VALID 8011 EXAM SAMPLE | DUMP 8011 TORRENT

Valid 8011 Exam Sample | Dump 8011 Torrent

Valid 8011 Exam Sample | Dump 8011 Torrent

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Tags: Valid 8011 Exam Sample, Dump 8011 Torrent, 8011 Valid Exam Practice, Latest 8011 Examprep, Real 8011 Exams

Living in such a world where competitiveness is a necessity that can distinguish you from others, every one of us is trying our best to improve ourselves in every way. It has been widely recognized that the 8011 exam can better equip us with a newly gained personal skill, which is crucial to individual self-improvement in today’s computer era. With the certified advantage admitted by the test PRMIA certification, you will have the competitive edge to get a favorable job in the global market. Here our 8011 Study Materials are tailor-designed for you.

PRMIA 8011 (Credit and Counterparty Manager (CCRM) Certificate) Certification Exam is a rigorous and comprehensive exam that tests an individual's knowledge and understanding of credit and counterparty risk management. Achieving this certification is a significant accomplishment for professionals in the financial industry and is widely recognized as a mark of excellence in the field.

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PRMIA 8011 Certification Exam is a professional certification program designed for professionals seeking to demonstrate their knowledge and expertise in credit and counterparty risk management. Credit and Counterparty Manager (CCRM) Certificate Exam certification program is offered by the Professional Risk Managers' International Association (PRMIA), a non-profit organization dedicated to advancing the practice of risk management across all industries and sectors.

PRMIA Credit and Counterparty Manager (CCRM) Certificate Exam Sample Questions (Q80-Q85):

NEW QUESTION # 80
Conditional default probabilities modeled under CreditPortfolio view use a:

  • A. Probit function
  • B. Altman's z-score
  • C. Logit function
  • D. Power function

Answer: C

Explanation:
Conditional default probabilities are modeled as a logit function under CreditPortfolio view. That ensures the resulting probabilities are 'well behaved', ie take a value between 0 and 1. The probability may be expressed as = 1/ (1 + exp(I)), where I is a country specific index taking various macro economic factors into account.


NEW QUESTION # 81
A cumulative accuracy plot:

  • A. measures the accuracy of credit risk estimates
  • B. is a measure of the correctness of VaR calculations
  • C. measures rating accuracy
  • D. measures accuracy of default probabilities observed empirically

Answer: C

Explanation:
A cumulative accuracy plot measures the accuracy of credit ratings assigned by rating agencies by considering the relative rankings of obligors according to the ratings given. Choice 'd' is the correct answer.


NEW QUESTION # 82
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. No impact
  • C. Cannot be determined without information on recovery rates
  • 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 # 83
A corporate bond maturing in 1 year yields 8.5% per year, while a similar treasury bond yields 4%. What is the probability of default for the corporate bond assuming the recovery rate is zero?

  • A. Cannot be determined from the given information
  • B. 4.15%
  • C. 4.50%
  • D. 8.50%

Answer: B

Explanation:
The probability of default would make the future cash flows from both the bonds identical. If p be the probability of default, the cash flows from the risky corporate bond would be
= (cash flows in the event of default x probability of default) + (cash flows without default x (1 - probability of default))
=> p*0 + (1 - p)*(1 + 8.5%) = (1 - p)*1.085.
The cash flows from the treasury bond would be 1.04. These two should be equal, ie,
1.04 = (1- p)*1.085, implying p = 4.15%.
(Note: The above is a simplification intended for the exam. In reality investors would demand a 'credit risk premium' for the corporate bond over and above the expected default loss rate. They are unlikely to be happy with just being compensated with exactly the expected default loss rate plus the risk-fre rate because the expected default loss rate itself is uncertain. They would demand some premium over and above what the default rate alone might mathematically imply above the risk free rate. In this question, this credit risk premium is ignored.)


NEW QUESTION # 84
Which of the following statements are true:
I. A transition matrix is the probability of a security migrating from one rating class to another during its lifetime.
II. Marginal default probabilities refer to probabilities of default in a particular period, given survival at the beginning of that period.
III. Marginal default probabilities will always be greater than the corresponding cumulative default probability.
IV. Loss given default is generally greater when recovery rates are low.

  • A. II and IV
  • B. I, III and IV
  • C. I and IV
  • D. I and III

Answer: A

Explanation:
Statement I is incorrect. A transition matrix expresses the probabilities of moving to a given set of ratings at the end of a period (usually one year) conditional upon a given rating at the beginning of the period. It does not make a reference to an individual security and certainly not to the probability of migrating to other ratings during its entire lifetime.
Statement II is correct. Marginal default probabilities are the probability of default in a given year, conditional upon survival at the beginning of that year.
Statement III is incorrect. Cumulative probabilities of default will always be greater than the marginal probabilities of default - except in year 1 when they will be equal.
Statement IV is correct. LGD = 1 - Recovery Rate, therefore a low recovery rate implies higher LGD.


NEW QUESTION # 85
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