PRMIA PRM Certification - Exam II: Mathematical Foundations of Risk Measurement - 8002 Exam Practice Test
For the function f(x) =3x-x3 which of the following is true?
Correct Answer: A
Vote an answer
A simple linear regression is based on 100 data points. The total sum of squares is 1.5 and the correlation between the dependent and explanatory variables is 0.5. What is the explained sum of squares?
Correct Answer: B
Vote an answer
Which of the following statements about variance and standard deviation are correct?
1.When calculated based on a sample of the population data, one has to correct for any bias in the result by using the number of degrees of freedom in the calculation
2.Variance is in square root units of the underlying data, whereas standard deviation is in units of the underlying data
3.When considering independent variables, variance is additive, while standard deviation is not
1.When calculated based on a sample of the population data, one has to correct for any bias in the result by using the number of degrees of freedom in the calculation
2.Variance is in square root units of the underlying data, whereas standard deviation is in units of the underlying data
3.When considering independent variables, variance is additive, while standard deviation is not
Correct Answer: B
Vote an answer
Consider the linear regression model for the returns of stock A and the returns of stock B.
Stock A is 50% more volatile than stock B.
Which of the following statements is TRUE?
Stock A is 50% more volatile than stock B.
Which of the following statements is TRUE?
Correct Answer: C
Vote an answer
In a binomial tree lattice, at each step the underlying price can move up by a factor of u = 1.1 or down by a factor of . The continuously compounded risk free interest rate over each time step is 1% and there are no dividends paid on the underlying. The risk neutral probability for an up move is:
Correct Answer: C
Vote an answer
Newton-Raphson iteration is used to find a solution of x5 - x3 + x = 1. If xn = 2, what is xn+1?
Correct Answer: B
Vote an answer
What is the simplest form of this expression: log2(165/2)
Correct Answer: B
Vote an answer
The bisection method can be used for solving f(x)=0 for a unique solution of x, when
Correct Answer: D
Vote an answer