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NEW QUESTION: 1
If the 99% VaR of a portfolio is $82,000, what is the value of a single standard deviation move in the portfolio?
A. 0
B. 1
C. 2
D. 3
Answer: B
Explanation:
Explanation
Remember that VaR is merely a multiple of the portfolio's standard deviation. The multiple is determined by the confidence level, and for a 99% confidence level this multiple is 2.3264 (=-NORMSINV(1%) in Excel).
Therefore one standard deviation at this level of confidence would be equal to VaR/2.3264.
In addition to the Z-value at 99% confidence, you should also remember what the Z value is for a 95% level of confidence, as PRM questions may expect you to know these. The standard Windows calculator allowed in the exam does not allow you to calculate these, so it is safer to just remember these values.

NEW QUESTION: 2
Under what conditions can an FX broker act as a position taker?
A. brokers act only as intermediaries or arrangers of deals
B. only if he can not find another counterparty for a name switching
C. if a principal refuses to honour the deal
D. no conditions are required; the broker is entitled to take positions
Answer: A

NEW QUESTION: 3
The entity has comprehensive, written credit risk management policies and procedures for derivative activities. This addresses to:
A. Market liquidity Risk
B. Legal Risk
C. Market risk
D. Counterparty Risk
Answer: D

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