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PRM Syllabus and Subjects

PRM Syllabus and Subjects

prm-syllabus

prm-syllabus

PRM Syllabus:- It provides the complete details of PRM Examination Syllabus and Subjects.

PRM Syllabus- PRM Subjects

PRM Syllabus- Exam I

  • 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 Syllabus- Exam II

  • 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 Syllabus- Exam III

  • 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 Syllabus- Exam IV

  • 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.

Recommended Read:- PRM Subjects

PRM Syllabus- PRM Curriculum

PRM Syllabus Exam I— Finance Theory, Financial Instruments and Markets

(Approx. 650 pages of reference material contained in PRM Handbook Volume I 2015 Edition: Books 1, 2 & 3)

Finance Theory                                   

  • Risk and Risk Aversion
  • Portfolio Mathematics
  • Capital Allocation
  • The CAPM and Multifactor Models
  • Basics of Capital Structure
  • The Term Structure of Interest Rates
  • Valuing Forward Contracts
  • Basic Principles of Options Pricing

Financial Instruments                              

(Descriptive and Pricing Knowledge)

  • General Characteristics of Bonds
  • The Analysis of Bonds
  • Futures and Forwards
  • Swaps
  • Vanilla Options
  • Credit Derivatives
  • Caps, Floors and Swaptions

Markets                                              

  • The Structure of Financial Markets
  • Money Markets
  • Bond Markets
  • Foreign Exchange Market
  • Stock Markets
  • Futures Markets
  • The Structure of Commodities Markets
  • Energy Markets

PRM Syllabus Exam II — Mathematical Foundations of Risk Measurement

(Approx. 220 pages of reference material found in PRM Handbook Volume II 2015 Edition)

Foundations

  • Symbols and Rules
  • Sequences and Series
  • Exponents and Logarithms
  • Equations and Inequalities
  • Functions and Graphs

Descriptive Statistics

  • Data?
  • The Moments of a Distribution
  • Measures of Location or Central Tendency
  • Measures of Dispersion
  • Bivariate Data

Calculus

  •  Differential Calculus
  • Higher-Order Derivatives
  • Financial Applications of Second Derivatives
  • Differentiating a Function of More than One Variable
  • Integral Calculus
  • Optimization
  • Linear Mathematics and

Matrix Algebra 

  • Matrix Algebra
  • Application of Matrix Algebra to Portfolio Construction
  • Quadratic Forms
  • Cholesky Decomposition
  • Eigenvalues and Eigenvectors

Probability Theory in Finance 

  • Definitions and Rules
  • Probability Distributions
  • Joint Distributions
  • Specific Probability Distributions

Regression Analysis in Finance

  • Simple Linear Regression
  • Multiple Linear Regression
  • Evaluating the Regression Model
  • Confidence Intervals
  • Hypothesis Testing
  • Prediction
  • Breakdown of OLS Assumptions
  • Random Walks and Mean Reversions
  • Maximum Likelihood Estimation

Numerical Methods

  • Solving (Non-differential) Equations
  • Numerical Optimization
  • Numerical Methods for Valuing Options

PRM Syllabus Exam III — Risk Management Practices

(Approx. 900 pages of reference material contained
in PRM Handbook Volume III: Books 1, 2 & 3)

Risk Management Frameworks

  • Foreword
  • Risk Governance
  • The Risk Management Framework

Operational Risk 

  • Introduction and Overview
  • Risk Assessment
  • Risk Information
  • Risk Modeling
  • Insurance Mitigation

Credit Risk 

  • Classic Credit Products
  • Classic Credit Life Cycle
  • Classic Credit Risk Methodology
  • Credit Derivatives and Securitization
  • Modern Credit Risk Modeling
  • Credit Portfolio Management

Counterparty Risk

  • Basics of Counterparty Risk
  • Risk Mitigation
  • Credit Valuation Adjustment (CVA)
  • CVA Related Aspects — Toward XVA
  • Managing Counterparty Risk and CVA

Market Risk

  • Foreword
  • Market Risk Governance
  • Market Risk Measurement and Management
  • Market Risk in the Trading Book —Business Specific Context
  • Commodities Market Risk Management
  • Market Risk Stress Testing

Asset Liability Management & Liquidity Risk

  • ALM, Liquidity and the Recent Crisis
  • An Introduction to ALM
  • Interest Rate Risk
  • Liquidity Risk
  • Balance Sheet Management

Funds Transfer Pricing

  • Introduction
  • FTP Governance and Management
  • FTP Methods and Historical Development

PRM Syllabus Exam IV — Case Studies and Standards: Governance, Best Practices and Ethics

(Approx. 130 pages of reference material online)

Case Studies

  • Barings
  • NAB-FX Options
  • Bankgesellscaft
  • LTCM
  • Bankers Trust
  • Orange County
  • Metallgesellschaft
  • World Com
  • Northern Rock
  • Taisei Fire and Marine Insurance
  • Fannie Mae/Freddie Mac
  • China Oil
  • Washington Mutual

Standards: Governance

  • Best Practices, Ethics
  • PRMIA Bylaws
  • PRMIA Governance Principles
  • PRMIA Standards of Best Practice,
    Conduct and Ethics
  • Group of Thirty Derivatives Best Practices

Recommended Read:- PRM Curriculum

PRM SyllabusPRM Details

You could wonder is PRM really worth the efforts, time and money. And surely you must have a good thought over this to do a quick comparison between what you invest and finally get in return after the completion of the program. Below I have listed down the main reasons why you should pursue PRM –

  • PRM is the most recognized certification course globally for the financial risk managers.
  • PRM program is useful in Portfolio Credit Risk Analyst, Enterprise Risk Managers, Risk Advisory Consultants, Operational Risk Analyst, Credit Risk Managers etc.
  • Employers considers PRM Designated individual’s expert in risk management because the skills of PRM holder is robust and vital to their business.
  • The lucrative working positions for PRM holders includes Chief Risk Officer, Senior Risk Analyst, Head of Operational Risk and Director.

To get a PRM Designation, you must pass all four exams. Either you can complete all exams in one day or in four separate modules, which can be taken in any order over a period of up to two years. You need to score a minimum of 60% correct answers to pass for each exam. You can retake any failed exam, but must wait 60 days from the date of the failed exam.

Eligibility

  • You must hold a membership in PRMIA.
  • You should meet minimum experience requirements, which include:
  • 4 Years if no bachelor degree
  • 2 Years if bachelor degree
  • No experience requirements if graduate school (i.e. MBA, MSF, MQF, etc.) or holder of other accepted professional designations (CFA exam, CAIA, CQF, etc.)

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.

You can appear any time of the year for PRM exam. PRM Exams are offered at fixed intervals throughout the year.

Scheduling WindowTesting Window
January 1 – March 14February 23 – March 14
March 15 – June 13May 25 – June 13
June 14 – September 5August 17 – September 5
September 6 – December 19November 23 – December 19

Recommended Read:- PRM Details

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prm-syllabus

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PRM Syllabus

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