# PRMIA Exam II: Mathematical Foundations of Risk Measurement - 2015 Edition - 8007 Free Exam Questions

QUESTION NO: 1
The first derivative of a function f(x) is zero at some point, the second derivative is also zero at this point. This means that:

Correct Answer: B
QUESTION NO: 2
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: A
QUESTION NO: 3
You are to perform a simple linear regression using the dependent variable Y and the independent variable X (Y = a + bX). Suppose that cov(X,Y)=10, var(X)= 5, and that the mean of X is 1 and the mean of Y is 2. What are the values for the regression parameters a and b?

Correct Answer: A
QUESTION NO: 4
A quadratic form is

Correct Answer: D
QUESTION NO: 5
A bond has modified duration 6 and convexity 30. Find the duration-convexity approximation to the percentage change in bond price when its yield increases by 5 basis points

Correct Answer: A
QUESTION NO: 6
Consider the following distribution data for a random variable X: What is the mean and variance of X?

Correct Answer: A
QUESTION NO: 7
Suppose 60% of capital is invested in asset 1, with volatility 40% and the rest is invested in asset 2, with volatility 30%. If the two asset returns have a correlation of -0.5, what is the volatility of the portfolio?

Correct Answer: B
QUESTION NO: 8
Simple linear regression involves one dependent variable, one independent variable and one error variable. In contrast, multiple linear regression uses...

Correct Answer: A
QUESTION NO: 9
What is the indefinite integral of the function f(x) = ln(x), where ln(x) denotes the natural logarithmic function?

Correct Answer: A
QUESTION NO: 10
Your stockbroker randomly recommends stocks to his clients from a tip sheet he is given each day. Today, his tip sheet has 3 common stocks and 5 preferred stocks from Asian companies and 3 common stocks and 5 preferred stocks from European companies. What is the probability that he will recommend a common stock AND/OR a European stock to you when you call and ask for one stock to buy today?

Correct Answer: A

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