PRMIA PRM Certification - Exam II: Mathematical Foundations of Risk Measurement (8002) Free Practice Test
Question 1
Exploring a regression model for values of the independent variable that have not been observed is most accurately described as...
Correct Answer: C
Question 2
You invest $100 000 for 3 years at a continuously compounded rate of 3%. At the end of 3 years, you redeem the investment. Taxes of 22% are applied at the time of redemption. What is your approximate after-tax profit from the investment, rounded to $10?
Correct Answer: D
Question 3
You are given the following regressions of the first difference of the log of a commodity price on the lagged price and of the first difference of the log return on the lagged log return. Each regression is based on 100 data points and figures in square brackets denote the estimated standard errors of the coefficient estimates:
Which of the following hypotheses can be accepted based on these regressions at the 5% confidence level (corresponding to a critical value of the Dickey Fuller test statistic of - 2.89)?
Which of the following hypotheses can be accepted based on these regressions at the 5% confidence level (corresponding to a critical value of the Dickey Fuller test statistic of - 2.89)?
Correct Answer: A
Question 4
A biased coin has a probability of getting heads equal to 0.3. If the coin is tossed 4 times, what is the probability of getting heads at least two times?
Correct Answer: C
Question 5
What is the probability of tossing a coin and getting exactly 2 heads out of 5 throws?
Correct Answer: B
Question 6
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 less than 1?
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 less than 1?
Correct Answer: D