Which one of the following is an example of systematic risk? The key portfolio features are given below: Advertising risk. True or false? You acquired an expensive piece of equipment for your project. Mock tests should also give you a feel of the actual exam … The greater the risk associated with an investment, the lower the return investors expect from it, b. State that your project is also behind the schedule because of it. How Effective Is The Company In Managing Its Top Risks? Read each question carefully and note your answers. - Use this exam again and again to practice before you go for the real exam . b. Why are more funds from property and casualty insurance companies than funds from life insurance companies invested in the money markets? Let x be a random variable representing the percent return for a person investing in the stock market only. List 5 types of events that influence systematic (non-diversifiable) risk. Who should be involved in Risk Management activities? B) Stocks in the same industry tend to have more highly co... "Without good risk management practices, government cannot manage its resources effectively. The likelihood of experiencing an adverse effect is called: a. Explain what is meant by this statement. c) accession. a. scenario planning b. prelimi... Identify one environmental factor or risk that can affect the decision-making opportunities within an organization. A. a. a. b. using more debt in the capital structure. The sample questions are provided to help examinees familiarise themselves with the form and style of questions which they may see in the CFPCM Certification Examination (Founda-tion Level, Level 1 and Level 2). c. When the binder is delivered. If a firm's projects differ in risk, then one way of handling this problem is to evaluate each project with the appropriate risk-adjusted discount rate. A) 0.9 B) 0.95 C) 1.00 D) 1... Is it possible for a stock to have high total risk but low systematic risk? Explain why holding investments in portfolios has such a profound impact on the concept of financial risk. Many businesses now disclose possible risks to the business. The LEAST attractive option for a small company as regards risk is: a. A firm-specific risk is that a competitor might enter its market and take some of its customers. Marketing risk; Financial risk c. Business risk; Financial risk d. Marketing risk. One can lower insurance premiums by doing all of the following except _____. Project Management Institute calls the document Risk Register. D. Risk Diary . The spread in the annual prices stocks selling for under $ 10 and the spread in prices of those selling for over $ 60 are the be compared. Information systems b. Indicate which type of risk is most difficult to quantify and explain why that is the case. Hire a technical support team to quickly fix the equipment if needed. Would you put $5,000 of your assets into an investment where you have a 70% chance of doubling your money (to $10,000) and a 30% chance of losing the entire $5,000? Can't find the question you're looking for? Practice exam questions are one fool-proof method to get prepared for the test. Then, explain why you think they are vital and how the healthcare industry w... How does Adverse Selection differ from Moral Hazard? A stock has an expected return of 12 percent, the risk-free rate is 5 percent, and the market risk premium is 7 percent. Does the PAP cover you if you are driving a vehicle in a foreign country? a. The amount invested in Coke is $20,000 and in Wal-Mart is $20,000. a. Enhancement of team spirit. I have purchased your PMP question bank which I will do and then planning to apply for the real exam. Sample Exam Questions. Most home insurance policies cover jewelry for $2,230 and silverware for $2,280 unless items are covered with additional insurance. Answer : A robust process for managing … Market beta, c. Sensitivity analysis, d. Standard deviation of profitability. What is the algebraic equation for the coefficient of variation? What additional expertise, aside from knowledge of property and casualty insu... A) Describe the basic features of mutual insurers. (b) List of Stakeholders. C. Risk List. B. avoiding coinsurance. 1. The severity distribution of operational losses usually has the following shape: a) Symmetrical with short tails b) Long-tailed to the right c) Uniform d) Symmetrical with long tails. What is the difference between VAR and ES, and why ES is superior to VAR as a measure of market risk? … An upside risk is the risk that the organization will outperform its strategic goals. Beta risk b. 1) Indemnification for loss 2) Enhancement of credit 3) Source of funds... A) Explain the meaning of risk control. What is the historic risk of different financial assets of the U.S. economy and what can we do with their historic risk premium? XYZ Ltd. is considering three possible capital projects for next year. The risk per unit of return is measured by the a) standard deviation. What’s the BEST action you can do to improve project’s chances for success? Domain 1 of the certification exam, Security and Risk Management, is one of the most heavily weighted sections of the test. The correct answer is: D) The 2nd principle of risk data aggregation ... “Great study materials and exam-standard questions. What is Risk Identification and Assessment? Refers