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8011 Reliable Exam Tips & 8011 Verified Answers

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PRMIA 8011 CCRM Certificate is an advanced-level certification exam that covers a range of topics related to credit and counterparty risk management, including credit analysis, risk assessment, credit derivatives, and counterparty credit risk. 8011 exam is designed for individuals who are responsible for managing credit and counterparty risk in financial institutions, corporations, and other organizations.

PRMIA 8011: Credit and Counterparty Manager (CCRM) certificate is a globally recognized certification that identifies professionals as experts in managing and monitoring credit and counterparty risks. This program is designed to provide a comprehensive understanding of the best practices and principles for managing credit risk and counterparty risk in financial institutions. It covers various risk management techniques, focusing on realistic scenarios in the context of counterparty credit risk management.

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The PRMIA 8011 certification exam always gives a tough time to their candidates. So you have to plan well and prepare yourself as per the recommended PRMIA 8011 exam study material. For the quick and complete 8011 exam preparation the Dumpexams PRMIA 8011 Practice Test questions are the ideal selection. With the Dumpexams PRMIA 8011 PDF Questions and practice test software, you will get everything that you need to learn, prepare and pass the difficult 8011 exam with good scores.

PRMIA Credit and Counterparty Manager (CCRM) Certificate Exam Sample Questions (Q291-Q296):

NEW QUESTION # 291
The capital adequacy ratio applied to risk weighted assets for the calculation of capital requirements for credit risk per Basel II is:

A. 8%
B. 12.5%
C. 100%
D. 150%

Answer: A

Explanation:
The capital adequacy ratio, also called the minimum capital requirement for credit risk per Basel II is 8% of risk weighted assets. The other choices are incorrect.

NEW QUESTION # 292
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. II
B. III and IV
C. I and II
D. II and III

Answer: A

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 # 293
A bank holds $10m of a corporate debt that it has purchased CDS protection against. What is the impact on the short term liquidity of the bank in the event of a default by the corporate on its bonds?

A. An immediate reduction in available liquidity
B. Cannot be determined without information on recovery rates
C. No impact
D. A short term increase in available liquidity

Answer: D

Explanation:
The immediate impact of the default would be to improve the liquidity available in the short term due to the pay out from the CDSs.
It is also important to consider the impact on liquidity from the occurence of a default even in situations where CDS protection may not have been purchased. In such cases, there may be a nearer term payout in the form of the recovery rate. Of course, recovery payments are generally not realized for longer periods of time as court cases linger on, but there is a good likelihood that a payment, albeit lower in total, is likely to be realized sooner than the maturity of the bond in cases where the bond is a longer term bond. At the same time, any interest payments, and the final principal payment, which may have been included in liquidity projections, will not occur.

NEW QUESTION # 294
Altman's Z-score does not consider which of the following ratios:

A. Sales to total assets
B. Market capitalization to debt
C. Net income to total assets
D. Working capital to total assets

Answer: C

Explanation:
A computation of Altman's Z-score considers the following ratios:
- Working capital to total assets
- Retained earnings to total assets
- EBIT to total assets
- Market cap to debt
- Sales to total assets
It does not consider Net Income to total assets, therefore Choice 'c' is the correct answer. This makes sense as net income is after interest and taxes, both of which are not relevant for considering the cash flows for debt servicing.

NEW QUESTION # 295
When modeling operational risk using separate distributions for loss frequency and loss severity, which of the following is true?

A. Loss severity and loss frequency are modeled using the same units of measurement
B. Loss severity and loss frequency are considered independent
C. Loss severity and loss frequency distributions are considered as a bivariate model with positive correlation
D. Loss severity and loss frequency are modeled as conditional probabilities

Answer: B

Explanation:
When modeling operational loss frequency distribution (which, for example, may be based upon a Poisson distribution) and a loss severity distribution (for example, based upon a lognormal distribution), it is assumed that the frequency of losses and the severity of the losses are completely independent and do not impact each other. Therefore Choice 'a' is correct, and the others are not valid assumptions underlying the operational loss modeling.
Once each of these distributions has been built, a random number is drawn from each to determine a loss scenario. The process is repeated many times as part of a Monte Carlo simulation to get a the loss distribution.

NEW QUESTION # 296
......

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