{"id":26045,"date":"2021-07-05T01:36:35","date_gmt":"2021-07-05T01:36:35","guid":{"rendered":"https:\/\/www.dumpsbase.com\/freedumps\/?p=26045"},"modified":"2021-07-05T01:36:37","modified_gmt":"2021-07-05T01:36:37","slug":"real-prima-prm-designation-exam-8006-dumps-questions","status":"publish","type":"post","link":"https:\/\/www.dumpsbase.com\/freedumps\/real-prima-prm-designation-exam-8006-dumps-questions.html","title":{"rendered":"Real PRIMA PRM Designation  Exam 8006 Dumps Questions"},"content":{"rendered":"\n<p>PRIMA PRM Designation certification is popular, which a globally recognized, graduate-level risk management credential. PRM Designation certification requires candidates to complete four exams in any order:<\/p>\n<ul style=\"list-style-type: square;\">\n<li>8006 PRM Certification &#8211; Exam I: Finance Theory, Financial Instruments, Financial Markets \u2013 2015 Edition<\/li>\n<li><a href=\"https:\/\/www.dumpsbase.com\/freedumps\/prmia-certification-8007-mathematical-foundations-of-risk-measurement-dumps-online.html\"><strong>8007 Exam II<\/strong><\/a>: Mathematical Foundations of Risk Measurement &#8211; 2015 Edition<\/li>\n<li><a href=\"https:\/\/www.dumpsbase.com\/8008.html\"><strong>8008 Exam III<\/strong><\/a>: Risk Management Frameworks . Operational Risk . Credit Risk . Counterparty Risk . Market Risk . ALM . FTP &#8211; 2015 Edition<\/li>\n<li><a href=\"https:\/\/www.dumpsbase.com\/freedumps\/real-prm-certification-exam-8009-dumps-questions.html\"><strong>8009 Exam IV<\/strong><\/a>: Case Studies: Standards: Governance, Best Practices and Ethics &#8211; 2015 Edition<\/li>\n<\/ul>\n<p>Today, we will introduce you the great 8006 dumps questions to help you pass Exam I: Finance Theory, Financial Instruments, Financial Markets \u2013 2015 Edition. Real 8006 exam questions with actual answers ensure that you can pass PRIMA 8006 exam in the first attempt.<\/p>\n<h2>Try to read PRIMA PRM Designation Certification <span style=\"background-color: #3366ff;\">8006 Free Dumps<\/span> Online.<\/h2>\n<script>\n\t  window.fbAsyncInit = function() {\n\t    FB.init({\n\t      appId            : '622169541470367',\n\t      autoLogAppEvents : true,\n\t      xfbml            : true,\n\t      version          : 'v3.1'\n\t    });\n\t  };\n\t\n\t  (function(d, s, id){\n\t     var js, fjs = d.getElementsByTagName(s)[0];\n\t     if (d.getElementById(id)) {return;}\n\t     js = d.createElement(s); js.id = id;\n\t     js.src = \"https:\/\/connect.facebook.net\/en_US\/sdk.js\";\n\t     fjs.parentNode.insertBefore(js, fjs);\n\t   }(document, 'script', 'facebook-jssdk'));\n\t<\/script><script type=\"text\/javascript\" >\ndocument.addEventListener(\"DOMContentLoaded\", function(event) { \nif(!window.jQuery) alert(\"The important jQuery library is not properly loaded in your site. Your WordPress theme is probably missing the essential wp_head() call. You can switch to another theme and you will see that the plugin works fine and this notice disappears. If you are still not sure what to do you can contact us for help.\");\n});\n<\/script>  \n  \n<div  id=\"watupro_quiz\" class=\"quiz-area single-page-quiz\">\n<p id=\"submittingExam5561\" style=\"display:none;text-align:center;\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.dumpsbase.com\/freedumps\/wp-content\/plugins\/watupro\/img\/loading.gif\" width=\"16\" height=\"16\"><\/p>\n\n<div class=\"watupro-exam-description\" id=\"description-quiz-5561\"><\/div>\n\n<form action=\"\" method=\"post\" class=\"quiz-form\" id=\"quiz-5561\"  enctype=\"multipart\/form-data\" >\n<div class='watu-question ' id='question-1' style=';'><div id='questionWrap-1'  class='   watupro-question-id-184249'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>1. <\/span>Calculate the number of S&amp;P futures contracts to sell to hedge the market exposure of an equity portfolio value at $1m and with a of 1.5. The S&amp;P is currently at 1000 and the contract multiplier is 250.<\/div><input type='hidden' name='question_id[]' id='qID_1' value='184249' \/><input type='hidden' id='answerType184249' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184249[]' id='answer-id-741697' class='answer   answerof-184249 ' value='741697'   \/><label for='answer-id-741697' id='answer-label-741697' class=' answer'><span>4<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184249[]' id='answer-id-741698' class='answer   answerof-184249 ' value='741698'   \/><label for='answer-id-741698' id='answer-label-741698' class=' answer'><span>8<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184249[]' id='answer-id-741699' class='answer   answerof-184249 ' value='741699'   \/><label for='answer-id-741699' id='answer-label-741699' class=' answer'><span>6<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184249[]' id='answer-id-741700' class='answer   answerof-184249 ' value='741700'   \/><label for='answer-id-741700' id='answer-label-741700' class=' answer'><span>2<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-2' style=';'><div id='questionWrap-2'  class='   watupro-question-id-184250'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>2. <\/span>Calculate the fair no-arbitrage spot price of oil if the price of a one year forward is $75, the discrete one year interest rates are 6%, and annual storage costs are $4 per barrel paid at the end of the year.<\/div><input type='hidden' name='question_id[]' id='qID_2' value='184250' \/><input type='hidden' id='answerType184250' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184250[]' id='answer-id-741701' class='answer   answerof-184250 ' value='741701'   \/><label for='answer-id-741701' id='answer-label-741701' class=' answer'><span>$70.75<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184250[]' id='answer-id-741702' class='answer   answerof-184250 ' value='741702'   \/><label for='answer-id-741702' id='answer-label-741702' class=' answer'><span>$74.53<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184250[]' id='answer-id-741703' class='answer   answerof-184250 ' value='741703'   \/><label for='answer-id-741703' id='answer-label-741703' class=' answer'><span>$71<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184250[]' id='answer-id-741704' class='answer   answerof-184250 ' value='741704'   \/><label for='answer-id-741704' id='answer-label-741704' class=' answer'><span>$66.98<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-3' style=';'><div id='questionWrap-3'  class='   watupro-question-id-184251'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>3. <\/span>Euro-dollar deposits refer to<\/div><input type='hidden' name='question_id[]' id='qID_3' value='184251' \/><input type='hidden' id='answerType184251' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184251[]' id='answer-id-741705' class='answer   answerof-184251 ' value='741705'   \/><label for='answer-id-741705' id='answer-label-741705' class=' answer'><span>A deposit denominated in the ECU<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184251[]' id='answer-id-741706' class='answer   answerof-184251 ' value='741706'   \/><label for='answer-id-741706' id='answer-label-741706' class=' answer'><span>A US dollar deposit outside the US<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184251[]' id='answer-id-741707' class='answer   answerof-184251 ' value='741707'   \/><label for='answer-id-741707' id='answer-label-741707' class=' answer'><span>A Euro deposit convertible into dollars upon maturity<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184251[]' id='answer-id-741708' class='answer   answerof-184251 ' value='741708'   \/><label for='answer-id-741708' id='answer-label-741708' class=' answer'><span>A Euro deposit in the USA<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-4' style=';'><div id='questionWrap-4'  class='   watupro-question-id-184252'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>4. <\/span>If the 3 month interest rate is 5%, and the 6 month interest rate is 6%, what would be the contract rate applicable to a 3 x 6 FRA?