to spreading the risk of loan default among all the depositors within the depository institution,... Give two (2) examples of items that may be covered in a business insurance policy. The correct answers, rationale and reference are found at the end of the document. Explain in detail how a company develops, implements, and monitors mitigation strategies to prepare for potential issues related to a specific country's economic risks in order to protect company a... What determines whether an individual is willing to take on a risky activity? What are the advantages of integrating Enterprise Risk Management (ERM) with strategy? From a hospitals perspective, what is most likely to be the highest risk arrangement with a payer? Sample exam questions ... know the data or be able to effectively apply the data in a decision-making process to choose the BEST answer. Let y be a random var... As a result of frequent flooding, the insurance market has noted a positive correlation between flooding and the amount of insurance monies paid out for such floods. The PMP®, or Project Management Professional, is an exam conducted by the Project Management Institute (PMI)®, is a globally recognized certification. Buy insurance to cover the costs of repairs. PORTFOLIO MANAGEMENT-TRIAL QUESTIONS 1) Explain the following terms as used in Portfolio management and give examples and/or furmulas. What are the elements of a risk assessment? Which is false regarding COSO's definition/explanation of risk appetite? Decision trees are a visual representation of the sequential choices that financial decision makers face when making capital budgeting and investment decisions. O Insuran... Young people with little wealth should not invest money in risky assets such as the stock market, because they can t afford to lose what little money they have. Why would some consumers want to buy renter's insurance and some would not? The premium for patients in Healthy Patient HMO is $4,000 of which the HMO pays out approximately 90% for medical expenses and the rest is allocated as a loading charge. In other words, is risk to insurance companies treated the same way as risk to customers that have been extended an unsecured line of credit? A company uses delta hedging to hedge a portfolio of long positions in put and call options on a currency. Consider the following data for the marginal benefit (MB) of three consumers for a particular good. If an investor holds all of her wealth in a single asset, the most appropriate measure for finding the risk of that asset would be what? A firm's business risk is measured by the variability in what over time? Exam June 2015, questions Sample/practice exam November 2014, questions and answers Sample/practice exam 2014, questions and answers - Sample mid test Exam October 2014, ... Because they are not specialised in credit risk management… How does internationalizing the payments system among banks increase operational risk? Give an example from your work context of how KPIs affect RCM. How important are statistics and computer simulations for determining the risk of a project? So, having a team on standby to keep the equipment working is the best option here. True b. A) Distinguish between beta (or market) risk, within-firm (or corporate) risk, and stand-alone risk for a potential project. Write out and explain the formula that relates total risk, market risk, and diversifiable risk. (e) Because banks and credit unions have more stringent credit controls. Why? What are the major expenses of a property and casualty insurance company? Discuss the concept of social-ecological risks. Discuss and include an overview of risk identification aids and techniques in your answer. List six reasons risk management might increase the value of a firm. Without proper analysis you can’t state that a risk has an impact on the project. Which of the following statements is correct? Your house is worth $200,000. The FRM Level I Exam is on November 16, 2013, which is right around the corner! Suppose General Motors wants to replace one of their traditional lines of vehicles with all electric models. What are the portfolio weights for a portfolio that has 170 shares of Stock A that sell for $62 per share and 210 shares of Stock B that sell for $29 per share? Consider a position consisting of $300,000 investment in gold and $500,000 investment in silver. What will be an ideal response? Our Financial Risk Manager exam question bank offers one complete exam question-and-answer PDF book for Exam 1 (FRM Part 1 Books PDF) and one complete exam question-and-answer PDF book for Exam 2 (FRM Part 2 Books PDF), with both books totaling over 2,400 questions-and-answers … What is revenue at risk? Indemnity health care plans offer consumers more choice of health care providers. A document you use to capture all known risks is called: Project Management Institute calls the document Risk Register. b. d. using more equity in the capital struct... Daily arithmetic returns are normally distributed with mean 0.1 and standard deviation 0.25. Practice Now! Don’t assume that all stakeholders and team members track all the aspects of the project as you do. A) What is the major advantage of using the technique of avoidance in a risk management program? b. All other trademarks and copyrights are the property of their respective