
- Exam Code: 8004
- Exam Name: PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics
- Updated: Sep 05, 2025
- Q & A: 112 Questions and Answers
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1. Which of the following is FALSE?
A) SIMEX made inquiries to Barings Bank about large margin calls on its positions
B) Nick Leeson claimed to be running an arbitrage book
C) Nick Leeson dealt in complex derivatives lacking transparency of pricing
D) Nick Leeson also ran the back office for his trading area
2. A risk manager finds that a client is engaged in a practice that looks like money laundering.
According to the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct), the risk manager should:
A) Report the findings immediately to authorities
B) Report this conduct to their immediate supervisor
C) Approach the client about the concern, regardless of what their reaction might be
D) Respect the client's confidentiality as that takes precedence
3. What was the main type of risk that Metallgesellschaft was exposed to?
A) Inflation
B) Currency Settlement
C) Interest Rate
D) Basis Risk
4. Barings failed to recognize that Nick Leeson's losses were increasing because:
A) Leeson ran the front office
B) Leeson hid his trades in a suspense account
C) The margin report sent to London did not show the true margin needs
D) The London office did not ask for any reports
5. An Organization as a Whole must:
I Provide an environment in which an Escalation Policy can be effective II Commit itself to actual enforcement of corporate governance policies III Provide ongoing education and training to all employees on the role of risk management and corporate governance in the organization IV Publish an external auditor's opinion that the corporation is in compliance with the Board's publicly stated Standards of Corporate Governance
A) I, III and IV only
B) I, II and IV only
C) I, II and III only
D) All of these are expectations of the Organization as a Whole
Solutions:
Question # 1 Answer: C | Question # 2 Answer: B | Question # 3 Answer: D | Question # 4 Answer: B | Question # 5 Answer: D |
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