PRMIA 8010 Exam - Topic 11 Question 66 Discussion

Actual exam question for PRMIA's 8010 exam

Question #: 66
Topic #: 11

[All 8010 Questions]

Which of the following is not a measure of risk sensitivity of some kind?

APL01

BConvexity

CCR01

DDelta

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 Joanna at Jan 22, 2025, 09:07 PM

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Talia

7 months ago

Not sure about that, sounds off to me.

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Samira

8 months ago

Wait, is PL01 really not a risk measure?

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Lai

8 months ago

Convexity definitely measures risk sensitivity.

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Reita

8 months ago

I think CR01 is also risk-related.

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Francine

8 months ago

Delta is a measure of risk sensitivity.

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Detra

9 months ago

Delta is usually tied to options pricing, but I can't recall if it's considered a risk measure or not.

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Stanton

9 months ago

CR01 is about credit risk, right? So it must be a measure of risk sensitivity.

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Lorrie

9 months ago

Convexity definitely sounds like a measure of risk sensitivity, especially in bond pricing.

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Teddy

9 months ago

I think I remember that PL01 is related to profit and loss, but I'm not entirely sure if it's a risk measure.

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Aide

9 months ago

I think I've got this one! PL01 is not a risk measure, it's a credit risk metric. The rest are all related to market risk in some way. I'll go with A.

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James

9 months ago

I'm a bit confused on this one. I know Convexity and Delta are related to risk, but I'm not sure about the others. Guess I'll have to eliminate the ones I'm less certain about.

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Jerrod

9 months ago

Okay, let me see... PL01, Convexity, CR01, Delta. I'm pretty sure Delta is a measure of risk sensitivity, so that's probably not the answer.

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Vincenza

9 months ago

Hmm, this seems like a tricky one. I'll need to think through the different risk measures carefully to figure out which one doesn't fit.

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Belen

1 year ago

Wait, is PL01 the risk sensitivity of my airplane pilot? I hope not!

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Destiny

1 year ago

User 3: CR01 is another measure of risk sensitivity.

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Alecia

1 year ago

User 2: Delta is not a measure of risk sensitivity.

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Jeannetta

1 year ago

User 1: No, PL01 is not related to airplane pilots.

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Leota

1 year ago

CR01? Sounds like a typo. I'll go with that one.

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Joanne

1 year ago

CR01? Sounds like a typo. I'll go with that one.

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Darrel

1 year ago

D) Delta

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Elise

1 year ago

C) CR01

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Refugia

1 year ago

B) Convexity

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Irene

1 year ago

A) PL01

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Arminda

1 year ago

Convexity? That's gotta be it. Who comes up with these terms anyway?

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Gracia

1 year ago

Convexity is actually a measure of risk sensitivity, so it's not the answer.

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Carolynn

1 year ago

No, I'm pretty sure it's A) PL01.

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Fanny

1 year ago

I think it's D) Delta.

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Mona

1 year ago

D) Delta

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Meghann

1 year ago

C) CR01

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Evan

1 year ago

B) Convexity

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Jean

1 year ago

A) PL01

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Adolph

1 year ago

PL01? Sounds like something from a sci-fi movie. Definitely not a risk measure.

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Kindra

1 year ago

PL01? Sounds like something from a sci-fi movie. Definitely not a risk measure.

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Elenora

1 year ago

D) Delta

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Sherron

1 year ago

C) CR01

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Phillip

1 year ago

B) Convexity

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Lorrine

1 year ago

A) PL01

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Anna

1 year ago

Hmm, I see your point. Let's discuss further to figure out the correct answer.

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Paz

1 year ago

Hmm, I thought Delta was a measure of risk sensitivity. Tricky one!

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Laurel

1 year ago

User 2: Yeah, it can be confusing sometimes. But in this case, it's not considered a measure of risk sensitivity.

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Providencia

1 year ago

User 1: Delta is actually a measure of risk sensitivity.

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Pearly

1 year ago

I disagree, I believe the answer is A) PL01.

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Anna

1 year ago

I think the answer is D) Delta.

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