PRMIA Exam 8010 Topic 1 Question 69 Discussion

Actual exam question for PRMIA's 8010 exam

Question #: 69
Topic #: 1

[All 8010 Questions]

For credit risk calculations, correlation between the asset values of two issuers is often proxied with:

ACredit migration matrices

BTransition probabilities

CEquity correlations

DDefault correlations

Show Suggested Answer

Suggested Answer: D

Choice 'b', Choice 'c' and Choice 'a' correctly describe a bilateral close out netting as recommended by the ISDA. However Choice 'd' is not correct as it suggests individual settlement of transactions without netting which is the whole point of bilateral close out netting.

by Anastacia at Mar 20, 2025, 08:15 PM

Limited Time Offer

25%

Off

Get Premium 8010 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Lachelle

29 days ago

This is a classic case of 'the more you know, the more you realize you don't know'. I'm going with D) Default correlations, but I'm open to being corrected if I'm missing something!

upvoted 0 times

...

Fausto

1 months ago

Haha, if only the answer was 'E) Horoscope correlations' - that would really spice things up! But seriously, I agree that D) Default correlations is the way to go here.

upvoted 0 times

...

Micaela

1 months ago

I was debating between C) Equity correlations and D) Default correlations, but I ultimately went with D. Seems like the more direct approach for this kind of analysis.

upvoted 0 times

Ines

6 days ago

Default correlations are often used in credit risk calculations because they directly measure the relationship between defaults of two issuers.

upvoted 0 times

...

Anissa

8 days ago

I went with A) Credit migration matrices. It's another common approach to proxy correlation between asset values.

upvoted 0 times

...

Karma

11 days ago

I chose D) Default correlations as well. It's a common proxy for correlation in credit risk calculations.

upvoted 0 times

...

2 months ago

I think the answer is D) Default correlations.

upvoted 0 times

...