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Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition Questions and Answers

Question 9

The Fortress Re finite reinsurance model

Options:

allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability

allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid annual premiums to cover these policies, and as the risks were spread out over the year the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability

allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the future premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability

allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, but as the risks were spread out over time the future premiums were not accounted for as current liabilities on the books of the pool members, thus giving a false impression of profitability

Question 10

For the sentence

"The organization should have at its disposal employees who have adequate _________, ________ and _______ to perform the tasks assigned to them",

Choose the correct combination of words from the following options:

Options:

knowledge, skills, expertise

experience, skills, previous successes

risk appetite, knowledge, expertise

track record, expertise, skills

Question 11

Unlike the case at Barings Bank, National Australia Bank:

Options:

Had a risk management infrastructure that was credited with doing its' job well, despite the losses

Was not dealing in derivatives

Had a Board of Directors that was unaware of the true nature of trading activities

Had a separation of duties between trading and back office

Question 12

According to the Group of 30 Report, option contracts:

Options:

Always generate credit risk to both counterparties

Create credit risk only for the buyer (due to default by the seller) provided the premium is due, and paid, at contract initiation

Create no credit risk, since the buyer need not exercise the option

Usually create credit risk only for the seller (to default by the buyer)

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Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition Questions and Answers

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