<\/div><input type='hidden' name='question_id[]' id='qID_4' value='184252' \/><input type='hidden' id='answerType184252' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184252[]' id='answer-id-741709' class='answer   answerof-184252 ' value='741709'   \/><label for='answer-id-741709' id='answer-label-741709' class=' answer'><span>6%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184252[]' id='answer-id-741710' class='answer   answerof-184252 ' value='741710'   \/><label for='answer-id-741710' id='answer-label-741710' class=' answer'><span>6.9%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184252[]' id='answer-id-741711' class='answer   answerof-184252 ' value='741711'   \/><label for='answer-id-741711' id='answer-label-741711' class=' answer'><span>5.5%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184252[]' id='answer-id-741712' class='answer   answerof-184252 ' value='741712'   \/><label for='answer-id-741712' id='answer-label-741712' class=' answer'><span>5%<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-5' style=';'><div id='questionWrap-5'  class='   watupro-question-id-184253'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>5. <\/span>Which of the following statements is INCORRECT according to CAPM:<\/div><input type='hidden' name='question_id[]' id='qID_5' value='184253' \/><input type='hidden' id='answerType184253' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184253[]' id='answer-id-741713' class='answer   answerof-184253 ' value='741713'   \/><label for='answer-id-741713' id='answer-label-741713' class=' answer'><span>expected returns on an asset will equal the risk free rate plus a compensation for the additional risk measured by the beta of the asset<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184253[]' id='answer-id-741714' class='answer   answerof-184253 ' value='741714'   \/><label for='answer-id-741714' id='answer-label-741714' class=' answer'><span>the return expected by investors for holding the risky asset is a function of the covariance of the risky asset to the market portfolio<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184253[]' id='answer-id-741715' class='answer   answerof-184253 ' value='741715'   \/><label for='answer-id-741715' id='answer-label-741715' class=' answer'><span>securities with a higher standard deviation of returns will have a higher expected return<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184253[]' id='answer-id-741716' class='answer   answerof-184253 ' value='741716'   \/><label for='answer-id-741716' id='answer-label-741716' class=' answer'><span>portfolios on the efficient frontier have different Sharpe ratios<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-6' style=';'><div id='questionWrap-6'  class='   watupro-question-id-184254'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>6. <\/span>A bank advertises its certificates of deposits as yielding a 5.2% annual effective rate. <br \/>\r<br>What is the equivalent continuously compounded rate of return?<\/div><input type='hidden' name='question_id[]' id='qID_6' value='184254' \/><input type='hidden' id='answerType184254' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184254[]' id='answer-id-741717' class='answer   answerof-184254 ' value='741717'   \/><label for='answer-id-741717' id='answer-label-741717' class=' answer'><span>4.82%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184254[]' id='answer-id-741718' class='answer   answerof-184254 ' value='741718'   \/><label for='answer-id-741718' id='answer-label-741718' class=' answer'><span>5%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184254[]' id='answer-id-741719' class='answer   answerof-184254 ' value='741719'   \/><label for='answer-id-741719' id='answer-label-741719' class=' answer'><span>5.07%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184254[]' id='answer-id-741720' class='answer   answerof-184254 ' value='741720'   \/><label for='answer-id-741720' id='answer-label-741720' class=' answer'><span>5.20%<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-7' style=';'><div id='questionWrap-7'  class='   watupro-question-id-184255'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>7. <\/span>[According to the PRMIA study guide for Exam 1, Simple Exotics and Convertible Bonds have been excluded from the syllabus. You may choose to ignore this question. It appears here solely because the Handbook continues to have these chapters.] <br \/>\r<br>What is the current conversion premium for a convertible bond where $100 in market value of the bond is convertible into two shares and the current share price is $50?<\/div><input type='hidden' name='question_id[]' id='qID_7' value='184255' \/><input type='hidden' id='answerType184255' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184255[]' id='answer-id-741721' class='answer   answerof-184255 ' value='741721'   \/><label for='answer-id-741721' id='answer-label-741721' class=' answer'><span>0.5<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184255[]' id='answer-id-741722' class='answer   answerof-184255 ' value='741722'   \/><label for='answer-id-741722' id='answer-label-741722' class=' answer'><span>1<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184255[]' id='answer-id-741723' class='answer   answerof-184255 ' value='741723'   \/><label for='answer-id-741723' id='answer-label-741723' class=' answer'><span>0<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184255[]' id='answer-id-741724' class='answer   answerof-184255 ' value='741724'   \/><label for='answer-id-741724' id='answer-label-741724' class=' answer'><span>None of the above<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-8' style=';'><div id='questionWrap-8'  class='   watupro-question-id-184256'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>8. <\/span>[According to the PRMIA study guide for Exam 1, Simple Exotics and Convertible Bonds have been excluded from the syllabus. You may choose to ignore this question. It appears here solely because the Handbook continues to have these chapters.] <br \/>\r<br>Which of the following describes a 'quanto' instrument:<\/div><input type='hidden' name='question_id[]' id='qID_8' value='184256' \/><input type='hidden' id='answerType184256' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184256[]' id='answer-id-741725' class='answer   answerof-184256 ' value='741725'   \/><label for='answer-id-741725' id='answer-label-741725' class=' answer'><span>options on options<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184256[]' id='answer-id-741726' class='answer   answerof-184256 ' value='741726'   \/><label for='answer-id-741726' id='answer-label-741726' class=' answer'><span>any two asset hybrid instrument<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184256[]' id='answer-id-741727' class='answer   answerof-184256 ' value='741727'   \/><label for='answer-id-741727' id='answer-label-741727' class=' answer'><span>correlation products<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184256[]' id='answer-id-741728' class='answer   answerof-184256 ' value='741728'   \/><label for='answer-id-741728' id='answer-label-741728' class=' answer'><span>any two asset instrument in which one asset is a foreign currency<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-9' style=';'><div id='questionWrap-9'  class='   watupro-question-id-184257'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>9. <\/span>A bullet bond refers to a bond:<\/div><input type='hidden' name='question_id[]' id='qID_9' value='184257' \/><input type='hidden' id='answerType184257' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184257[]' id='answer-id-741729' class='answer   answerof-184257 ' value='741729'   \/><label for='answer-id-741729' id='answer-label-741729' class=' answer'><span>that carries no coupon payments during its lifetime<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184257[]' id='answer-id-741730' class='answer   answerof-184257 ' value='741730'   \/><label for='answer-id-741730' id='answer-label-741730' class=' answer'><span>that