Discuss PRMIA 8010 Exam Topic 1 Question 18

Which of the following is NOT true in respect of bilateral close out netting:

AThe net amount due is immediately receivable or payable

BAll transactions are immediately closed out upon the occurrence of a credit event for either of the counterparties

CAll transactions are netted against each other

DTransactions are separated by transaction type and immediately settled separately at each's replacement value

Suggested Answer: D

Choice 'b', Choice 'c' and Choice 'a' correctly describe a bilateral close out netting as recommended by the ISDA. However Choice 'd' is not correct as it suggests individual settlement of transactions without netting which is the whole point of bilateral close out netting.

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13 comments · newest first

Jacob 11 months ago

I thought all transactions were settled separately, but maybe not?

Thad 11 months ago

Wait, D seems off to me, really?

Eun 12 months ago

C sounds right, all transactions get netted.

Earleen 12 months ago

Totally agree, B is misleading.

Tracey 12 months ago

A is true, the net amount is due right away.

Wynell 1 year ago

I feel like option A is definitely true since the net amount is usually receivable or payable right away. But I'm a bit confused about the specifics of option D.

Grover 1 year ago

I have a vague recollection that netting means all transactions are combined, so maybe option C is true? But I'm not completely confident about it.

Catherin 1 year ago

I think option B is the one that doesn't fit. In practice questions, we discussed how not all transactions close out immediately after a credit event.

Pauline 1 year ago

I remember studying close out netting, but I'm not entirely sure if option D is correct. It sounds like it could be true, but it might not fit the definition.

Whitley 1 year ago

Hmm, I'm not sure about this one. The license plate could be either the User Service identifier or the Service identifier. I'll need to think it through carefully.

Ruthann 1 year ago

I'm a bit confused by this question. The options don't seem to directly match the question being asked. I'll have to review the VMware Dynamic Environment Manager documentation to see where I can find the settings for capturing application information.

Cory 1 year ago

High-speed interconnection seems like an obvious advantage, but I remember discussing something about cost efficiency too.

Jesus 1 year ago

I'm torn between Total Bandwidth Usage and Per-flow Goodput for one of the answers. I feel like both could be relevant, but I'm not confident.

PRMIA 8010 Exam - Topic 1 Question 18 Discussion