owners. c. A city... Are any business settings more in need of contingency planning than others? a. The KMV model produces a measure called Expected Default Frequency. A) It is the uncertainty about the gain or loss from an investment. It burned to the ground after a stray skyrocket from a nearby neighborhood landed on the roof. Learn vocabulary, terms, and more with flashcards, games, and other study tools. A) Explain the difference between pure risk and speculative risk. If Ruth Triton is the new CFO of a multinational company, what steps could she take to minimize international risk? Identify the types of firm-specific factors that increase a firm's nondiversifiable risk (systematic risk). Based on the historical record since 1900, which one of the following statements is correct? His deductible is... How does risk communication relate to risk management? What is the difference between technology risk and operational risk? Good luck. Risk data quality assessment evaluates the degree to which the data about individual project risks is accurate and reliable as a basis for qualitative risk analysis. One has a project to build a factory; the other has a project to visit a casino and gamble on roulette. He accepts a fair gamble only, b. What are the two components of total risk? Investors panic causing security prices around the globe to fall precipitously. Below are three retired ICMA questions from past CMA Exams. To reduce risk-taking, U.S. bank regulators: e) Require banks to hold substantial capital, b) Subject banks to annual financial examinations, c) Prohibit banks from investing in corporate stock,... Do financial institutions need FDIC insurance to join the Federal Reserve System? Mr. Jones has a 2-stock portfolio with a total value of $400,000. Each project has a 1-year life, and project returns depend on next year's state of the economy. Browse from thousands of Risk Management questions and answers (Q&A). a. This sample practice exam gives you the feeling of reality and is a clue to the questions asked in the actual ISACA Certified Information Security Manager (CISM) certification exam. Define Project Scope. Services, Working Scholars® Bringing Tuition-Free College to the Community. Explain the following legal characteristics of insurance contracts. Go ahead and submit it to our experts to be answered. This free practice quiz includes questions from ISACA ® 's test prep solutions that are the same level of difficulty you can expect on ISACA's official CRISC exam. As executives find themselves being asked more and more questions about the risks facing their supply chains, many have decided it’s time to reexamine their assumptions and approaches. This website or its third-party tools use cookies which are necessary to its functioning and required to improve your experience. Earn Transferable Credit & Get your Degree. Explain how title insurance works. A. Therefore, always log all possible risks first. Hedging reduces risk by: A. holding assets with negatively correlated returns so that totality portfolio return variability is reduced. In January 1988, Arco bought a 24.3% stake in the British oil firm Britoil PLC. Is the reputational risk part of operational risk? What risks does it cover? Explain which of these factors would be more volatile over the business cycle. More Risk Management Quizzes Quiz: Risk Management Practice Questions! Once you take a sample PMP test, write down your answers and mistakes.Go over the topics that you did not understand clearly to make sure you will improve your knowledge. True b. Question2: How often does the company refresh its assessment of the top risks? A. What is meant by systematic risk factors? D. liquidity risk. C. Bad management and/or unsuccessful products. Your risk of a catastrophic flood is 0.5 percent. Ten months later his insurance company canceled his policy as a result of failure to correc... As VP of strategic planning for a large, multi-business company, would you use portfolio-planning techniques in your work? That’s why regular one-on-ones is the best proactive action. Likewise, you should not assume that a risk has no impact at all. Why might the hedging strategy be preferred over the insurance strategy as a risk management approach by some businesses? When you’re done, you can scroll down (don’t cheat!) When the application is received. C. During the whole lifetime of a project. The efficient-markets hypothesis states that the return of a security is based on its risk. Describe how cash flows are used to minimize political risk. Risk b. Your Risk Register is shared with the team and stakeholders. Which of the following is the most significant disadvantage of starting a business from scratch? Stocks depend on next year accident for a project manager, need to learn about project management Basics |. Of healthcare organizations in the future is uncertain BCP ), and ( c ) risk neutral, project!, or even similar characteristics to be found in the team ) comes to you, a. Most relevant measure of: a. trying to maximize profits these factors would be increased by this prepayment. Waste time certainty equivalent is greater than the expected value of a 500,000... Then what is a risk management for Southwest Airlines major catastrophic occurrence, such as a hurricane,...! 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