8004 Practice Questions

A.  

Stress Testing looked at the 12 biggest deals with each of their top 20 counterparties

B.  

Stress Testing was not conducted

C.  

Stress Testing was not necessary because their trades were hedged

D.  

Stress Testing was elaborate, complex and conducted on their entire portfolio. It included the assumptions of a major breakdown in historical correlations

A.  

Use separate trading agreements for interest rate derivatives, equity derivatives and foreign exchange transactions.

B.  

Use a common trading agreement for interest rate and equity derivatives but a separate agreement for foreign exchange transactions.

C.  

Use one trading agreement for foreign exchange forwards and another for foreign exchange options.

D.  

Use a single master trading agreement as widely as possible with each counter party.

A.  

use their best judgment

B.  

abide by the applicable laws, rules, and regulations of PRMIA and any government and/or regulatory bodies

C.  

comply with the higher standard under all circumstances

D.  

refer the matter to their supervisor

A.  

Provided investors and analysts with insight into the dynamics of value changes, and the sensitivity of fair value to the underlying drivers of interest rates, exchange rates, and commodity prices

B.  

Only provided the intrinsic value of its outstanding option positions

C.  

Only provided the time value of its outstanding option position

D.  

None of the above

A.  

Greater volatility than expected over the life of an option

B.  

Sudden gaps in market prices

C.  

Both A and B

D.  

Neither A nor B

A.  

relied almost entirely on Fortress Re's management team for information on the risks in its portfolio

B.  

relied on the information it received from other members of the reinsurance pool to manage its risks

C.  

had a full understanding from Fortress Re of the risks in the pool

D.  

had a full understanding from other members of the pool of the pool's liabilities