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PRMIA Exam 8008 Topic 1 Question 2 Discussion
Actual exam question for
PRMIA's
Risk Management Frameworks, Operational Risk, Credit Risk, Counterparty Risk, Market Risk, ALM, FTP ? 2015 Edition exam
Question #: 2
Topic #: 1
[All Risk Management Frameworks, Operational Risk, Credit Risk, Counterparty Risk, Market Risk, ALM, FTP ? 2015 Edition Questions]
Topic #: 1
Which of the following methods cannot be used to calculate Liquidity at Risk?
Suggested Answer:
B
Analytical or parametric approaches are not useful at all for liquidity at risk calculations because there are no neat distributions available to parameterize the large number of factors that affect the calculations of liquidity inflows and outflows. Historical simulations, Monte Carlo and scenario analysis (which can complement historical scenarios) are all valid choices
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