Free PRMIA 8007 Practice Exam with Questions & Answers

Suppose I trade an option and I wish to hedge that option for delta and vega. Another option is available to trade. To complete the hedge I would

Which of the following statements is true for symmetric positive definite matrices?

Which of the following can induce a 'multicollinearity' problem in a regression model?

A 95% confidence interval for a parameter estimate can be interpreted as follows:

I have a portfolio of two stocks. The weights are equal. The one volatility is 30% while the other is 40%. The minimum and maximum possible values of the volatility of my portfolio are:

There are two portfolios with no overlapping of stocks or bonds. Portfolio 1 has 6 stocks and 6 bonds. Portfolio 2 has 4 stocks and 8 bonds. If we randomly select one stock, what is the probability that it came from Portfolio1?

You are investigating the relationship between weather and stock market performance. To do this, you pick 100 stock market locations all over the world. For each location, you collect yesterday's mean temperature and humidity and yesterday's local index return. Performing a regression analysis on this data is an example of…

A linear regression gives the following output:

Figures in square brackets are estimated standard errors of the coefficient estimates. What is the value of the test statistic for the hypothesis that the coefficient of is zero against the alternative that is less than zero?

Let N(.) denote the cumulative distribution function and suppose that X and Y are standard normally distributed and uncorrelated. Using the fact that N(1.96)=0.975, the probability that X ≤ 0 and Y ≤ 1.96 is approximately

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?