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PRMIA 8011 CCRM exam is designed to test an individual's knowledge and understanding of the principles and practices of credit risk management, counterparty credit risk management, and credit risk measurement and modeling. 8011 exam is based on a comprehensive syllabus that covers a range of topics, including credit risk analysis, credit derivatives, credit portfolio management, and the regulatory framework governing credit risk.

PRMIA 8011 (Credit and Counterparty Manager (CCRM) Certificate) Certification Exam is a globally recognized certification exam designed for credit and counterparty risk managers. 8011 exam is conducted by the Professional Risk Managers' International Association (PRMIA), which is a non-profit organization that aims to promote best practices in risk management across the world. The CCRM certificate is specifically designed for professionals who are involved in managing credit and counterparty risks in financial institutions, corporations, and government agencies.

PRMIA 8011 Exam covers a wide range of topics related to credit risk and counterparty risk, including credit analysis, credit ratings, credit derivatives, credit portfolio management, counterparty risk management, and more. The program provides professionals with a comprehensive understanding of the principles, tools, and techniques used in credit and counterparty risk management. 8011 exam is designed to test the knowledge and skills of professionals in these areas, and those who pass the exam will receive the PRMIA CCRM Certificate.

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PRMIA Credit and Counterparty Manager (CCRM) Certificate Exam Sample Questions (Q274-Q279):

NEW QUESTION # 274
Which of the following statements is correct?

• A. Market liquidity risk is idiosyncratic while funding liquidity risk is not
• B. Market liquidity risks present themselves in the form of higher bid offer spreads
• C. Dynamic simulations of liquidity needs require an assumption of counterparty risk remaining constant
• D. Funding liquidity risks present themselves in the form of an adverse market impact on prices from a trade

Answer: B

Explanation:
Simulations of liquidity needs can be of various types: historical simulations, where the current positions are subjected to the kind of liquidity shocks experienced in the past; static simulations, where a static view of current positions, counterparty credit position, and the business is considered; and dynamic simulations where all factors are dynamically changed including counterparty credit standing, changes to the current portfolio and behavioural aspects of the business. Choice 'b' is incorrect as dynamic simulations require no such assumptions.
Liquidity risk is often thought of in terms of market liquidity risk and funding liquidity risk. Market liquidity risk relates to the the liquidity for a particular type of asset drying up. For example, during the 2007-2009 crisis a large number of corporate bonds and structured products became extremely illiquid. Market liquidity risk manifests itself in the form of higher bid offer spreads, higher pricde impact, and a reduction in the normal market size (ie, the 'normal' size of a trade for which a dealer quote is valid for). Therefore Choice 'd' is correct. Similarly, Choice 'a' is incorrect as adverse price impact results from market liquidity risk and not funding liquidity risk.
Market liquidity risk applies to the entire market and all its participants. It is not idiosyncratic. Therefore Choice 'c' is incorrect too. Funding liquidity risk on the other hand applies to an individual institution that is under liquidity stress in the sense of not being able to meet its obligations such as margin or collateral calls because of a lack of liquid assets. Thus it is funding liquidity that is idiosyncratic. Market liquidity risk often leads to funding liquidity risks materializing as firms are unable to get to the funds they were relying upon due to assets becoming illiquid.

NEW QUESTION # 275
The key difference between 'top down models' and 'bottom up models' for operational risk assessment is:

• A. Top down approaches to operational risk calculate the implied operational risk using available data such as income volatility, capital etc; while bottom up approaches use causal factors, risk drivers and other factors to get an aggregated estimate of risk.
• B. Top down approaches to operational risk are based upon an analysis of key risk drivers, while bottom up approaches consider causality in risk scenarios.
• C. Bottom up approaches to operational risk are based upon an analysis of key risk drivers, while top down approaches consider causality in risk scenarios.
• D. Bottom up approaches to operational risk calculate the implied operational risk using available data such as income volatility, capital etc; while top down approaches use causal factors, risk drivers and other factors to get an aggregated estimate of risk.

