PRMIA 8010 Exam - Topic 1 Question 37 Discussion

Actual exam question for PRMIA's 8010 exam

Question #: 37
Topic #: 1

[All 8010 Questions]

Which of the following statements are correct:

1. A training set is a set of data used to create a model, while a control set is a set of data is used to prove that the model actually works

2. Cleansing, aggregating or ensuring data integrity is a task for the IT department, and is not a risk manager's responsibility

3. Lack of information on the quality of underlying securities and assets was a major cause of the collapse in the CDO markets during the credit crisis that started in 2007

4. The problem of lack of historical data can be addressed reasonably satisfactorily by using analytical approaches

A2 and 4

B1, 3 and 4

C1 and 3

DAll of the above

Show Suggested Answer

Suggested Answer: B

Volatility clustering leads to levels of current volatility that can be significantly different from long run averages. When volatility is running high, institutions need to shed risk, and when it is running low, they can afford to increase returns by taking on more risk for a given amount of capital. An institution's response to changes in volatility can be either to adjust risk, or capital, or both. Accounting for volatility clustering helps institutions manage their risk and capital and therefore statements I and II are correct.

Regulatory requirements do not require volatility clustering to be taken into account (at least not yet). Therefore statement III is not correct, and neither is IV which is completely unrelated to volatility clustering.

by Rima at Nov 25, 2023, 04:19 AM

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Kimbery

3 months ago

Totally agree with 3, that was a huge problem back in 2007.

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Karl

3 months ago

Not sure about 4, can analytics really fix the historical data issue?

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Arlie

4 months ago

Wow, I can't believe how much the CDO markets collapsed!

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Sherill

4 months ago

I disagree with 2, risk managers should care about data quality too.

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My

4 months ago

Statement 1 is spot on!

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Taryn

4 months ago

For statement 4, I think using analytical approaches can help with historical data issues, but I wonder if "reasonably satisfactorily" is too optimistic.

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Matthew

5 months ago

Statement 3 seems correct to me; I recall reading about how the lack of transparency in CDOs was a huge issue during the crisis.

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Basilia

5 months ago

I think statement 2 is tricky. I feel like data cleansing is part of risk management too, not just IT.

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Glennis

5 months ago

I remember that a training set is definitely used to create a model, but I'm not sure about the control set part. Is it really just to prove the model works?

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Talia

5 months ago

I'm a bit unsure about how to approach this question. There are a lot of different concepts being tested, so I'll need to carefully analyze each statement to determine which ones are true.

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Charlie

5 months ago

I'm pretty confident that the third statement about the CDO market collapse is correct. Lack of transparency on the underlying assets was a major issue during the crisis. The fourth statement also seems reasonable to me.

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Ruthann

5 months ago

Hmm, the second statement about data integrity being an IT responsibility seems questionable to me. I thought risk managers also needed to ensure data quality. Let me re-read that one.

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Brandee

5 months ago

The first statement about training and control sets seems straightforward, but I'm not as sure about the other statements. I'll need to review my notes on data quality and the credit crisis to answer this properly.

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Micaela

5 months ago

This question covers a lot of different concepts, so I'll need to think through each statement carefully to determine which ones are correct.

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Marylou

5 months ago

I'm feeling pretty confident about this one. The question is straightforward, and the exhibit provides a helpful reference for the group-to-RP mapping. I'll review the options and select the best answer.

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Dana

5 months ago

Hmm, the question mentions SSL processing, so I'm thinking the issue might be related to the SSL setup on the virtual server. I'll focus on checking the SSL profile and handshake.

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Allene

5 months ago

Hmm, I'm a bit unsure about this one. The options seem similar, and I want to make sure I understand the difference between them before answering.

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Malinda

5 months ago

I think it might be related to service quality dimensions. We had a practice question that highlighted how different metrics can affect customer perceptions.

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Nidia

5 months ago

I'm a little unsure on this. I know the Daily Scrum is supposed to be quick, but I can't recall the specific three questions. I'll have to think it through carefully.

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