provides for fixed coupons and repayment of principal at maturity<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184257[]' id='answer-id-741731' class='answer   answerof-184257 ' value='741731'   \/><label for='answer-id-741731' id='answer-label-741731' class=' answer'><span>that is issued by a sovereign<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184257[]' id='answer-id-741732' class='answer   answerof-184257 ' value='741732'   \/><label for='answer-id-741732' id='answer-label-741732' class=' answer'><span>that provides for floating rate interest payments during its lifetime<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-10' style=';'><div id='questionWrap-10'  class='   watupro-question-id-184258'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>10. <\/span>The securities market line (SML) based upon the CAPM expresses the relationship between<\/div><input type='hidden' name='question_id[]' id='qID_10' value='184258' \/><input type='hidden' id='answerType184258' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184258[]' id='answer-id-741733' class='answer   answerof-184258 ' value='741733'   \/><label for='answer-id-741733' id='answer-label-741733' class=' answer'><span>asset beta and expected returns<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184258[]' id='answer-id-741734' class='answer   answerof-184258 ' value='741734'   \/><label for='answer-id-741734' id='answer-label-741734' class=' answer'><span>asset standard deviation and expected returns<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184258[]' id='answer-id-741735' class='answer   answerof-184258 ' value='741735'   \/><label for='answer-id-741735' id='answer-label-741735' class=' answer'><span>excess returns from the asset and its standard deviation<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184258[]' id='answer-id-741736' class='answer   answerof-184258 ' value='741736'   \/><label for='answer-id-741736' id='answer-label-741736' class=' answer'><span>market returns and asset returns<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-11' style=';'><div id='questionWrap-11'  class='   watupro-question-id-184259'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>11. <\/span>Using covered interest parity, calculate the 3 month CAD\/USD forward rate if the spot CAD\/USD rate is 1.1239 and the three month interest rates on CAD and USD are 0.75% and 0.4% annually respectively.<\/div><input type='hidden' name='question_id[]' id='qID_11' value='184259' \/><input type='hidden' id='answerType184259' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184259[]' id='answer-id-741737' class='answer   answerof-184259 ' value='741737'   \/><label for='answer-id-741737' id='answer-label-741737' class=' answer'><span>1.1249<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184259[]' id='answer-id-741738' class='answer   answerof-184259 ' value='741738'   \/><label for='answer-id-741738' id='answer-label-741738' class=' answer'><span>1.1229<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184259[]' id='answer-id-741739' class='answer   answerof-184259 ' value='741739'   \/><label for='answer-id-741739' id='answer-label-741739' class=' answer'><span>1.1278<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184259[]' id='answer-id-741740' class='answer   answerof-184259 ' value='741740'   \/><label for='answer-id-741740' id='answer-label-741740' class=' answer'><span>1.1200<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-12' style=';'><div id='questionWrap-12'  class='   watupro-question-id-184260'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>12. <\/span>A receiver option on a swap is a swaption that gives the buyer the right to:<\/div><input type='hidden' name='question_id[]' id='qID_12' value='184260' \/><input type='hidden' id='answerType184260' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184260[]' id='answer-id-741741' class='answer   answerof-184260 ' value='741741'   \/><label for='answer-id-741741' id='answer-label-741741' class=' answer'><span>swap two options between the two counterparties<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184260[]' id='answer-id-741742' class='answer   answerof-184260 ' value='741742'   \/><label for='answer-id-741742' id='answer-label-741742' class=' answer'><span>receive the fixed rate and pay a variable rate<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184260[]' id='answer-id-741743' class='answer   answerof-184260 ' value='741743'   \/><label for='answer-id-741743' id='answer-label-741743' class=' answer'><span>receive the swap spread in effect on a future date and pay a variable underlying rate<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184260[]' id='answer-id-741744' class='answer   answerof-184260 ' value='741744'   \/><label for='answer-id-741744' id='answer-label-741744' class=' answer'><span>pay the fixed rate and receive a variable rate<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-13' style=';'><div id='questionWrap-13'  class='   watupro-question-id-184261'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>13. <\/span>[According to the PRMIA study guide for Exam 1, Simple Exotics and Convertible Bonds have been excluded from the syllabus. You may choose to ignore this question. It appears here solely because the Handbook continues to have these chapters.] <br \/>\r<br>A company that uses physical commodities as an input into its manufacturing process wishes to use options to hedge against a rise in its raw material costs. <br \/>\r<br>Which of the following options would be the most cost effective to use?<\/div><input type='hidden' name='question_id[]' id='qID_13' value='184261' \/><input type='hidden' id='answerType184261' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184261[]' id='answer-id-741745' class='answer   answerof-184261 ' value='741745'   \/><label for='answer-id-741745' id='answer-label-741745' class=' answer'><span>Writer-extendible options<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184261[]' id='answer-id-741746' class='answer   answerof-184261 ' value='741746'   \/><label for='answer-id-741746' id='answer-label-741746' class=' answer'><span>Correlation options<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184261[]' id='answer-id-741747' class='answer   answerof-184261 ' value='741747'   \/><label for='answer-id-741747' id='answer-label-741747' class=' answer'><span>Vanilla options<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184261[]' id='answer-id-741748' class='answer   answerof-184261 ' value='741748'   \/><label for='answer-id-741748' id='answer-label-741748' class=' answer'><span>Average rate options<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-14' style=';'><div id='questionWrap-14'  class='   watupro-question-id-184262'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>14. <\/span>A company has a long term loan from a bank at a fixed rate of interest. It expects interest rates to go down. <br \/>\r<br>Which of the following instruments can the company use to convert its fixed rate liability to a floating rate liability?<\/div><input type='hidden' name='question_id[]' id='qID_14' value='184262' \/><input type='hidden' id='answerType184262' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184262[]' id='answer-id-741749' class='answer   answerof-184262 ' value='741749'   \/><label for='answer-id-741749' id='answer-label-741749' class=' answer'><span>A fixed for floating interest rate swap<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184262[]' id='answer-id-741750' class='answer   answerof-184262 ' value='741750'   \/><label for='answer-id-741750' id='answer-label-741750' class=' answer'><span>A currency swap<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184262[]' id='answer-id-741751' class='answer   answerof-184262 ' value='741751'   \/><label for='answer-id-741751' id='answer-label-741751' class=' answer'><span>A forward rate agreement<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184262[]' id='answer-id-741752' class='answer   answerof-184262 ' value='741752'   \/><label for='answer-id-741752' id='answer-label-741752' class=' answer'><span>Interest rate futures<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-15' style=';'><div id='questionWrap-15'  class='   watupro-question-id-184263'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>15. <\/span>A trader comes in to work and finds the following prices in relation to a stock: $100 spot, $10 for a call expiring in one year with a strike price of $100, and $10 for a put with the same expiry and strike. Interest rates are at 5% per year, and the stock does not pay any dividends. <br \/>\r<br>What should the trader do?