PRMIA 8008 : PRM Certification - Exam III: Risk Management Frameworks, Operational Risk, Credit Risk, Counterparty Risk, Market Risk, ALM, FTP - 2015 Edition

  • Exam Code: 8008
  • Exam Name: PRM Certification - Exam III: Risk Management Frameworks, Operational Risk, Credit Risk, Counterparty Risk, Market Risk, ALM, FTP - 2015 Edition
  • Updated: Oct 04, 2026
  • Q & A: 359 Questions and Answers

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PRMIA 8008 Exam Syllabus Topics:

SectionObjectives
Topic 1: Market Risk- Interest rate, equity, FX, and commodity risk
- Market risk measurement techniques
  • 1. Stress testing and scenario analysis
    • 2. Value at Risk (VaR)
      Topic 2: Counterparty Risk- Netting and collateral management
      - Counterparty credit exposure
      - Derivatives credit risk considerations
      Topic 3: Credit Risk- Credit risk measurement and modeling
      • 1. Exposure at default (EAD)
        • 2. Probability of default (PD)
          • 3. Loss given default (LGD)
            - Credit portfolio risk
            Topic 4: Funds Transfer Pricing (FTP)- FTP methodologies
            - Internal pricing of funds and liquidity allocation
            Topic 5: Risk Management Frameworks- Enterprise risk management principles
            • 1. Risk governance structure
              • 2. Risk identification and assessment processes
                • 3. Risk appetite and tolerance
                  - Risk measurement and reporting frameworks
                  Topic 6: Operational Risk- Operational risk management techniques
                  • 1. Loss event data collection
                    • 2. Key risk indicators (KRI)
                      • 3. Risk and control self-assessment (RCSA)
                        - Operational risk types and sources
                        Topic 7: Asset-Liability Management (ALM)- Liquidity risk management
                        - Interest rate risk in the banking book (IRRBB)

                        PRMIA PRM Certification - Exam III: Risk Management Frameworks, Operational Risk, Credit Risk, Counterparty Risk, Market Risk, ALM, FTP - 2015 Edition Sample Questions:

                        Question #1

                        A bank holds a portfolio of corporate bonds. Corporate bond spreads widen, resulting in a loss of value for the portfolio. This loss arises due to:

                        • A. Liquidity risk
                        • B. Credit risk
                        • C. Counterparty risk
                        • D. Market risk
                        Reveal Solution  Discussion  0

                        Correct Answer: D  🗳️

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                        Question #2

                        If the systematic VaR for an equity portfolio is $100 and the specific VaR is $80, then which of the following is true in relation to the total VaR:

                        • A. Total VaR is $180
                        • B. Total VaR is greater than $180
                        • C. Total VaR is less than $180
                        • D. Total VaR is $20
                        Reveal Solution  Discussion  0

                        Correct Answer: C  🗳️

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                        Question #3

                        Which of the following statements are true:
                        I. Stress tests should consider simultaneous pressures in funding and asset markets, and the impact of a reduction in liquidity II. Judging the effectiveness of risk mitigation techniques is not a part of stress testing III. A reverse stress test is useful for discovering hidden vulnerabilities and inconsistencies in hedging strategies IV. Reputational risk, which is explicitly excluded from the definition of operational risk under Basel II, should still be considered as part of stress tests.

                        • A. I and III
                        • B. All of the above
                        • C. I, III and IV
                        • D. II and IV
                        Reveal Solution  Discussion  0

                        Correct Answer: C  🗳️

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                        Question #4

                        Assuming all other factors remain the same, an increase in the volatility of the returns on the assets of a firm causes which of the following outcomes?

                        • A. A decrease in the value of the non-callable debt issued by the firm
                        • B. A decrease in the value of the implicit put in in the debt of the firm
                        • C. An increase in the value of the equity of the firm
                        • D. An increase in the value of the callable debt of the firm
                        Reveal Solution  Discussion  0

                        Correct Answer: A  🗳️

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                        Question #5

                        A corporate bond has a cumulative probability of default equal to 20% in the first year, and 45% in the second year. What is the monthly marginal probability of default for the bond in the second year, conditional on there being no default in the first year?

                        • A. 3.07%
                        • B. 2.60%
                        • C. 31.25%
                        • D. 15.00%
                        Reveal Solution  Discussion  0

                        Correct Answer: A  🗳️

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