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PRMIA Exam 8008 Topic 1 Question 6 Discussion
Actual exam question for
PRMIA's
8008 exam
Question #: 6
Topic #: 1
[All 8008 Questions]
Topic #: 1
Which of the following are valid techniques used when performing stress testing based on hypothetical test scenarios:
I,Modifying the covariance matrix by changing asset correlations
II,Specifying hypothetical shocks
III,Sensitivity analysis based on changes in selected risk factors
IV. Evaluating systemic liquidity risks
Suggested Answer:
D
Each of these represent valid techniques for performing stress testing and building stress scenarios. Therefore d is the correct answer. In practice, elements of each of these techniques is used depending upon the portfolio and the exact situation.
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