the investment bank fails, the joint probability of default of the two is merely the probability of the investment bank failing, ie 0.05.
The probability of just the BHC failing, given that both the investment bank and the retail bank have survived will be equal to 0.11 - (0.05+0.05-0.05*0.05) = 0.0125. (The easiest way to understand this would be to consider a venn diagram, where the area under the largest circle is 0.11, and there are two intersecting circles inside this larger circle, each with an area of 0.05 and their intersection accounting for 0.05*0.05. We need to calculate the area outside of the two smaller circles, but within the larger circle representing the BHC).
Refer diagram below, please excuse the awful colors.
A diagram of a bank Description automatically generated


NEW QUESTION # 96
For a corporate issuer, which of the following can be used to calculate market implied default probabilities?
I. CDS spreads
II. Bond prices
III. Credit rating issued by S&P
IV. Altman's scoring model

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

Answer: D

Explanation:
Generally, the probability of default is an input into determining the price of a security. However, if we know the market price of a security, we can back out the probability of default that the market is factoring into pricing that security. Market implied default probabilities are the probabilities of default priced into security prices, and can be determined from both bond prices and CDS spreads. Credit ratings issued by a credit agency do not give us 'market implied default probabilities', and neither does an internal scoring model like Altman's as these do not consider actual market prices in any way.
Therefore Choice 'b' is the correct answer and the others are not.


NEW QUESTION # 97
Which of the following statements is NOT true in relation to the recent financial crisis of 2007-08?

  • A. Central banks had data on the interconnections between institutions, but poor understanding and analysis meant this data was never analyzed
  • B. The existence of central counterparties could have limited the damage caused by the financial crisis
  • C. An intention to diversify from their core activities led all market participants to the same activities, which though appearing diversified at the bank's level, created a concentration risk at the systemic level
  • D. Counterparty risk was difficult to gauge as it was impossible to know who the counterparty's counterparties were

Answer: A

Explanation:
Counterparty risk was difficult to gauge as it was impossible to know who the counterparty's counterparties were - this is true as the chain of financial transactions became excessively long with no central transparency of who owed who what. Bank A's credit depended upon the health of its counterparties, whose health in turn depended upon other counterparties. Thus Choice 'd' is a correct statement.
In an attempt to diversify, banks became more like each other - chasing yield, they piled into securitized products, and chasing diversification, they piled into different types of securitized products. The system as a whole became susceptible to small shocks in the assets underlying this vast edifice of structured products.
Therefore Choice 'a' represents a correct statement.
Choice 'c' does not represent a correct statement. Central banks had little data on the interconnections between institutions. They were aware of the large volumes of OTC transactions, but had no data to figure out who was connected to who, and who had what kind of exposures.
Choice 'b' represents a correct statement. Most transactions, other than exchange cleared futures trades (which were a tiny fraction of all trades) were cleared on a bilateral basis. The existence of central counterparties (CCPs) could have limited the impact of the crisis significantly as market participants would not have lost trust in each other, and the 'collateral damage' that was witnessed from a fall in housing prices, and thereby mortgage assets, would have been more contained.


NEW QUESTION # 98
Which of the following steps are required for computing the aggregate distribution for a UoM for operational risk once loss frequency and severity curves have been estimated:
I. Simulate number of losses based on the frequency distribution
II. Simulate the dollar value of the losses from the severity distribution III. Simulate random number from the copula used to model dependence between the UoMs IV. Compute dependent losses from aggregate distribution curves

  • A. All of the above
  • B. None of the above
  • C. III and IV
  • D. I and II

Answer: D

Explanation:
A recap would be in order here: calculating operational risk capital is a multi-step process.
First, we fit curves to estimate the parameters to our chosen distribution types for frequency (eg, Poisson), and severity (eg, lognormal). Note that these curves are fitted at the UoM level - which is the lowest level of granularity at which modeling is carried out. Since there are many UoMs, there are are many frequency and severity distributions. However what we are interested in is the loss distribution for the entire bank from which the 99.9th percentile loss can be calculated. From the multiple frequency and severity distributions we have calculated, this becomes a two step process:
- Step 1: Calculate the aggregate loss distribution for each UoM. Each loss distribution is based upon and underlying frequency and severity distribution.
- Step 2: Combine the multiple loss distributions after considering the dependence between the different UoMs. The 'dependence' recognizes that the various UoMs are not completely independent, ie the loss distributions are not additive, and that there is a sort of diversification benefit in the sense that not all types of losses can occur at once and the joint probabilities of the different losses make the sum less than the sum of the parts.
Step 1 requires simulating a number, say n, of the number of losses that occur in a given year from a frequency distribution. Then n losses are picked from the severity distribution, and the total loss for the year is a summation of these losses. This becomes one data point. This process of simulating the number of losses and then identifying that number of losses is carried out a large number of times to get the aggregate loss distribution for a UoM.
Step 2 requires taking the different loss distributions from Step 1 and combining them considering the dependence between the events. The correlations between the losses are described by a 'copula', and combined together mathematically to get a single loss distribution for the entire bank. This allows the 99.9th percentile loss to be calculated.


NEW QUESTION # 99
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