PRMIA 8004 exam : PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics

8004 Exam Simulator
  • Exam Code: 8004
  • Exam Name: PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics
  • Updated: Sep 12, 2026
  • Q & A: 112 Questions and Answers

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PRMIA 8004 Exam Syllabus Topics:

SectionObjectives
Case Study Application- Governance and ethics decision analysis
- Integrated risk assessment scenarios
Governance, Standards and Regulatory Frameworks- Regulatory expectations and compliance structures
- Risk governance principles in financial institutions
Ethics and Professional Standards- Industry codes of ethics and decision-making standards
- Professional conduct and ethical responsibilities
Best Practices in Risk Management- Enterprise risk management frameworks
- Operational and financial risk controls

PRMIA PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics Sample Questions:

Question #1

According to the Northern Rock Case Study, what is Forced Insolvency?

  • A. The bank is insolvent in that the current value of its assets (measured at book value) is less than the value of its liabilities; thus even if the bank were to liquidate all of its assets it would not be able to repay all depositors and other creditors
  • B. The bank is legally solvent but if, because it cannot fund its operations, it is forced to liquidate assets it could do so only at less than nominal values (fire sale) and this would make it legally insolvent (value of assets falls below those of liabilities)
  • C. The bank is legally solvent but its current funding costs (which are likely to continue) exceed the average rate of return on its assets and hence it would soon become insolvent as it would be making losses and would eventually exhaust its equity capital
  • D. The bank is solvent in that the current value of its assets (measured at book value) is more than the value of its liabilities; so even if the bank were to liquidate all of its assets it would be able to repay all depositors and other creditors
Reveal Solution  Discussion  0

Correct Answer: B  🗳️

Question #2

National Australia Bank and Barings cases are similar in that:

  • A. The back offices had inadequate procedures
  • B. None of the above
  • C. Both A and B
  • D. Losses kept increasing while rogue trader(s) hid their positions
Reveal Solution  Discussion  0

Correct Answer: C  🗳️

Question #3

Which of the following was NOT a factor in the WorldCom collapse?

  • A. Accounting abuses
  • B. Over stating actual sales
  • C. Failed corporate governance
  • D. Unfair pricing to customers
Reveal Solution  Discussion  0

Correct Answer: D  🗳️

Question #4

What is (are) the lesson(s) of the Barings' failure?

  • A. Incentive plans have risk management implications
  • B. All of the above
  • C. Large profits can be an indicator of risk
  • D. Front and back offices need to be independent
Reveal Solution  Discussion  0

Correct Answer: B  🗳️

Question #5

When local rules and regulations conflict with the PRMIA Standards of Best Practice, Conduct and Ethics the PRMIA member should ...

  • A. Seek advice from a qualified party, being mindful of legal and confidentiality requirements
  • B. Respect local rules and regulations
  • C. Modify the interpretation of local rules and regulations to meet the situation
  • D. Ignore local rules and regulations
Reveal Solution  Discussion  0

Correct Answer: A  🗳️

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