Exam II: Mathematical Foundations of Risk Measurement - 2015 Edition
Last Update September 15, 2024
Total Questions : 132
Our PRM Certification 8007 exam questions and answers cover all the topics of the latest Exam II: Mathematical Foundations of Risk Measurement - 2015 Edition exam, See the topics listed below. We also provide PRMIA 8007 exam dumps with accurate exam content to help you prepare for the exam quickly and easily. Additionally, we offer a range of PRMIA 8007 resources to help you understand the topics covered in the exam, such as PRM Certification video tutorials, 8007 study guides, and 8007 practice exams. With these resources, you can develop a better understanding of the topics covered in the exam and be better prepared for success.
| Exam Name | Exam II: Mathematical Foundations of Risk Measurement - 2015 Edition |
| Exam Code | 8007 |
| Actual Exam Duration | The duration of the PRMIA 8007 Exam is 2 hours. |
| What exam is all about | PRMIA 8007 is an exam that tests the knowledge and skills of candidates in the area of risk management. It is a part of the Professional Risk Manager (PRM) certification program offered by the Professional Risk Managers' International Association (PRMIA). The exam covers topics such as financial markets, risk management frameworks, credit risk, operational risk, market risk, and quantitative analysis. The PRMIA 8007 exam is designed to assess the candidate's ability to identify, measure, and manage various types of risks in financial institutions and other organizations. Passing this exam is a prerequisite for obtaining the PRM certification. |
| Passing Score required | The passing score required in the PRMIA 8007 exam is 60%. This means that a candidate must answer at least 60% of the questions correctly to pass the exam and earn the PRMIA certification. The exam consists of 30 multiple-choice questions and has a time limit of 60 minutes. Candidates are advised to thoroughly prepare for the exam by studying the exam syllabus and practicing sample questions. |
| Competency Level required | Based on the previous exam pattern, the competency level required for the PRMIA 8007 exam is advanced. The exam is designed for professionals who have a strong understanding of financial risk management concepts and techniques. Candidates are expected to have a solid foundation in mathematics, statistics, and financial modeling. Additionally, candidates should have practical experience in risk management and be able to apply their knowledge to real-world scenarios. Overall, the PRMIA 8007 exam is a challenging test that requires a high level of competency and preparation. |
| Questions Format | The PRMIA 8007 exam consists of multiple-choice questions. |
| Delivery of Exam | PRMIA 8007 exam is an online proctored exam that can be taken from anywhere with a stable internet connection. The exam is delivered through the PRMIA testing platform, which is accessible through a web browser. The exam consists of 80 multiple-choice questions and has a time limit of 2 hours. The exam is designed to test the candidate's knowledge and understanding of the principles of market risk management. |
| Language offered | Based on my research, the PRMIA 8007 exam is focused on financial risk management and may include technical language related to financial markets, risk assessment, and quantitative analysis. It is likely that the exam will require a strong understanding of financial terminology and concepts. |
| Cost of exam | You can visit the official PRMIA website or contact their customer support team to get the latest pricing information. |
| Target Audience | The PRMIA 8007 exam is designed for professionals who are interested in risk management and financial modeling. The target audience for this exam includes: 1. Risk managers: Professionals who are responsible for identifying, assessing, and managing risks in their organizations. 2. Financial analysts: Professionals who analyze financial data and provide insights to support decision-making. 3. Investment bankers: Professionals who advise clients on financial transactions, such as mergers and acquisitions, and help them raise capital. 4. Portfolio managers: Professionals who manage investment portfolios on behalf of clients or organizations. 5. Quantitative analysts: Professionals who use mathematical and statistical models to analyze financial data and develop trading strategies. 6. Traders: Professionals who buy and sell financial instruments, such as stocks, bonds, and derivatives, on behalf of clients or their organizations. 7. Regulators: Professionals who oversee financial markets and ensure compliance with regulations. 8. Consultants: Professionals who provide advice and support to clients on risk management and financial modeling. |