<\/div><input type='hidden' name='question_id[]' id='qID_15' value='184263' \/><input type='hidden' id='answerType184263' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184263[]' id='answer-id-741753' class='answer   answerof-184263 ' value='741753'   \/><label for='answer-id-741753' id='answer-label-741753' class=' answer'><span>Buy the call, buy the put and sell the stock<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184263[]' id='answer-id-741754' class='answer   answerof-184263 ' value='741754'   \/><label for='answer-id-741754' id='answer-label-741754' class=' answer'><span>Buy the call, sell the put and sell the stock<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184263[]' id='answer-id-741755' class='answer   answerof-184263 ' value='741755'   \/><label for='answer-id-741755' id='answer-label-741755' class=' answer'><span>Buy the put, sell the call and buy the stock<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184263[]' id='answer-id-741756' class='answer   answerof-184263 ' value='741756'   \/><label for='answer-id-741756' id='answer-label-741756' class=' answer'><span>Do nothing<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-16' style=';'><div id='questionWrap-16'  class='   watupro-question-id-184264'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>16. <\/span>Which of the following does not explain the shape of an yield curve?<\/div><input type='hidden' name='question_id[]' id='qID_16' value='184264' \/><input type='hidden' id='answerType184264' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184264[]' id='answer-id-741757' class='answer   answerof-184264 ' value='741757'   \/><label for='answer-id-741757' id='answer-label-741757' class=' answer'><span>Market segmentation theory<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184264[]' id='answer-id-741758' class='answer   answerof-184264 ' value='741758'   \/><label for='answer-id-741758' id='answer-label-741758' class=' answer'><span>The expectations hypothesis<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184264[]' id='answer-id-741759' class='answer   answerof-184264 ' value='741759'   \/><label for='answer-id-741759' id='answer-label-741759' class=' answer'><span>The efficient markets hypothesis<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184264[]' id='answer-id-741760' class='answer   answerof-184264 ' value='741760'   \/><label for='answer-id-741760' id='answer-label-741760' class=' answer'><span>The liquidity preference theory<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-17' style=';'><div id='questionWrap-17'  class='   watupro-question-id-184265'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>17. <\/span>If the quoted discount rate of a 3 month treasury bill futures contract is 10%, what is the price of a 3-month treasury bill with a principal at maturity of $100?<\/div><input type='hidden' name='question_id[]' id='qID_17' value='184265' \/><input type='hidden' id='answerType184265' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184265[]' id='answer-id-741761' class='answer   answerof-184265 ' value='741761'   \/><label for='answer-id-741761' id='answer-label-741761' class=' answer'><span>$90<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184265[]' id='answer-id-741762' class='answer   answerof-184265 ' value='741762'   \/><label for='answer-id-741762' id='answer-label-741762' class=' answer'><span>$110.00<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184265[]' id='answer-id-741763' class='answer   answerof-184265 ' value='741763'   \/><label for='answer-id-741763' id='answer-label-741763' class=' answer'><span>$102.50<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184265[]' id='answer-id-741764' class='answer   answerof-184265 ' value='741764'   \/><label for='answer-id-741764' id='answer-label-741764' class=' answer'><span>$97.50<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-18' style=';'><div id='questionWrap-18'  class='   watupro-question-id-184266'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>18. <\/span>[According to the PRMIA study guide for Exam 1, Simple Exotics and Convertible Bonds have been excluded from the syllabus. You may choose to ignore this question. It appears here solely because the Handbook continues to have these chapters.] <br \/>\r<br>Which of the following statements relating to convertible debt are true: <br \/>\r<br>I. A hard call protection means the bond cannot be called by the issuer till the share price reaches a threshold <br \/>\r<br>II. It is advantageous for the issuer to call its convertible securities when the share price exceeds the conversion price <br \/>\r<br>III. When the issuer's share prices is very high, the convertible bond trades at a discount to the value of the shares it is convertible into <br \/>\r<br>IV. Convertible bonds generally have to carry a higher coupon than on equivalent non-convertible securities to make them attractive to investors<\/div><input type='hidden' name='question_id[]' id='qID_18' value='184266' \/><input type='hidden' id='answerType184266' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184266[]' id='answer-id-741765' class='answer   answerof-184266 ' value='741765'   \/><label for='answer-id-741765' id='answer-label-741765' class=' answer'><span>III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184266[]' id='answer-id-741766' class='answer   answerof-184266 ' value='741766'   \/><label for='answer-id-741766' id='answer-label-741766' class=' answer'><span>I and II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184266[]' id='answer-id-741767' class='answer   answerof-184266 ' value='741767'   \/><label for='answer-id-741767' id='answer-label-741767' class=' answer'><span>I, III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184266[]' id='answer-id-741768' class='answer   answerof-184266 ' value='741768'   \/><label for='answer-id-741768' id='answer-label-741768' class=' answer'><span>II and III<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-19' style=';'><div id='questionWrap-19'  class='   watupro-question-id-184267'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>19. <\/span>For a stock that does not pay dividends, which of the following represents the delta of a futures contract?<\/div><input type='hidden' name='question_id[]' id='qID_19' value='184267' \/><input type='hidden' id='answerType184267' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184267[]' id='answer-id-741769' class='answer   answerof-184267 ' value='741769'   \/><label for='answer-id-741769' id='answer-label-741769' class=' answer'><span>0<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184267[]' id='answer-id-741770' class='answer   answerof-184267 ' value='741770'   \/><label for='answer-id-741770' id='answer-label-741770' class=' answer'><span>e^(rt)<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184267[]' id='answer-id-741771' class='answer   answerof-184267 ' value='741771'   \/><label for='answer-id-741771' id='answer-label-741771' class=' answer'><span>1<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184267[]' id='answer-id-741772' class='answer   answerof-184267 ' value='741772'   \/><label for='answer-id-741772' id='answer-label-741772' class=' answer'><span>Futures contracts do not have a delta as they are not options<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-20' style=';'><div id='questionWrap-20'  class='   watupro-question-id-184268'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>20. <\/span>What is the fair price for a bond paying annual coupons at 5% and maturing in 5 years. <br \/>\r<br>Assume par value of $100 and the yield curve is flat at 6%.