PRMIA Exam 8008 Topic 1 Question 2 Discussion

Actual exam question for PRMIA's 8008 exam

Question #: 2
Topic #: 1

[All 8008 Questions]

Which of the following methods cannot be used to calculate Liquidity at Risk?

AMonte Carlo simulation

BAnalytical or parametric approaches

CHistorical simulation

DScenario analysis

Show Suggested Answer

Suggested Answer: B

Analytical or parametric approaches are not useful at all for liquidity at risk calculations because there are no neat distributions available to parameterize the large number of factors that affect the calculations of liquidity inflows and outflows. Historical simulations, Monte Carlo and scenario analysis (which can complement historical scenarios) are all valid choices

by Willard at May 06, 2022, 11:44 PM

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