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PRMIA Exam 8010 Topic 1 Question 50 Discussion

Actual exam question for PRMIA's Operational Risk Manager (ORM) Exam exam
Question #: 50
Topic #: 1
[All Operational Risk Manager (ORM) Exam Questions]

Which of the following are valid approaches for extreme value analysis given a dataset:

1. The Block Maxima approach

2. Least squares approach

3. Maximum likelihood approach

4. Peak-over-thresholds approach

Show Suggested Answer Hide Answer
Suggested Answer: C

For EVT, we use the block maxima or the peaks-over-threshold methods. These provide us the data points that can be fitted to a GEV distribution.

Least squares and maximum likelihood are methods that are used for curve fitting, and they have a variety of applications across risk management.


by Carin at Jun 20, 2024, 01:14 PM

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Lorita
1 months ago
I think the correct answer is C) 1 and 4, as those are the most commonly used approaches.
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Kallie
2 months ago
Hold up, the Least squares approach? What is this, a beauty pageant? The only valid answers are the ones that actually make statistical sense.
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Kati
2 months ago
Whoa, all four of those are valid? I thought it was just the Block Maxima and Peak-over-thresholds. Looks like I need to brush up on my extreme value analysis methods.
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My
1 months ago
User 2: Really? I didn't know that. I thought it was just the Block Maxima and Peak-over-thresholds.
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Isabella
1 months ago
User 1: Yeah, all four approaches are actually valid for extreme value analysis.
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Margery
2 months ago
I'm not sure, I think it might be D) All of the above.
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Belen
2 months ago
I agree with Brigette, I believe the correct answer is B) 1, 3 and 4.
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Delisa
2 months ago
The Maximum likelihood approach is definitely one of the valid options. I'm not sure about the Least squares approach, that sounds more like a regression thing.
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Portia
2 months ago
User 2: I agree, it's a common method used for extreme value analysis.
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Viola
2 months ago
User 1: The Maximum likelihood approach is definitely one of the valid options.
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Brigette
2 months ago
I think the valid approaches for extreme value analysis are 1, 3, and 4.
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Cory
2 months ago
I'm pretty sure the Block Maxima approach and the Peak-over-thresholds approach are valid for extreme value analysis. The Least squares approach seems a bit off-target though.
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Dick
1 months ago
User 3: The Least squares approach doesn't seem to fit the bill for extreme value analysis.
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Josue
1 months ago
User 2: I agree, those two approaches are commonly used.
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Talia
2 months ago
User 1: I think the Block Maxima and Peak-over-thresholds approaches are valid for extreme value analysis.
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