<\/div><input type='hidden' name='question_id[]' id='qID_20' value='184268' \/><input type='hidden' id='answerType184268' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184268[]' id='answer-id-741773' class='answer   answerof-184268 ' value='741773'   \/><label for='answer-id-741773' id='answer-label-741773' class=' answer'><span>$104.33<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184268[]' id='answer-id-741774' class='answer   answerof-184268 ' value='741774'   \/><label for='answer-id-741774' id='answer-label-741774' class=' answer'><span>$95.79<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184268[]' id='answer-id-741775' class='answer   answerof-184268 ' value='741775'   \/><label for='answer-id-741775' id='answer-label-741775' class=' answer'><span>$100.00<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184268[]' id='answer-id-741776' class='answer   answerof-184268 ' value='741776'   \/><label for='answer-id-741776' id='answer-label-741776' class=' answer'><span>$94.73<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-21' style=';'><div id='questionWrap-21'  class='   watupro-question-id-184269'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>21. <\/span>The yield-to-maturity on a 10 year coupon bearing bond<\/div><input type='hidden' name='question_id[]' id='qID_21' value='184269' \/><input type='hidden' id='answerType184269' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184269[]' id='answer-id-741777' class='answer   answerof-184269 ' value='741777'   \/><label for='answer-id-741777' id='answer-label-741777' class=' answer'><span>1, 2, 3<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184269[]' id='answer-id-741778' class='answer   answerof-184269 ' value='741778'   \/><label for='answer-id-741778' id='answer-label-741778' class=' answer'><span>2, 1, 3<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184269[]' id='answer-id-741779' class='answer   answerof-184269 ' value='741779'   \/><label for='answer-id-741779' id='answer-label-741779' class=' answer'><span>1, 3, 2<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184269[]' id='answer-id-741780' class='answer   answerof-184269 ' value='741780'   \/><label for='answer-id-741780' id='answer-label-741780' class=' answer'><span>3, 2, 1<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-22' style=';'><div id='questionWrap-22'  class='   watupro-question-id-184270'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>22. <\/span>A stock sells for $100, and a call on the same stock for one year hence at a strike price of $100 goes for $35. <br \/>\r<br>What is the price of the put on the stock with the same exercise and strike as the call? Assume the stock pays dividends at 1% per year at the end of the year and interest rates are 5% annually.<\/div><input type='hidden' name='question_id[]' id='qID_22' value='184270' \/><input type='hidden' id='answerType184270' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184270[]' id='answer-id-741781' class='answer   answerof-184270 ' value='741781'   \/><label for='answer-id-741781' id='answer-label-741781' class=' answer'><span>$41.50<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184270[]' id='answer-id-741782' class='answer   answerof-184270 ' value='741782'   \/><label for='answer-id-741782' id='answer-label-741782' class=' answer'><span>$31.20<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184270[]' id='answer-id-741783' class='answer   answerof-184270 ' value='741783'   \/><label for='answer-id-741783' id='answer-label-741783' class=' answer'><span>$35<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184270[]' id='answer-id-741784' class='answer   answerof-184270 ' value='741784'   \/><label for='answer-id-741784' id='answer-label-741784' class=' answer'><span>$31.95<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-23' style=';'><div id='questionWrap-23'  class='   watupro-question-id-184271'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>23. <\/span>[According to the PRMIA study guide for Exam 1, Simple Exotics and Convertible Bonds have been excluded from the syllabus. You may choose to ignore this question. It appears here solely because the Handbook continues to have these chapters.] <br \/>\r<br>Which of the following is not an approach to attempt to value to a convertible security:<\/div><input type='hidden' name='question_id[]' id='qID_23' value='184271' \/><input type='hidden' id='answerType184271' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184271[]' id='answer-id-741785' class='answer   answerof-184271 ' value='741785'   \/><label for='answer-id-741785' id='answer-label-741785' class=' answer'><span>DCF analysis<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184271[]' id='answer-id-741786' class='answer   answerof-184271 ' value='741786'   \/><label for='answer-id-741786' id='answer-label-741786' class=' answer'><span>Bootstrapping<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184271[]' id='answer-id-741787' class='answer   answerof-184271 ' value='741787'   \/><label for='answer-id-741787' id='answer-label-741787' class=' answer'><span>Lower of bond value and value of converted shares<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184271[]' id='answer-id-741788' class='answer   answerof-184271 ' value='741788'   \/><label for='answer-id-741788' id='answer-label-741788' class=' answer'><span>Bond value plus equity option value<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-24' style=';'><div id='questionWrap-24'  class='   watupro-question-id-184272'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>24. <\/span>The two components of risk in a commodities futures portfolio are:<\/div><input type='hidden' name='question_id[]' id='qID_24' value='184272' \/><input type='hidden' id='answerType184272' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184272[]' id='answer-id-741789' class='answer   answerof-184272 ' value='741789'   \/><label for='answer-id-741789' id='answer-label-741789' class=' answer'><span>Changes in the convenience yield and storage costs<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184272[]' id='answer-id-741790' class='answer   answerof-184272 ' value='741790'   \/><label for='answer-id-741790' id='answer-label-741790' class=' answer'><span>Changes in spot prices and carrying costs, also called commodity lease rates<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184272[]' id='answer-id-741791' class='answer   answerof-184272 ' value='741791'   \/><label for='answer-id-741791' id='answer-label-741791' class=' answer'><span>Changes in interest rates and spot prices<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184272[]' id='answer-id-741792' class='answer   answerof-184272 ' value='741792'   \/><label for='answer-id-741792' id='answer-label-741792' class=' answer'><span>The risk from change in basis and interest rates<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-25' style=';'><div id='questionWrap-25'  class='   watupro-question-id-184273'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>25. <\/span>Which of the following statements are true: <br \/>\r<br>I. Protective puts are a form of insurance against a fall in prices <br \/>\r<br>II. The maximum loss for an investor holding a protective put is equal to the decline in the value of the underlying <br \/>\r<br>III. The premium paid on the put options held as a protective put is a loss if the value of the underlying goes up <br \/>\r<br>IV. Protective puts can be a useful strategy for an investor holding a long position but with a negative short term view of the markets<\/div><input type='hidden' name='question_id[]' id='qID_25' value='184273' \/><input