Answer: A

Explanation:
Top down approaches rely upon available data such as total capital, income volatility, peer group information etc and attempt to imply the capital attributable to operational risk. They do not consider firm specific scenarios or causal factors. Bottom up approaches on the other hand attempt to determine operational risk capital based upon an identification and quantification of firm specific risks. Bottom up approaches help determine a traditional loss distribution from which capital requirements can be determined at a given level of confidence.
Therefore Choice 'd' is the correct answer.

NEW QUESTION # 276
Which of the following statements are true:
I. Stress testing, if exhaustive, can replace traditional risk management tools such as value-at-risk (VaR) II. Stress tests can be particularly useful in identifying risks with new products III. Stress testing is distinct from a bank's ICAAP carried out periodically IV. Stress testing is a powerful communication tool that can convey risks to decisionmakers in an organization

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

Answer: D

Explanation:
Stress testing provides an independent and complementary perspective to other risk management tools such as value-at-risk and economic capital. Both are tools that serve similar purposes but are not interchangeable.
Stress testing, no matter how exhaustively done, can not replace other tools such as those based on analytical or historical models. It can provide a useful sense check to validate models and assumptions, but is not a replacement for traditional techniques. Therefore statement I is false.
Stress testing can certainly help identify risks with new products for which historical data may be limited, and analytical models may be based upon many unproven assumptions. It can help challenge the risk characteristics of new products where stress situations have not been observed in the past. Therefore statement II is correct.
ICAAP stands for the 'internal capital adequacy assessment process' performed by a bank (remember the acronym and its expansion). Stress testing is an integral part of a firm's ICAAP, and not distinct. It is one of the elements of the internal process. Therefore statement III is false.
Statement IV is correct as stress testing is indeed a powerful tool that can communicate risks throughout the organization as the stress scenarios are easier to comprehend than arcane statistical models. They are also easier to explain to regulators, and are a powerful communication tool.
Thus Choice 'c' is the correct answer.

NEW QUESTION # 277
Which of the following statements is true?

• A. Deterioration in the balance sheets of key counterparties is a concern for a liquidity manager even though it may not immediately affect a firm
• B. For an issuer of life insurance policies, longevity risk can lead to reserves falling short of payments due
• C. Under times of liquidity stress, both prepayments of loans extended and expected withdrawals from on- demand deposits will decrease
• D. Only the drawn portions of credit facilities extended to clients by a bank count towards its liquidity exposure

Answer: A

Explanation:
Deterioration in the balance sheets of key counterparties is a concern for a liquidity manager even though it may not immediately affect a firm, and this is true because counterparty failures may lead to liquidity shortfalls for an institution for no fault of its own. It is important for a liquidity risk manager to watch the health of key counterparties where exposure is concentrated and take timely steps to reduce it should the health deteriorate.
Under times of liquidity stress, prepayments of loans extended will decline while withdrawals of demand deposits are likely to increase. Both will not decrease, and therefore Choice 'b' is incorrect.
A bank is exposed to the undrawn portions of a line of credit extended to a borrower as the borrower, with superior information on its own finances, is likely to draw upon undrawn lines of credit thereby increasing the bank's exposure. Therefore Choice 'a' is incorrect. Generally, a portion of the undrawn part is counted towards a liquidity outflow.
Longevity risk is the risk facing sellers of annuities that their clients will outlive their assumptions on their length of life, while mortality risk is the downside risk for an insurer that clients will die sooner than expected causing the reserves to fall short of what is needed. Therefore Choice 'd' is not correct as the opposite is true.

NEW QUESTION # 278
If the annual default hazard rate for a borrower is 10%, what is the probability that there is no default at the end of 5 years?

• A. 59.05%
• B. 39.35%
• C. 50.00%
• D. 60.65%

Answer: D

Explanation:
A default hazard rate is the rate of default in a continuous time setting. This question is asking for probability of survival at the end of 5 years. The formula to calculate the probability of survival at the end of t years where the default hazard rate is#is e