8009 exam

The hedging strategy employed by MG Refining & Marketing has been called:A . Dynamic hedgingB . A stacked hedgeC . A differential hedgeD . Nothing because MG Refining & Marketing did not hedge its positionView AnswerAnswer: B

Which of the following was not received by Northern Rock as official support from the UK banking and government authorities?A . A covert money market support operation designed to cover up the difficulties Northern Rock was facingB . The Bank of England's role as Lender-Of-Last-resort was activated at a penalty...

What is (are) the lesson(s) of the Barings' failure?A . Incentive plans have risk management implicationsB . Front and back offices need to be independentC . Large profits can be an indicator of riskD . All of the aboveView AnswerAnswer: D

The financial intermediary services provided by Fannie Mae and Freddie Mac were designed toA . Offer loans directly to the consumerB . Compete directly with banks in selling mortgaged to would-be home ownersC . Repackage mortgage loans made by banks and sell them on to investors as asset backed securitiesD...

According to the Group of 30 Report, dealers and end-users are encouraged to:A . Use separate trading agreements for interest rate derivatives, equity derivatives and foreign exchange transactions.B . Use a common trading agreement for interest rate and equity derivatives but a separate agreement for foreign exchange transactions.C . Use...

Which of the following is FALSE?A . Nick Leeson also ran the back office for his trading areaB . Nick Leeson dealt in complex derivatives lacking transparency of pricingC . SIMEX made inquiries to Barings Bank about large margin calls on its positionsD . Nick Leeson claimed to be running...

Finite insurance is reinsurance whichA . transfers only a limited amount of risk at the usual reinsurance priceB . transfers the total risk at less cost than traditional reinsuranceC . transfers the total risk at the usual reinsurance priceD . transfers only a limited amount of risk at less cost...

The problems in the Orange County case can best be characterized as failures related to:A . Market RiskB . Credit RiskC . Operational and Regulatory Compliance RiskD . All of the AboveView AnswerAnswer: A

The Financial Accounting and Reporting Infrastructure of any organization must: I. Accurately represent the corporation's current and known financial condition in a timely manner II. Only use off-balance sheet transactions which have a legitimate economic, tax, risk transfer or risk mitigating purpose III. Provide a detailed description of the Risk...

An Organization as a Whole must: I. Provide an environment in which an Escalation Policy can be effective II. Commit itself to actual enforcement of corporate governance policies III. Provide ongoing education and training to all employees on the role of risk management and corporate governance in the organization IV....