type='hidden' id='answerType184273' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184273[]' id='answer-id-741793' class='answer   answerof-184273 ' value='741793'   \/><label for='answer-id-741793' id='answer-label-741793' class=' answer'><span>I and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184273[]' id='answer-id-741794' class='answer   answerof-184273 ' value='741794'   \/><label for='answer-id-741794' id='answer-label-741794' class=' answer'><span>I, III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184273[]' id='answer-id-741795' class='answer   answerof-184273 ' value='741795'   \/><label for='answer-id-741795' id='answer-label-741795' class=' answer'><span>II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184273[]' id='answer-id-741796' class='answer   answerof-184273 ' value='741796'   \/><label for='answer-id-741796' id='answer-label-741796' class=' answer'><span>I, II, III and IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-26' style=';'><div id='questionWrap-26'  class='   watupro-question-id-184274'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>26. <\/span>Which of the following is not a money market security<\/div><input type='hidden' name='question_id[]' id='qID_26' value='184274' \/><input type='hidden' id='answerType184274' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184274[]' id='answer-id-741797' class='answer   answerof-184274 ' value='741797'   \/><label for='answer-id-741797' id='answer-label-741797' class=' answer'><span>Treasury notes<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184274[]' id='answer-id-741798' class='answer   answerof-184274 ' value='741798'   \/><label for='answer-id-741798' id='answer-label-741798' class=' answer'><span>Treasury bills<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184274[]' id='answer-id-741799' class='answer   answerof-184274 ' value='741799'   \/><label for='answer-id-741799' id='answer-label-741799' class=' answer'><span>Bankers' acceptances<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184274[]' id='answer-id-741800' class='answer   answerof-184274 ' value='741800'   \/><label for='answer-id-741800' id='answer-label-741800' class=' answer'><span>Commercial paper<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-27' style=';'><div id='questionWrap-27'  class='   watupro-question-id-184275'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>27. <\/span>In terms of notional values traded, which of the following represents the largest share of total traded futures and options globally?<\/div><input type='hidden' name='question_id[]' id='qID_27' value='184275' \/><input type='hidden' id='answerType184275' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184275[]' id='answer-id-741801' class='answer   answerof-184275 ' value='741801'   \/><label for='answer-id-741801' id='answer-label-741801' class=' answer'><span>interest rate products<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184275[]' id='answer-id-741802' class='answer   answerof-184275 ' value='741802'   \/><label for='answer-id-741802' id='answer-label-741802' class=' answer'><span>commodities<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184275[]' id='answer-id-741803' class='answer   answerof-184275 ' value='741803'   \/><label for='answer-id-741803' id='answer-label-741803' class=' answer'><span>foreign exchange futures and options<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184275[]' id='answer-id-741804' class='answer   answerof-184275 ' value='741804'   \/><label for='answer-id-741804' id='answer-label-741804' class=' answer'><span>equity futures and options<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-28' style=';'><div id='questionWrap-28'  class='   watupro-question-id-184276'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>28. <\/span>Which of the following statements is not correct with respect to a European call option:<\/div><input type='hidden' name='question_id[]' id='qID_28' value='184276' \/><input type='hidden' id='answerType184276' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184276[]' id='answer-id-741805' class='answer   answerof-184276 ' value='741805'   \/><label for='answer-id-741805' id='answer-label-741805' class=' answer'><span>A increase in the risk-free rate of interest always increases the value of the option<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184276[]' id='answer-id-741806' class='answer   answerof-184276 ' value='741806'   \/><label for='answer-id-741806' id='answer-label-741806' class=' answer'><span>An increase in the price of the underlying always increases the value of the option<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184276[]' id='answer-id-741807' class='answer   answerof-184276 ' value='741807'   \/><label for='answer-id-741807' id='answer-label-741807' class=' answer'><span>An increase in the time to expiry always increases the value of the option<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184276[]' id='answer-id-741808' class='answer   answerof-184276 ' value='741808'   \/><label for='answer-id-741808' id='answer-label-741808' class=' answer'><span>An increase in the volatility of the underlying always increases the value of the option<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-29' style=';'><div id='questionWrap-29'  class='   watupro-question-id-184277'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>29. <\/span>Which of the following expressions represents the Treynor ratio, where is the expected return, is the standard deviation of returns, rm is the return of the market portfolio and rf is the risk free rate: <br \/>\r<br>A) <br \/>\r<br><br><img decoding=\"async\" width=36 height=34 src=\"https:\/\/www.dumpsbase.com\/freedumps\/wp-content\/uploads\/2021\/07\/image002-5.jpg\" v:shapes=\"_x0000_i1025\"><br><br \/>\r<br>B) <br \/>\r<br><br><img decoding=\"async\" width=53 height=37 src=\"https:\/\/www.dumpsbase.com\/freedumps\/wp-content\/uploads\/2021\/07\/image004-4.jpg\" v:shapes=\"_x0000_i1026\"><br><br \/>\r<br>C) <br \/>\r<br><br><img decoding=\"async\" width=48 height=36 src=\"https:\/\/www.dumpsbase.com\/freedumps\/wp-content\/uploads\/2021\/07\/image006-3.jpg\" v:shapes=\"_x0000_i1027\"><br><br \/>\r<br>D) <br \/>\r<br><br><img decoding=\"async\" width=123 height=20 src=\"https:\/\/www.dumpsbase.com\/freedumps\/wp-content\/uploads\/2021\/07\/image008-3.jpg\" v:shapes=\"_x0000_i1028\"><br><\/div><input type='hidden' name='question_id[]' id='qID_29' value='184277' \/><input type='hidden' id='answerType184277' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184277[]' id='answer-id-741809' class='answer   answerof-184277 ' value='741809'   \/><label for='answer-id-741809' id='answer-label-741809' class=' answer'><span>Option A<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184277[]' id='answer-id-741810' class='answer   answerof-184277 ' value='741810'   \/><label for='answer-id-741810' id='answer-label-741810' class=' answer'><span>Option B<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184277[]' id='answer-id-741811' class='answer   answerof-184277 ' value='741811'   \/><label for='answer-id-741811' id='answer-label-741811' class=' answer'><span>Option C<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184277[]' id='answer-id-741812' class='answer   answerof-184277 ' value='741812'   \/><label for='answer-id-741812' id='answer-label-741812' class=' answer'><span>Option D<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-30' style=';'><div id='questionWrap-30'  class='   watupro-question-id-184278'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>30. <\/span>Which of the following best describes the efficient frontier?