| Average Salary in Market | The PRMIA website, the PRMIA 8007 exam certification is designed for risk managers, and it covers topics such as credit risk, market risk, operational risk, and risk management frameworks. Obtaining this certification can enhance your knowledge and skills in risk management, which can lead to better job opportunities and higher salaries. The salary range after obtaining the PRMIA 8007 exam certification may vary depending on factors such as your experience, location, and industry. It is best to research current market trends and job postings to get a better idea of the average salary range. |
| Testing Provider | You can visit the official website of PRMIA (Professional Risk Managers' International Association) to find information about their certification exams and testing services. You can also contact PRMIA directly for any inquiries or assistance related to their exams. |
| Recommended Experience | PRMIA (Professional Risk Managers' International Association) recommends that candidates have a strong understanding of financial mathematics, probability theory, statistics, and risk management concepts. Additionally, candidates should have experience in financial markets, financial instruments, and financial modeling. It is also recommended that candidates have completed the PRMIA 8001 exam or have equivalent knowledge and experience in risk management. Candidates should have a strong understanding of the principles of risk management, including risk identification, assessment, measurement, and mitigation. Overall, candidates should have a solid foundation in quantitative finance and risk management concepts to be successful in the PRMIA 8007 exam. |
| Prerequisite | The prerequisite for the PRMIA 8007 exam is to have a basic understanding of financial markets, risk management concepts, and quantitative analysis. It is recommended that candidates have completed the PRMIA Operational Risk Manager (ORM) certification or have equivalent knowledge and experience in operational risk management. Additionally, candidates should have a good understanding of statistical analysis, probability theory, and financial modeling. |
| Retirement (If Applicable) | It is recommended to check with PRMIA or their official website for the latest updates on exam retirement dates. |
| Certification Track (RoadMap): | The PRMIA 8007 exam is part of the Professional Risk Manager (PRM) certification program offered by the Professional Risk Managers' International Association (PRMIA). The PRMIA 8007 exam is focused on credit risk management and is designed to test the candidate's knowledge and skills in areas such as credit risk measurement, credit risk modeling, credit risk mitigation, and credit risk management frameworks. The certification track/roadmap for the PRM program includes four levels of certification: 1. PRMIA Associate: This is the entry-level certification that requires passing the PRMIA 8001 exam, which covers the fundamentals of risk management. 2. PRMIA Professional: This level requires passing four exams, including the PRMIA 8001 exam, the PRMIA 8002 exam (market risk management), the PRMIA 8003 exam (operational risk management), and the PRMIA 8004 exam (risk management frameworks, governance, and ethics). 3. PRMIA Advanced Professional: This level requires passing two exams, including the PRMIA 8005 exam (credit risk management) and the PRMIA 8006 exam (liquidity risk management). 4. PRMIA Master: This is the highest level of certification and requires passing the PRMIA 8007 exam (advanced credit risk management) in addition to the exams required for the PRMIA Advanced Professional level. Overall, the PRM certification program is designed to provide risk management professionals with a comprehensive understanding of the various types of risks faced by organizations and the tools and techniques used to manage those risks effectively. |
| Official Information | https://prmia.org/Public/PRM/PRM_Handbook_Digital%20Resources.aspx |
| Take Self-Assessment | Use PRMIA 8007 Practice Test to Assess your preparation - Save Time and Reduce Chances of Failure |
| Section | Weight | Objectives |
|---|---|---|
| V. RISK MANAGEMENT FRAMEWORKS AND OPERATIONAL RISK | 23% | A. Risk Governance 1. Understand key organizational roles and responsibility for risk decision-making and challenges. 2. Describe the role of the risk function and leadership in ensuring the success of the risk framework through the support of risk culture. 3. Evaluate the effectiveness of governance structures, including the role of external stakeholders (regulators, auditors, shareholders, rating agencies, etc.). B. Risk Management Framework 1. Identify the key components of a risk framework including policies, appetite, culture, limits, and thresholds. 2. Describe how a risk management framework supports an enterprise-wide participation in risk management. 3. Differentiate between expected loss appetite versus tolerance and capacity for stress losses. 