CUSTOMIZABLE PRMIA 8011 PRACTICE EXAM

Customizable PRMIA 8011 Practice Exam

Customizable PRMIA 8011 Practice Exam

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Tags: 8011 Reliable Test Test, 8011 New Study Plan, 8011 Latest Dumps Pdf, Exam 8011 Consultant, Valid 8011 Dumps Demo

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PRMIA 8011 (Credit and Counterparty Manager (CCRM) Certificate) Exam is a globally recognized certification program that focuses on credit risk management and counterparty risk management. The program is designed to provide professionals with the skills and knowledge necessary to identify, measure, monitor, and manage credit and counterparty risks in financial institutions. The program is ideal for professionals working in credit risk management, counterparty risk management, loan origination, credit analysis, and other related areas.

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Prep4sures is a trusted platform that has been helping Credit and Counterparty Manager (CCRM) Certificate Exam 8011 candidates for many years. Over this long time period, countless candidates have passed their Credit and Counterparty Manager (CCRM) Certificate Exam 8011 Exam and they all got help from Credit and Counterparty Manager (CCRM) Certificate Exam practice questions and easily pass the final exam.

PRMIA 8011 Credit and Counterparty Manager (CCRM) Certificate Exam is a globally recognized professional certification program designed for individuals who aspire to become experts in credit and counterparty risk management. The CCRM certificate is awarded by the Professional Risk Managers’ International Association (PRMIA), which is a non-profit organization dedicated to promoting best practices in risk management, education and certification.

PRMIA 8011 Certification Exam is a specialized exam designed to test the knowledge and skills of professionals in the credit and counterparty management field. Credit and Counterparty Manager (CCRM) Certificate Exam certification is offered by the Professional Risk Managers’ International Association (PRMIA), a leading professional association for risk management professionals worldwide. The PRMIA 8011 Exam is designed for professionals who are involved in credit risk management, counterparty risk management, and financial analysis. Credit and Counterparty Manager (CCRM) Certificate Exam certification is widely recognized in the industry and is a valuable asset for professionals who want to advance their careers in the field of risk management.

PRMIA Credit and Counterparty Manager (CCRM) Certificate Exam Sample Questions (Q301-Q306):

NEW QUESTION # 301
Which of the following techniques is used to generate multivariate normal random numbers that are correlated?

  • A. Markov process
  • B. Cholesky decomposition of the correlation matrix
  • C. Pseudo random number generator
  • D. Simulation

Answer: B

Explanation:
A PRNG (pseudo random number generators of the kind included in statistical packages and Excel) is used to generate random numbers that are not correlated with each other, ie they are random. A Markov process is a stochastic model that depends only upon its current state. Simulation underlies many financial calculations.
None of these directly relate to generating correlated multivariate normal random numbers. That job is done utilizing a Cholesky decomposition of the correlation matrix.
Specifically, a Cholesky decomposition involves the factorization of the correlation matrix into a lower triangular matrix (a square matrix all of whose entries above the diagonal are zero) and its transpose. This can then be combined with random numbers to generate a set of correlated normal random numbers. This technique is used for calculating Monte Carlo VaR.


NEW QUESTION # 302
The cumulative probability of default for a security for 4 years is 11.47%. The marginal probability of default for the security for year 5 is 5% during year 5. What is the cumulative probability of default for the security for 5 years?

  • A. 5.00%
  • B. None of the above
  • C. 15.90%
  • D. 16.47%

Answer: C

Explanation:
The cumulative probability of default for the security for the 5 years is [1 - (1 - probability of default upto year 4)*(1 - probability of default in year 5)]. An easier way to think about this is that the Probability of survival till year 5 = (Probability of survival till year 4 * Probability of survival during year 5). Using the relationship that probability of default = 1 - probability of survival, we can calculate the required probability in all cases.
In this case, the cumulative probability of default for the security for 5 years = 1 - (1 - 11.47%)*(1 - 5%) =
15.8695%, therefore Choice 'c' is the correct answer.


NEW QUESTION # 303
Loss provisioning is intended to cover:

  • A. Expected losses
  • B. Losses in excess of unexpected losses
  • C. Unexpected losses
  • D. Both expected and unexpected losses

Answer: A

Explanation:
Loss provisioning is intended to cover expected losses. Economic capital is expected to cover unexpected losses. No capital or provisions are set aside for losses in excess of unexpected losses, which will ultimately be borne by equity.
Choice 'd' is the correct answer.


NEW QUESTION # 304
A bank prices retail credit loans based on median default rates. Over the long run, it can expect:

  • A. Underestimation and therefore underpricing of risk in it retail portfolio
  • B. Correct pricing of risk in the retail credit portfolio
  • C. Overestimation of risk and overpricing, leading to loss of market share
  • D. A reduction in the rate of defaults

Answer: A

Explanation:
The key to pricing loans is to make sure that the prices cover expected losses. The correct measure of expected losses is the mean, and not the median. To the extent the median is different from the mean, the loans would be over or underpriced.
The loss curve for credit defaults is a distribution skewed to the right. Therefore its mode is less than its median which is less than its mean. Since the median is less than the mean, the bank is pricing in fewer losses than the mean, which means over the long run it is underestimating risk and underpricing its loans. Therefore Choice 'd' is the correct answer.
If on the other hand for some reason the bank were overpricing risk, its loans would be more expensive than its competitors and it would lose market share. In this case however, this does not apply. Loan pricing decisions are driven by the rate of defaults, and not the other way round, therefore any pricing decisions will not reduce the rate of default.


NEW QUESTION # 305
Random recovery rates in respect of credit risk can be modeled using:

  • A. the normal distribution
  • B. the beta distribution
  • C. the omega distribution
  • D. the binomial distribution

Answer: B

Explanation:
The beta distribution is commonly used to model recovery rates. It is a distribution for variables whose values lie between 0 & 1, and the parameters of the distribution can be estimated using the mean and standard deviation of the data. Therefore Choice 'a' is correct and the others are wrong.
Refer to the tutorial on distributions for an Excel model of the beta distribution.


NEW QUESTION # 306
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