PRMIA CCRM Practice Questions - PRMIA Credit and Counterparty Risk Management Certificate Exam - PRMIA CCRM Practice Questions - PRMIA Credit and Counterparty Risk Management Certificate Exam

Question 1

Which formula correctly defines Expected Loss (EL) under the standard credit risk framework used by PRMIA and Basel?

EL = PD + LGD + EAD EL = PD x LGD x EAD EL = PD x (1 - LGD) x EAD EL = EAD x (1 + LGD) / PD

Correct Answer:

EL = PD x LGD x EAD

Question 2

An obligor has PD = 2%, LGD = 45%, and EAD = $10,000,000. What is the one-year Expected Loss?

$$45,000 $$90,000 $$200,000 $$900,000

Correct Answer:

$$90,000

Question 3

Which of the following best describes Unexpected Loss (UL) in a credit risk context?

The mean loss over a long horizon The standard deviation (or volatility) of credit losses around the Expected Loss The maximum possible loss in a 1-in-100,000 event Losses caused by operational errors rather than defaults

Correct Answer:

The standard deviation (or volatility) of credit losses around the Expected Loss

Question 4

Under the Basel default definition that PRMIA references, an obligor is considered in default when which of the following is true?

The obligor misses any single interest payment The obligor's credit spread widens by more than 100 bps The obligor is more than 90 days past due on a material credit obligation, or the bank considers it unlikely to pay in full The obligor's external rating is downgraded below investment grade

Correct Answer:

The obligor is more than 90 days past due on a material credit obligation, or the bank considers it unlikely to pay in full

Question 5

Which of the following is the most accurate definition of Loss Given Default (LGD)?

The probability that the obligor defaults The percentage of EAD that the lender expects NOT to recover after default, net of recovery costs The dollar amount lost in any default event The recovery rate on senior secured debt

Correct Answer:

The percentage of EAD that the lender expects NOT to recover after default, net of recovery costs

Question 1

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Prepare with the PRMIA CCRM Practice Questions - PRMIA Credit and Counterparty Risk Management Certificate Exam practice quiz. This question bank includes 100 questions covering credit, risk, loss, typically, and portfolio. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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PRMIA CCRM Practice Questions - PRMIA Credit and Counterparty Risk Management Certificate Exam

This practice set contains 100 questions from the matching question bank and focuses on credit, risk, loss, typically, and portfolio. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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PRMIA CCRM Practice Questions - PRMIA Credit and Counterparty Risk Management Certificate Exam

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