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The following 8010 questions are part of our PRMIA 8010 real exam questions full version. There are 240 in our 8010 full version. All of our 8010 real exam questions can guarantee you success in the first attempt. If you fail 8010 exam with our PRMIA 8010 real exam questions, you will get full payment fee refund. Want to practice and study full verion of 8010 real exam questions? Go now!

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PRMIA 8010 Exam Actual Questions

The questions for 8010 were last updated on Feb 21,2025 .

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Question#1

Which of the following are a CRO's responsibilities:
I. Statutory financial reporting
II. Reporting to the audit committee
III. Compliance with risk regulatory standards
IV. Operational risk

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

Explanation:
Statutory financial reporting is the responsibility of the Chief Financial Officer, not the Chief Risk Officer. The head of internal audit reports to theaudit committee of the board, not the CRO. Therefore statements I and II are incorect.
The CRO is generally expected to drive risk and compliance with related regulatory standards. Market risk, credit risk and operational risk groups report into the CRO, so statements III and IV are correct.

Question#2

According to the implied capital model, operational risk capital is estimated as:

A. Operational risk capital held by similar firms, appropriately scaled
B. Total capital less market risk capital less credit risk capital
C. Capitalimplied from known risk premiums and the firm's earnings
D. Total capital based on the capital asset pricing model

Explanation:
Operational risk capital estimated using the implied capital model is merely the capital that is not attributable to market or credit risk. Therefore Choice 'b' is the correct answer. All other responses are incorrect.

Question#3

According to the Basel II framework, subordinated term debt that was originally issued 4 years ago with amaturity of 6 years is considered a part of:

A. Tier 2 capital
B. Tier 1 capital
C. Tier 3 capital
D. None of the above

Explanation:
According to the Basel II framework, Tier 1 capital, also called core capital or basic equity, includes equity capital and disclosed reserves.
Tier 2 capital, also called supplementary capital, includes undisclosed reserves, revaluation reserves, general provisions/general loan-loss reserves, hybrid debt capital instruments and subordinated term debt issued originally for 5 years or longer.
Tier 3 capital, or short term subordinated debt, is intended only to cover market risk but only at the discretion of their national authority. This only includes short term subordinated debt originally issued for 2 or more years.
An interesting thing to note is the difference between 'subordinated term debt' under Tier 2 and the 'short term subordinated debt' under Tier 3. The distinction is based upon the years to maturity at the time the debt was issued. The remaining time to maturity is not relevant.
For the subordinated term debt included under Tier 2, the amount that can be counted towards capital is reduced by 20% for every year when the debt is due within 5 years. This takes care of the time to maturity problem for Tier 2subordinated debt. For Tier 3 short term subordinated debt, this is not an issue because debt will only qualify for Tier 3 if it has a lock-in clause stipulating that the debt is not required to be repaid if the effect of such repayment is to take the bank below minimum capital requirements.

Question#4

If the full notional value of a debt portfolio is $100m, its expected value in a year is $85m, and the worst value of the portfolio in one year's time at 99% confidence level is $60m, then what is the credit VaR?

A. $40m
B. $25m
C. $60m
D. $15m

Explanation:
Credit VaR is the difference between the expected value of the portfolio and the value of the portfolio at the given confidence level. Therefore the credit VaR is $85m - $ 60m = $25m. Choice 'b' is the correct answer.
Note that economic capital and credit VaR are identical at a risk horizon of one year. Therefore if the question asks for economic capital, the answer would be the same. [Again, an alternative way to look at this is to consider the explanation given in III.B.6.2.2:Credit Var = Q(L) - EL where Q(L) is the total loss at a given confidence interval, and EL is the expected loss. In this case Q(L) - $100-$60 = $40, and EL = $100-$85=$15. Therefore Credit VaR = $40-$15=$25.]

Question#5

Which of the following contributed to the systemic failure during the credit crisis that began in 2007?

A. Stress tests that did not stress enough
B. Moral hazard from the strategy of 'originate and distribute'
C. Inadequate attentionpaid to liquidity risk
D. All of the above

Explanation:
All the factors listed above contributed to systemic failure. Liquidity risk was not on the radar of regulators, and was a second priority for risk managers, and most of the focus was oncapital adequacy as liquidity was thought to be an unlikely problem. Liquidity, regardless of capital adequacy, was the primary cause of failure of a number of institutions during the crisis.
Similarly, stress tests proved to be much milder than the shocks that were actually experienced, and the strategy of 'originate and distribute' implied that the mortgage and other debt originators had no interest in any due diligence as they intended to package and sell the debt to other investors.
Therefore Choice 'd' is the correct answer.

Exam Code: 8010Q & A: 240 Q&AsUpdated:  Feb 21,2025

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