Free 8010 Questions for PRMIA Operational Risk Manager (ORM) 8010 Exam as PDF & Practice Test Engine

Financial institutions need to take volatility clustering into account:
I. To avoid taking on an undesirable level of risk
II. To know the right level of capital they need to hold
III. To meet regulatory requirements
IV. To account for mean reversion in returns

For a loan portfolio, unexpected losses are charged against:

A zero coupon corporate bond maturing in an year has a probability of default of 5% and yields 12%. The recovery rate is zero. What is the risk free rate?

Which of the following is closest to the description of a 'risk functional'?

An assumption regarding the absence of ratings momentum is referred to as:

For a bank using the advanced measurement approach to measuring operational risk, which of the following brings the greatest 'model risk' to its estimates:

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 atthe 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.

Which of the following is a cause ofmodel risk in risk management?

A Bank Holding Company (BHC) is invested in an investment bank and a retail bank. The BHC defaults for certain if either the investment bank or the retail bank defaults. However, the BHC can also default on its own without either the investment bank or the retail bank defaulting. The investment bank and the retail bank's defaults are independent of each other, with a probability of default of 0.05 each. The BHC's probability of default is 0.11.
What is the probabilityof default of both the BHC and the investment bank? What is the probability of the BHC's default provided both the investment bank and the retail bank survive?

Which of the following belong in a credit risk report?

What isthe risk horizon period used for credit risk as generally used for economic capital calculations and as required by regulation?

Under the standardized approach to calculating operational risk capital, how many business lines are a bank's activities divided into per Basel II?

According to the Basel II framework, subordinated term debt that was originally issued 4 years ago with amaturity of 6 years is considered a part of:

Which of the following does not affect the credit risk facing a lender institution?

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 beingno default in the first year?