Try Free PRMIA 8002 P R M Updated Questions & Answers

Most Recent PRMIA 8002 Exam Dumps

Prepare for the PRMIA Mathematical Foundations of Risk Measurement :II exam with our extensive collection of questions and answers. These practice Q&A are updated according to the latest syllabus, providing you with the tools needed to review and test your knowledge.

QA4Exam focus on the latest syllabus and exam objectives, our practice Q&A are designed to help you identify key topics and solidify your understanding. By focusing on the core curriculum, These Questions & Answers helps you cover all the essential topics, ensuring you're well-prepared for every section of the exam. Each question comes with a detailed explanation, offering valuable insights and helping you to learn from your mistakes. Whether you're looking to assess your progress or dive deeper into complex topics, our updated Q&A will provide the support you need to confidently approach the PRMIA 8002 exam and achieve success.

Actual PRMIA 8002 Exam Questions

Question 1

A 2-step binomial tree is used to value an American put option with strike 104, given that the underlying price is currently 100. At each step the underlying price can move up by 20% or down by 20% and the risk-neutral probability of an up move is 0.55. There are no dividends paid on the underlying and the discretely compounded risk free interest rate over each time step is 2%. What is the value of the option in this model?

A11.82

B12.33

C12.49

D12.78

Correct answer: C

Question 2

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?

AThe stocks must be positively correlated ( )

BBeta must be positive ( )

CBeta must be greater in absolute value than the correlation of the stocks ( )

DAlpha must be positive ( )

Correct answer: C

Question 3

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?

A0.3

B0.5

C0.6

DNone of these

Correct answer: C

Question 4

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

Atrade the underlying in such a way as to make the portfolio delta and vega neutral.

Btrade the other option in such a way as to make the portfolio delta and vega neutral.

Ctrade the other option in such a way as to make the portfolio vega neutral, and then trade the underlying in such a way as to make the portfolio delta neutral.

Dtrade the underlying in such a way as to make the portfolio delta neutral, and then trade the other option in such a way as to make the portfolio vega neutral.

Correct answer: C

Question 5

Exploring a regression model for values of the independent variable that have not been observed is most accurately described as...

AEstimation

BRegression

CHypothesis testing

DPrediction

Correct answer: D

8002 Exam Dumps and Practice Questions

Most Recent PRMIA 8002 Exam Dumps

Actual PRMIA 8002 Exam Questions

Unlock all PRMIA 8002 questions