PRMIA 8007 Valid Dump : Exam II: Mathematical Foundations of Risk Measurement - 2015 Edition

8007 real exams

Exam Code: 8007

Exam Name: Exam II: Mathematical Foundations of Risk Measurement - 2015 Edition

Updated: Dec 20, 2024

Q & A: 133 Questions and Answers

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PRMIA Exam II: Mathematical Foundations of Risk Measurement - 2015 Edition Sample Questions:

1. What is the probability of tossing a coin and getting exactly 2 heads out of 5 throws?

A) 8/15
B) 10/32
C) None of these
D) 9/23


2. Assume that 40% of all financial organizations investigated by authorities turn out to be fraudulent.
What is the probability of randomly investigating 2 different organizations and finding that neither is fraudulent; and what is the probability of finding exactly one being fraudulent?

A) 2/5 and 3/5
B) 1/3 and 8/17
C) 9/25 and 12/25
D) 2/5 and 1/2


3. A 2-step binomial tree is used to value an American put option with strike 105, given that the underlying price is currently 100. At each step the underlying price can move up by 10 or down by 10 and the risk-neutral probability of an up move is 0.6. There are no dividends paid on the underlying and the continuously compounded risk free interest rate over each time step is 1%. What is the value of the option in this model?

A) 7.44
B) 7.12
C) 7.29
D) 6.59


4. For the function f(x) =3x-x3 which of the following is true?

A) x = -3 is a maximum
B) x = 0 is a minimum
C) None of these
D) x = 2 is a maximum


5. Two vectors are orthogonal when:

A) one is a scalar multiple of the other
B) their scalar product (sum product) is zero
C) their components are linearly dependent
D) their determinant is zero


Solutions:

Question # 1
Answer: B
Question # 2
Answer: C
Question # 3
Answer: B
Question # 4
Answer: C
Question # 5
Answer: B

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