PRMIA 8011 Test Labs & Valid 8011 Torrent

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PRMIA 8011, also known as the Credit and Counterparty Manager (CCRM) Certificate exam, is one of the most rigorous assessments in the financial industry for risk management professionals. Credit and Counterparty Manager (CCRM) Certificate Exam certification is designed to provide professionals with the necessary knowledge and skills to manage credit risk, counterparty risk, and capital allocation efficiently. The CCRM certification is globally recognized and awarded by the Professional Risk Managers’ International Association (PRMIA).

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PRMIA 8011 Certification Exam is a highly specialized certification that is designed to provide professionals with the knowledge and skills needed to manage credit and counterparty risk effectively. It covers a range of topics related to credit and counterparty risk and is intended for professionals who work in the financial industry. Credit and Counterparty Manager (CCRM) Certificate Exam certification is highly valued in the financial industry and is recognized by many leading financial institutions around the world.

PRMIA 8011 Certification Exam is ideal for professionals who are involved in credit risk management, counterparty risk management, credit analysis, lending, and other related fields. Credit and Counterparty Manager (CCRM) Certificate Exam certification exam is designed to help individuals develop a deep understanding of the principles, concepts, and practices of credit risk and counterparty risk management. Individuals who pass the certification exam will be able to demonstrate their knowledge and expertise in this field, which can help them advance their careers and improve their job prospects.

PRMIA Credit and Counterparty Manager (CCRM) Certificate Exam Sample Questions (Q130-Q135):

NEW QUESTION # 130
Which of the following statements is correct?

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

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 # 131
What is the annualized steady state volatility under a GARCH model where alpha is 0.1, beta is 0.8 and omega is 0.00025?

A. 0.1
B. 0.0025
C. 0.05
D. 0.08

Answer: C

Explanation:
Steady state variance under the GARCH model is given by the formula #/(1 - # - #). In this case, steady state variance therefore works out to 0.00025/(1 - 0.1 - 0.8) = 0.0025. Since this is the variance, volatility is the square root of 0.0025, which works out to 0.05.
Thus, 5% (=0.05) is the correct answer, and the others are incorrect.
Also recall the following in respect of GARCH:
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NEW QUESTION # 132
Which of the following are considered asset based credit enhancements?
I. Collateral
II. Credit default swaps
III. Close out netting arrangements
IV. Cash reserves

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

Answer: C

Explanation:
Credit enhancements come in two varieties: counterparty based, where the exercise of the credit enhancement requires a third party to pay, and this includes guarantees and CDS contracts. Asset based credit enhancements are based upon a physical asset in possession, and these include collateral and balances owed on other trades or transactions, and availed through close out netting arrangements.
Of the listed choices, I and III are asset based credit enhancements, and II is third party based. Cash reserves are not credit enhancements (unless held as collateral).

NEW QUESTION # 133
A corporate bond maturing in 1 year yields 8.5% per year, while a similar treasury bond yields 4%. What is the probability of default for the corporate bond assuming the recovery rate is zero?

A. 4.50%
B. 8.50%
C. 4.15%
D. Cannot be determined from the given information

Answer: C

Explanation:
The probability of default would make the future cash flows from both the bonds identical. If p be the probability of default, the cash flows from the risky corporate bond would be
= (cash flows in the event of default x probability of default) + (cash flows without default x (1 - probability of default))
=> p*0 + (1 - p)*(1 + 8.5%) = (1 - p)*1.085.
The cash flows from the treasury bond would be 1.04. These two should be equal, ie,
1.04 = (1- p)*1.085, implying p = 4.15%.
(Note: The above is a simplification intended for the exam. In reality investors would demand a 'credit risk premium' for the corporate bond over and above the expected default loss rate. They are unlikely to be happy with just being compensated with exactly the expected default loss rate plus the risk-fre rate because the expected default loss rate itself is uncertain. They would demand some premium over and above what the default rate alone might mathematically imply above the risk free rate. In this question, this credit risk premium is ignored.)

NEW QUESTION # 134
Under the internal ratings based approach for risk weighted assets, for which of the following parameters must each institution make internal estimates (as opposed to relying upon values determined by a national supervisor):

A. Loss given default
B. Probability of default
C. Exposure at default
D. Effective maturity

Answer: B

Explanation:
Regardless of the approach being followed by a bank (ie, whether foundation IRB or advanced IRB), it must make its own estimates for the probability of default. Banks following the foundation IRB approach may use values set by the supervisor for the other three parameters, though those following the advanced IRB approach may use their own estimates for all four inputs. (This is also the difference between advanced IRB and the foundation IRB approaches.) Therefore Choice 'a' is the correct answer.
Also note the four difference elements that go as inputs to the internal ratings based approach in the choices provided.

NEW QUESTION # 135
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PRMIA 8011 Test Labs & Valid 8011 Torrent

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PRMIA Credit and Counterparty Manager (CCRM) Certificate Exam Sample Questions (Q130-Q135):