PRMIA 8011 dumps VCE file - Testking 8011 real dumps
PRMIA 8011 dumps VCE file - Testking 8011 real dumps
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Tags: Reliable 8011 Test Notes, 8011 Discount, Reliable 8011 Exam Prep, Test 8011 Guide Online, Practice 8011 Questions
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PRMIA 8011 exam covers a range of topics related to credit and counterparty risk management, including credit analysis and evaluation, credit portfolio management, counterparty risk management, and regulatory frameworks. 8011 exam is designed to test candidates' understanding of the key concepts and principles of credit risk management, including the use of credit rating models and credit scoring methodologies.
PRMIA 8011 Credit and Counterparty Manager (CCRM) Certificate is a prestigious professional certification that demonstrates a deep understanding of credit and counterparty risk management. 8011 examination is designed to test the knowledge and skills of individuals who manage credit and counterparty risk in financial institutions, banks, and other financial service providers. 8011 exam covers a wide range of topics, including credit risk analysis, counterparty credit risk, credit risk measurement, credit risk mitigation, and credit risk modeling.
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Quiz 2025 PRMIA The Best 8011: Reliable Credit and Counterparty Manager (CCRM) Certificate Exam Test Notes
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PRMIA Credit and Counterparty Manager (CCRM) Certificate Exam Sample Questions (Q271-Q276):
NEW QUESTION # 271
Which of the following statements are true:
I. Credit risk and counterparty risk are synonymous
II. Counterparty risk is the contingent risk from a counterparty's default in derivative transactions III. Counterparty risk is the risk of a loan default or the risk from moneys lent directly IV. The exposure at default is difficult to estimate for credit risk as it depends upon market movements
- A. I and II
- B. II and III
- C. III and IV
- D. II
Answer: D
Explanation:
Credit risk is the risk from a borrower defaulting on moneys lent. Counterparty risk, on the other hand, is the risk that a counterparty to a derivative transaction will be unable to pay at the time the transaction is in-the- money.
Credit risk therefore relates more to the banking book, counterparty risk relates more to the trading book.
Credit risk and counterparty risk differ in that for counterparty risk, the amount at risk fluctuates for counterparty risk depending upon the value of the underlying derivative. Counterparty risk generally starts at zero, for most swaps and other derivatives are near zero value at inception. Over time, as the prices of the underlying instruments move, one party ends up owing money to the other. A deterioration in the financial situation of the party owing moneys may lead to a loss to the other party, resulting in counterparty risk.
Counterparty risk can also arise from stock lending operations and repo trades.
Credit risk on the other hand is the traditional risk of default by a borrower, or a bank's customer who has taken a loan or has an overdraft or other credit facility.
Statement I is therefore incorrect as credit risk and counterparty risks are different.
Statement II is correct as counterparty risk is 'contingent' in the sense it arises only if the transaction with the counterparty ends up being in-the-money, and the counterparty defaults.
Statement III is incorrect. The statement describes credit risk.
Statement IV is incorrect, as the exposure is known for moneys lent. Derivative exposures for the future are difficult to estimate, they can even turn from moneys owed to moneys due as the value of the underlying changes.
NEW QUESTION # 272
Which of the following is a most complete measure of the liquidity gap facing a firm?
- A. Marginal liquidity gap
- B. Liquidity at Risk
- C. Residual liquidity gap
- D. Cumulative liquidity gap
Answer: C
Explanation:
Marginal liquidity gap measures the expected net change in liquidity over, say, a day. It is just equal to the liquidity inflow minus liquidity outflow. The cumulative liquidity gap measures the aggregate change in liquidity from a point in time, in other words it is just the summation of the marginal liquidity gap for each of the days included in the period under consideration. The residual liquidity gap goes one step further and adds available 'opening balance' of liquidity to the cumulative liquidity gap to reveal the days or times when the net liquidity is most at risk.
Liquidity at Risk measures the expected time to survival at a certain confidence level applied to the firm's cash flows - and is not a measure of the liquidity gap.
Therefore Choice 'a' is the correct answer.
NEW QUESTION # 273
Which of the following can be used to reduce credit exposures to a counterparty:
I. Netting arrangements
II. Collateral requirements
III. Offsetting trades with other counterparties
IV. Credit default swaps
- A. I, II, III and IV
- B. I and II
- C. III and IV
- D. I, II and IV
Answer: D
Explanation:
Offsetting trades with other counterparties will not reduce credit exposure to a given counterparty. All other choices represent means of reducing credit risk. Therefore Choice 'c' is the correct answer.
NEW QUESTION # 274
The returns for a stock have a monthly volatilty of 5%. Calculate the volatility of the stock over a two month period, assuming returns between months have an autocorrelation of 0.3.
- A. 10%
- B. 5%
- C. 8.062%
- D. 7.071%
Answer: C
Explanation:
The square root of time rule cannot be applied here because the returns across the periods are not independent.
(Recall that the square root of time rule requires returns to be iid, independent and identically distributed.) Here there is a 'autocorrelation' in play, which means one period's returns affect the returns of the other period.
This problem can be solved by combining the variance of the returns from the two consecutive periods in the same way as one would combine the variance of different assets that have a givencorrelation. In such cases we know that:
Variance (A + B) = Variance(A) + Variance(B) + 2*Correlation*StdDev(A)*StdDev(B).
The standard deviation can be calculated by taking the square root of the variance.
Therefore the combined volatility over the two months will be equal to =SQRT((5%