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PRMIA Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition Sample Questions:
1. The problems in the Orange County case can best be characterized as failures related to:
A) Operational and Regulatory Compliance Risk
B) Credit Risk
C) All of the Above
D) Market Risk
2. Which of the following was not cited within the chain of miscalculations and deferred decisions for the downfall of Fannie Mae and Freddie Mac
A) They did not raise enough capital to weather the storm as the housing slump expanded
B) Extreme exposure to foreign currency exposures and losses from non-US$ mortgages
C) Lawmakers postponed strenghtening regulatory oversight due to partisan infighting
D) Under-management and under-measurement of market and liquidity risk
3. The Fortress Re accounting risk transfer procedures
A) made it difficult for TFMI to determine whether risk had actually been transferred and whether it had sufficient catastrophe insurance cover
B) made it straightforward for TFMI to determine whether risk had actually been transferred and they decided not to take out more catastrophe insurance cover
C) made it difficult for TFMI to determine whether risk had actually been transferred so they had to take out additional catastrophe insurance cover
D) made it straightforward for TFMI to determine when the risk had been transferred and to take out additional catastrophe insurance cover
4. With respect to the Purpose of Professional Standards, in the event of any difference in standards between local laws/rules and those of PRMIA, members must
A) use their best judgment
B) refer the matter to their supervisor
C) comply with the higher standard under all circumstances
D) abide by the applicable laws, rules, and regulations of PRMIA and any government and/or regulatory bodies
5. When Fannie Mae and Freddie Mac were taken under US government conservatorship, which of the following was not included within their operating mandate?
A) There was a 2 year limit to the conservatorship
B) Fannie Mae and Freddie Mac will continue to buy home loans from banks to repackage them as mortgage-backed securities
C) The US government will provide capital as needed in return for preferred shares in the companies
D) The US government will buy mortgage-backed securities in the open market as needed
Solutions:
| Question # 1 Answer: D | Question # 2 Answer: B | Question # 3 Answer: A | Question # 4 Answer: C | Question # 5 Answer: A |