<\/div><input type='hidden' name='question_id[]' id='qID_30' value='184278' \/><input type='hidden' id='answerType184278' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184278[]' id='answer-id-741813' class='answer   answerof-184278 ' value='741813'   \/><label for='answer-id-741813' id='answer-label-741813' class=' answer'><span>The efficient frontier identifies portfolios with the lowest return per unit of volatility<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184278[]' id='answer-id-741814' class='answer   answerof-184278 ' value='741814'   \/><label for='answer-id-741814' id='answer-label-741814' class=' answer'><span>The efficient frontier identifies portfolios with the highest return per unit of volatility<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184278[]' id='answer-id-741815' class='answer   answerof-184278 ' value='741815'   \/><label for='answer-id-741815' id='answer-label-741815' class=' answer'><span>The efficient frontier identifies the market portfolio<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184278[]' id='answer-id-741816' class='answer   answerof-184278 ' value='741816'   \/><label for='answer-id-741816' id='answer-label-741816' class=' answer'><span>The efficient frontier identifies portfolios with the highest volatility for a given level of return<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-31' style=';'><div id='questionWrap-31'  class='   watupro-question-id-184279'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>31. <\/span>Profits and losses on futures contracts are:<\/div><input type='hidden' name='question_id[]' id='qID_31' value='184279' \/><input type='hidden' id='answerType184279' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184279[]' id='answer-id-741817' class='answer   answerof-184279 ' value='741817'   \/><label for='answer-id-741817' id='answer-label-741817' class=' answer'><span>settled upfront<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184279[]' id='answer-id-741818' class='answer   answerof-184279 ' value='741818'   \/><label for='answer-id-741818' id='answer-label-741818' class=' answer'><span>settled upon the expiry of the contract<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184279[]' id='answer-id-741819' class='answer   answerof-184279 ' value='741819'   \/><label for='answer-id-741819' id='answer-label-741819' class=' answer'><span>settled by moving collateral<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184279[]' id='answer-id-741820' class='answer   answerof-184279 ' value='741820'   \/><label for='answer-id-741820' id='answer-label-741820' class=' answer'><span>settled daily<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-32' style=';'><div id='questionWrap-32'  class='   watupro-question-id-184280'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>32. <\/span>Determine the enterprise value of a firm whose expected operating free cash flows are $100 each year and are growing with GDP at 2.5%. Assume its weighted average cost of capital is 7.5% annually.<\/div><input type='hidden' name='question_id[]' id='qID_32' value='184280' \/><input type='hidden' id='answerType184280' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184280[]' id='answer-id-741821' class='answer   answerof-184280 ' value='741821'   \/><label for='answer-id-741821' id='answer-label-741821' class=' answer'><span>$4,000<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184280[]' id='answer-id-741822' class='answer   answerof-184280 ' value='741822'   \/><label for='answer-id-741822' id='answer-label-741822' class=' answer'><span>$1,000<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184280[]' id='answer-id-741823' class='answer   answerof-184280 ' value='741823'   \/><label for='answer-id-741823' id='answer-label-741823' class=' answer'><span>$1,333<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184280[]' id='answer-id-741824' class='answer   answerof-184280 ' value='741824'   \/><label for='answer-id-741824' id='answer-label-741824' class=' answer'><span>$2,000<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-33' style=';'><div id='questionWrap-33'  class='   watupro-question-id-184281'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>33. <\/span>An investor in mortgage backed securities can hedge his\/her prepayment risk using which of the following? <br \/>\r<br>I. Long swaption <br \/>\r<br>II. Short cap <br \/>\r<br>III. Short callable bonds <br \/>\r<br>IV. Long fixed\/floating swap<\/div><input type='hidden' name='question_id[]' id='qID_33' value='184281' \/><input type='hidden' id='answerType184281' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184281[]' id='answer-id-741825' class='answer   answerof-184281 ' value='741825'   \/><label for='answer-id-741825' id='answer-label-741825' class=' answer'><span>II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184281[]' id='answer-id-741826' class='answer   answerof-184281 ' value='741826'   \/><label for='answer-id-741826' id='answer-label-741826' class=' answer'><span>I and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184281[]' id='answer-id-741827' class='answer   answerof-184281 ' value='741827'   \/><label for='answer-id-741827' id='answer-label-741827' class=' answer'><span>II and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184281[]' id='answer-id-741828' class='answer   answerof-184281 ' value='741828'   \/><label for='answer-id-741828' id='answer-label-741828' class=' answer'><span>I and IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-34' style=';'><div id='questionWrap-34'  class='   watupro-question-id-184282'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>34. <\/span>A bank sells an interest rate swap to its client, with the client agreeing to pay the bank a fixed 4% and receive 3 month LIBOR + 100 basis points, payments due every quarter. After quarter 1, the 3 month LIBOR is 2% pa. <br \/>\r<br>Which of the following payments will happen in respect of this swap, assuming the contract notional is $100m, and the rate convention is 30\/360?<\/div><input type='hidden' name='question_id[]' id='qID_34' value='184282' \/><input type='hidden' id='answerType184282' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184282[]' id='answer-id-741829' class='answer   answerof-184282 ' value='741829'   \/><label for='answer-id-741829' id='answer-label-741829' class=' answer'><span>Bank pays customer $1,000,000 and customer pays the bank $750,000<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184282[]' id='answer-id-741830' class='answer   answerof-184282 ' value='741830'   \/><label for='answer-id-741830' id='answer-label-741830' class=' answer'><span>Bank pays customer $250,000<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184282[]' id='answer-id-741831' class='answer   answerof-184282 ' value='741831'   \/><label for='answer-id-741831' id='answer-label-741831' class=' answer'><span>Customer pays bank $250,000<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184282[]' id='answer-id-741832' class='answer   answerof-184282 ' value='741832'   \/><label for='answer-id-741832' id='answer-label-741832' class=' answer'><span>Bank pays customer $1,000,000<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-35' style=';'><div id='questionWrap-35'  class='   watupro-question-id-184283'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>35. <\/span>Which of the following statements are true: <br \/>\r<br>I. All investors regardless of their expectations face the same efficient frontier which is always the market portfolio <br \/>\r<br>II. Investors will have different efficient frontiers based upon their views of expected risks, returns and correlations <br \/>\r<br>III. Investors risk appetite will determine their choice of the combination of risk-free and risky assets to hold <br \/>\r<br>IV. If all investors have identical views on expected returns, standard deviation and correlations, they will hold risky assets in identical proportions<\/div><input type='hidden' name='question_id[]' id='qID_35' value='184283' \/><input type='hidden' id='answerType184283' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184283[]' id='answer-id-741833' class='answer   answerof-184283 ' value='741833'   \/><label for='answer-id-741833' id='answer-label-741833' class=' answer'><span>III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184283[]' id='answer-id-741834' class='answer   