Last Updated: Jun 09, 2026
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1. Which is NOT part of the guidance on Professional Conduct in the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct)?
A) Provide advice that is clear and accurate
B) Clearly inform all affected parties of any apparent or actual conflicts of interest
C) Report to the Regulator any departures from generally accepted methodology or practices
D) Know and abide by applicable rules and regulations
2. A risk manager is asked to analyze the credit risk of a convertible bond. The risk manager has never analyzed convertible bonds, but does have significant expertise in credit risk. The risk manager accepts the assignment, finds a paper on the subject through the PRMIA web site and copies the method used there. The risk manager completes the assignment and delivers a report to his or her direct supervisor and the supervisor is quite pleased.
According to the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct), this was acceptable behavior if the following conditions were met:
I. The risk manager disclosed the lack of knowledge about convertible bonds II. The methodology employed is disclosed and explained III. The report was just to be used for analysis and not in practice IV. The risk manager was sure of his/her understanding of the paper found on the web
A) I, II and III
B) I and II
C) I, II and IV
D) I only
3. According to the Group of 30 Report, deriving aggregate potential credit exposure for a counterparty by adding up the potential exposure of multiple transactions:
A) Overstates exposure in most cases
B) Gives an accurate result in most cases
C) Can easily reflect the impact of netting
D) Captures portfolio effects but not tenor differences
4. When supervising others, a PRMIA member must comply with
A) his / her established personal standards of work approved in previous work situations
B) PRMIA Standards
C) local regulatory authority standards which may be less onerous than PRMIA standards
D) the standards of the organization where the work is being performed
5. The key people involved in the application of good governance and risk management must:
I. be trustworthy
II. be honest
III. be approved by the local regulator
IV. treat others fairly at all times
A) I, II, and IV only
B) III only
C) I, II, III and IV above
D) I, II, and III only
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: B | Question # 3 Answer: A | Question # 4 Answer: B | Question # 5 Answer: A |
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