PRMIA 8010 Exam - Topic 5 Question 64 Discussion

Actual exam question for PRMIA's 8010 exam

Question #: 64
Topic #: 5

Under the standardized approach to calculating operational risk capital, how many business lines are a bank's activities divided into per Basel II?

B15

D12

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 Dacia at Dec 08, 2024, 03:21 PM

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Ocie

6 months ago

Really? I didn't know it was that few!

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Sage

6 months ago

Nope, definitely 8!

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Sylvie

6 months ago

Wait, I thought it was 12?

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Catrice

7 months ago

Totally agree, 8 is the right number!

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Peggie

7 months ago

It's 8 business lines according to Basel II.

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Cecil

7 months ago

I’m pretty confident it’s 8. I recall going over the Basel II framework and that number stuck with me.

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Billye

7 months ago

I’m torn between 7 and 12. I feel like I practiced a question that mentioned 12, but I could be mixing it up.

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Melda

7 months ago

I remember studying this, and I think it might be 15 business lines. That seems to ring a bell.

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Belen

8 months ago

I think there are 8 business lines, but I’m not completely sure. It feels like I’ve seen that number before.

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Ciara

8 months ago

I've got this one! The Basel II framework divides a bank's activities into 8 distinct business lines for the purposes of calculating operational risk capital under the standardized approach.

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Karl

8 months ago

Okay, let me think this through step-by-step. The question is asking about the number of business lines under the Basel II standardized approach for operational risk capital. I believe the answer is 8, but I'll review my notes to confirm.

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Corazon

8 months ago

Hmm, I'm a bit confused on this one. I know it has to do with the standardized approach to operational risk, but I can't recall the exact number of business lines off the top of my head.

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Elli

8 months ago

I'm pretty sure the answer is 8 business lines, but I'll double-check the Basel II guidelines just to be sure.

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Jaime

1 year ago

I bet the answer is 8 business lines. After all, who would expect the exam to ask about the number of business lines in the banking industry? That's so niche, it has to be the right answer.

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Moon

11 months ago

I agree, I also believe it's 8 business lines.

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Kandis

11 months ago

I'm going with 7 business lines.

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Candida

12 months ago

I think it's 12 business lines.

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Alecia

1 year ago

8 business lines, no doubt about it. Although, knowing my luck, the correct answer will be something completely unexpected, like 'all of the above'.

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Troy

12 months ago

Yeah, 8 sounds right to me too.

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Vilma

1 year ago

I agree, it's definitely 8.

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Rebbecca

1 year ago

I think it's 8 business lines.

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Samira

1 year ago

8 business lines, easy peasy. Though I wonder if the exam writers are feeling mischievous and will throw in a curveball answer just to mess with us.

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Eloisa

1 year ago

Ah, the old operational risk capital question. I'm pretty sure it's 8 business lines, but I hope the exam doesn't try to trick me with a different number.

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Heike

11 months ago

Let's hope we're all right on this one.

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Tamar

11 months ago

I'm going with 8 as well, seems like the consensus.

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Kiley

11 months ago

Yeah, I remember studying that it's divided into 8.

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Marion

11 months ago

I think it's 8 business lines too.

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Shayne

1 year ago

Hmm, I remember learning about the Basel II framework in my risk management course. I think it's 8 business lines, but I better double-check before answering.

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Melvin

1 year ago

I'm not sure, but I think the correct answer is D) 12 because it provides a more comprehensive coverage of a bank's activities.

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Wendell

1 year ago

I disagree, I believe the answer is C) 8.

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Melvin

1 year ago

I think the answer is A) 7.

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