PRM Exam Format
PRM Exam Format:- The PRM certification gives the person a competitive advantage over peers. The world is increasingly becoming risk-centric, thereby increasing the demand of risk professionals, and the PRM certification is a part of this.
As a PRM-certified risk manager, the professional is able to distinguish himself/herself from other professionals.For the employer, it translates into seriousness to handling risk management tasks.
The exams conducted by PRMIA is computer-based consisting of multiple-choice questions which are drawn randomly from the exam database according to the syllabus order and weightings. It helps PRMIA to examine the accurate details of questions by administering and evaluating the time taken by candidates to answer each question.
Following table showcases the details of PRM exams:
|Exam||Exam Name||No. of Questions||Time Allowed|
|I||Finance Theory, Financial Instruments and Markets||36||2 hours|
|II||Mathematical Foundations of Risk Measurement||24||2 hours|
|III||Risk Management Practices||60||3 hours|
|IV||Case Studies, PRMIA Standards of Best Practice, Conduct and Ethics, Bylaws||24||1 hour|
Let’s now look at the high level subject matter breakdown for each individual exam.
PRM Exam Format- Exam I
Considering the number of questions, you need to attempt in given time, PRM Level I exam contains total 36 questions which needs to be answered in 2 hours’ time. The questions are MCQ’s and are selected randomly from the syllabus as per weightage requirement and the exam doesn’t have any negative marking. You are required to score minimum 60% to clear the exam and the exam can be taken only in English Language. It is an online exam and conducted in more than 165 countries consisting nearly 5000 locations.
- Finance Theory – This section carries 36% weightage and you will study about the risk and its aversion, CAPM, Basics of capital structure, Valuation of forward contracts and Options Pricing.
- Financial Instruments – This section carries 36% weightage and hence you are required to have descriptive and pricing knowledge on the various financial instruments like Bonds, Futures and forwards, Swaps, Credit Derivatives etc.
- Financial Markets – This section carries 28% weightage, for this section you should have knowledge of Money, Bond, Forex, Stock, Futures, Commodities and Energy Markets.
PRM Exam Format- Exam II
The total number of questions in Exam II is 24 for which you will get 2 hours’ time. And you need to score minimum 60% to clear this exam, there is no negative marking.
- Mathematical Foundation – This section carries 4% weightage and it deals with the mathematical symbols, rules, sequences, series, exponents and logarithmic concepts, various functions and graphs.
- Descriptive Statistics – This section carries 8% weightage and it includes the moments of a distribution, bivariate data, measures of dispersion.
- Calculus – This section carries 21% weightage and it includes differential calculus, integral calculus, applications of second derivatives, optimization etc.
- Linear Mathematics & Matrix Algebra – This section carries 21% weightage and it includes matrix algebra, its applications, and quadratic forms.
- Probability Theory – This section carries 25% weightage and it includes probability theory definitions and rules, distribution concepts.
- Financial Theory – This section carries 13% weightage and it includes the simple, multiple linear regression, hypothesis testing, maximum likelihood estimation.
- Numerical Methods – This section carries 8% weightage and it includes numerical methods for valuing options, solving equations etc.
PRM Exam Format- Exam III
The total number of questions in this exam is 60 and total time duration is 3 hours and you need to score minimum 60% and there is no negative marking.
- Risk Management Frameworks – This section carries 11% weightage and it includes the knowledge on the area of risk governance, risk management frameworks etc.
- Operational Risk – This section carries 16% weightage and it includes risk assessment, risk information, risk modeling, insurance mitigation.
- Credit Risk – This section carries 29% weightage and it includes the knowledge on classic credit products, classic credit life cycle, classic credit risk methodology, credit derivatives and securitization, modern credit risk modeling and credit portfolio management.
- Counterparty Credit Risk – This section carries 8% weightage and it deals with the basics of counterparty risk, risk mitigation, credit valuation adjustment (CVA), CVA related aspects and managing counterparty risk.
- Market Risk – This section carries 23% weightage and it includes market risk governance, market risk measurement and management, market risk in trading book, commodities market risk management, market risk stress testing.
- Asset Liability Management, Liquidity Risk Management & Funds Transfer Pricing – This section carries 18% weightage and it includes interest rate risk, liquidity risk, Introduction to ALM, balance sheet management, Funds Transfer Pricing Governance, Management, Methods and Historical Development.
PRM Exam Format- Exam IV
This exam consists of 24 multiple choice questions and the time duration for this exam is 1 hour, to clear this exam you need to score 60% and there is no negative marking.
- Case Studies – This section carries 63% weightage and for this section you will required to study about the various cases like World Com, Barings, LTCM, NAB-FX Options, Bankers Trust, Washington Mutual, Northern Rock etc.
- Standards of Practice, Governance & Ethics – This section carries 37% weightage and this includes study on PRMIA Bylaws, Governance Principles, Standards of Best Practice, Conduct and Ethics, Group of Thirty Derivatives Best Practices.
PRM Exam Format