4. Apply strategies for managing risk exposure. C. Risk Assessment 1. Identify the key steps in a risk assessment lifecycle. 2. Categorize operational risk into its sub-components, including causes and effects. 3. Understand different methodologies for measuring and quantifying operational risks. D. Risk Information 1. Evaluate relevant measures to identify and analyze loss experience. 2. Understand the key steps in a loss investigation. 3. Be able to identify, select, and implement appropriate key risk indicators and articulate a risk profile. E. Risk Modeling 1. Evaluate the use of internal and external data in operational risk modeling. 2. Understand the relationship between frequency and severity in loss modeling. 3. Use modeling techniques to price risk and assess the value of risk transfer (e.g., insurance). |
| VI. CREDIT RISK AND COUNTERPARTY CREDIT RISK | 20% | A. Classic Credit Life Cycle 1. Describe the entire credit life cycle from origination to repayment. B. Classic Credit Products 1. Describe credit markets and credit instruments. 2. Analyze and describe the credit risk taxonomy. C. Classic Credit Risk Methodology 1. Analyze, compare, and contrast credit risk evaluation methodologies. D. Counterparty Risk 1. Explain counterparty risk. 2. Measure counterparty exposure and interpret risk appetite. E. Credit Derivatives and Securitization 1. Outline how credit derivatives and securitization are used as a funding risk management tool. F. Credit Portfolio Management 1. Recognize credit portfolio management goals and philosophy. 2. Define commonly used credit portfolio management metrics and describe how these metrics are used in practice. G. Credit Risk Modeling 1. Understand and interpret credit risk models, including Credit Metrics™ and Moody’s KMV™. H. Valuation Adjustments (XVA) 1. Calculate and interpret various value adjustments (e.g., credit (CVA), funding (FVA), debit (DVA), margin (MVA), etc.) 2. Describe right- and wrong-way risk, and the role of the Central Clearing Counterparties (CCPs). I. Leverage Ratio 1. Calculate and interpret leverage ratio. J. Risk Mitigation 1. Describe the tools and methodologies used to mitigate credit risk. |
| VII. MARKET RISK, ASSET LIABILITY MANAGEMENT AND FUNDS TRANSFER PRICING | 17% | A. Asset Liability Management 1. Understand the framework and governance processes for managing liquidity and funding risk. 2. Determine the efficiency of capital and funding sources, and the use of the balance sheet. B. Liquidity Risk 1. Understand and interpret the matching of asset and liability maturities. 2. Define and calculate liquidity indicators and ratios. 3. Identify the key components of liquidity assessment and contingency funding plans. C. Interest Rate Risk 1. Compare interest rate risk management for a trading book versus banking book structures. 2. Calculate specific measures of interest rate risk at different points in the yield curve. D. Market Risk Management and Stress Testing 1. Identify the components of market risk policy, limit setting frameworks, and how management action triggers are designed to work. 2. Define stress testing techniques for trading exposures (e.g., FX, interest rate, equity commodity) with different levels of market liquidity. E. Market Risk Monitoring 1. Compare and contrast different risk monitoring techniques (e.g., gross/net exposure, concentration measure, value at risk (VaR), stress VaR, expected shortfall, etc.) 2. Calculate a simple VaR measure. |
| VIII. CASE STUDY PRACTICUM | 20% | A. Risk Taxonomy 1. Interpret specific scenarios to identify areas of risks according to the following risk taxonomy. a) Financial risks (1) Market Risk (Equity price risk, Interest rate risk, Foreign exchange risk, Commodity price risk) (2) Credit Risk (Transaction risk and portfolio concentration) b) Liquidity Risk c) Operational Risk (1) People risk (2) Process risk (3) Systems and technology risk (4) External events d) Legal and regulatory risk e) Business, Strategic, and Reputational risk B. Historical Case Studies 1. Compare and contrast the scenario environment against case studies and the lessons learned from those documented cases. 2. Examine the symptoms and causes from specific case studies and apply these to the scenario. |
| IX. PRMIA STANDARDS AND GOVERNANCE | 4% | A. Group of Thirty Best Practices 1. Describe the Group of Thirty Best Practice recommendations and how they may be applied in risk management. B. PRMIA Governance Principles and Bylaws 1. Define the PRMIA Governance Principles and describe the application of the principles. 2. Describe the PRMIA Bylaws. C. PRMIA Code of Conduct and Ethics 1. Define and describe the PRMIA Professional Standards, Code of Conduct, and Guidance on Ethical Behavior, and understand how these shall be applied in professional practice. |
TESTED 16 Sep 2024
