Practice 8010 Exam Online

Question 1

The Options Theoretic approach to calculating economic capital considers the value of capital as being equivalent to a call option with a strike price equal to:

A : The notional value ofthe debt

B : The market value of the debt

C : The value of the firm

D : The value of the assets

Answer: A

Question 2

Under the KMV Moody's approach to calculating expectingdefault frequencies (EDF), firms' default on obligations is likely when:

A : expected asset values one year hence are below total liabilities

B : asset values reach a level below short term debt

C : asset values reach a level below totalliabilities

D : asset values reach a level between short term debt and total liabilities

Answer: D

Question 3

In respect of operational risk capital calculations, the Basel II accord recommends a confidence leveland time horizon of

A : 99.9% confidence level over a 10 day time horizon

B : 99% confidence level over a 10 year time horizon

C : 99% confidence level over a 1 year time horizon

D : 99.9% confidence level over a 1 year time horizon

Answer: D

Question 4

Which of the following statements are true:

I.Top down approaches help focus management attention on the frequency and severity of loss events, while

bottom up approaches do not.

II. Top down approaches rely upon high level data while bottom up approaches need firm specific risk data to

estimate risk.

III. Scenario analysis can help capture both qualitative and quantitative dimensions of operational risk.

A : III only

B : II and III

C : I only

D : II only

Answer: B

Question 5

Under thebasic indicator approach to determining operational risk capital, operational risk capital is equal to:

A : 15% of the average gross income (considering only the positive years) of the past three years

B : 15% of the average net income (considering only thepositive years) of the past three years

C : 25% of the average gross income (considering only the positive years) of the past three years

D : 15% of the average gross income of the past five years

Answer: A

Name:	Operational Risk Manager (ORM)
Exam Code:	8010
Certification:	PRM
Vendor:	PRMIA
Total Questions:	242
Last Updated:	Apr 23, 2024

PRMIA 8010