answerof-184283 ' value='741834'   \/><label for='answer-id-741834' id='answer-label-741834' class=' answer'><span>II, III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184283[]' id='answer-id-741835' class='answer   answerof-184283 ' value='741835'   \/><label for='answer-id-741835' id='answer-label-741835' class=' answer'><span>I and II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184283[]' id='answer-id-741836' class='answer   answerof-184283 ' value='741836'   \/><label for='answer-id-741836' id='answer-label-741836' class=' answer'><span>I, II, III and IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-36' style=';'><div id='questionWrap-36'  class='   watupro-question-id-184284'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>36. <\/span>Which of the following statements is true in relation to an American style option: <br \/>\r<br>I. Put-call parity applies to American options <br \/>\r<br>II. An American put will never be cheaper than a European put <br \/>\r<br>III. An American put option should never be exercised early for a non-dividend paying stock <br \/>\r<br>IV. An American put option is always at least as valuable as its intrinsic value<\/div><input type='hidden' name='question_id[]' id='qID_36' value='184284' \/><input type='hidden' id='answerType184284' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184284[]' id='answer-id-741837' class='answer   answerof-184284 ' value='741837'   \/><label for='answer-id-741837' id='answer-label-741837' class=' answer'><span>I, II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184284[]' id='answer-id-741838' class='answer   answerof-184284 ' value='741838'   \/><label for='answer-id-741838' id='answer-label-741838' class=' answer'><span>II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184284[]' id='answer-id-741839' class='answer   answerof-184284 ' value='741839'   \/><label for='answer-id-741839' id='answer-label-741839' class=' answer'><span>II and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184284[]' id='answer-id-741840' class='answer   answerof-184284 ' value='741840'   \/><label for='answer-id-741840' id='answer-label-741840' class=' answer'><span>III and IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-37' style=';'><div id='questionWrap-37'  class='   watupro-question-id-184285'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>37. <\/span>The theta of a delta neutral options position is large and positive. <br \/>\r<br>What can we say about the gamma of the position?<\/div><input type='hidden' name='question_id[]' id='qID_37' value='184285' \/><input type='hidden' id='answerType184285' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184285[]' id='answer-id-741841' class='answer   answerof-184285 ' value='741841'   \/><label for='answer-id-741841' id='answer-label-741841' class=' answer'><span>The gamma must be large and positive<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184285[]' id='answer-id-741842' class='answer   answerof-184285 ' value='741842'   \/><label for='answer-id-741842' id='answer-label-741842' class=' answer'><span>The gamma must be large and negative<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184285[]' id='answer-id-741843' class='answer   answerof-184285 ' value='741843'   \/><label for='answer-id-741843' id='answer-label-741843' class=' answer'><span>The gamma must be small and positive<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184285[]' id='answer-id-741844' class='answer   answerof-184285 ' value='741844'   \/><label for='answer-id-741844' id='answer-label-741844' class=' answer'><span>The gamma must be small and negative<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-38' style=';'><div id='questionWrap-38'  class='   watupro-question-id-184286'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>38. <\/span>Which of the following statements is false:<\/div><input type='hidden' name='question_id[]' id='qID_38' value='184286' \/><input type='hidden' id='answerType184286' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184286[]' id='answer-id-741845' class='answer   answerof-184286 ' value='741845'   \/><label for='answer-id-741845' id='answer-label-741845' class=' answer'><span>The value of an FRA at expiration is determined by the spot interest rate prevailing at expiration<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184286[]' id='answer-id-741846' class='answer   answerof-184286 ' value='741846'   \/><label for='answer-id-741846' id='answer-label-741846' class=' answer'><span>The value of an FRA (forward rate agreement) at inception is zero.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184286[]' id='answer-id-741847' class='answer   answerof-184286 ' value='741847'   \/><label for='answer-id-741847' id='answer-label-741847' class=' answer'><span>An FRA can be valued at anytime in its lifetime using the spot interest rate for the period to which the FRA relates<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184286[]' id='answer-id-741848' class='answer   answerof-184286 ' value='741848'   \/><label for='answer-id-741848' id='answer-label-741848' class=' answer'><span>Notional principals are exchanged at the start and the end of an FRA to eliminate credit risk<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-39' style=';'><div id='questionWrap-39'  class='   watupro-question-id-184287'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>39. <\/span>The value of which of the following options cannot be less than its intrinsic value<\/div><input type='hidden' name='question_id[]' id='qID_39' value='184287' \/><input type='hidden' id='answerType184287' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184287[]' id='answer-id-741849' class='answer   answerof-184287 ' value='741849'   \/><label for='answer-id-741849' id='answer-label-741849' class=' answer'><span>a Bermudan put<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184287[]' id='answer-id-741850' class='answer   answerof-184287 ' value='741850'   \/><label for='answer-id-741850' id='answer-label-741850' class=' answer'><span>a European put<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184287[]' id='answer-id-741851' class='answer   answerof-184287 ' value='741851'   \/><label for='answer-id-741851' id='answer-label-741851' class=' answer'><span>an American put<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184287[]' id='answer-id-741852' class='answer   answerof-184287 ' value='741852'   \/><label for='answer-id-741852' id='answer-label-741852' class=' answer'><span>a European call<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-40' style=';'><div id='questionWrap-40'  class='   watupro-question-id-184288'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>40. <\/span>What is the yield to maturity for a 5% annual coupon bond trading at par? The bond matures in 10 years.<\/div><input type='hidden' name='question_id[]' id='qID_40' value='184288' \/><input type='hidden' id='answerType184288' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184288[]' id='answer-id-741853' class='answer   answerof-184288 ' value='741853'   \/><label for='answer-id-741853' id='answer-label-741853' class=' answer'><span>Less than 5%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184288[]' id='answer-id-741854' class='answer   answerof-184288 ' value='741854'   \/><label for='answer-id-741854' id='answer-label-741854' class=' answer'><span>Equal to 5%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184288[]' id='answer-id-741855' class='answer   answerof-184288 ' value='741855'   \/><label for='answer-id-741855' id='answer-label-741855' class=' answer'><span>Greater than 5%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184288[]' id='answer-id-741856' class='answer   answerof-184288 ' value='741856'   \/><label for='answer-id-741856' id='answer-label-741856' class=' answer'><span>Cannot be determined based on the given information<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-41' style=';'><div id='questionWrap-41'  class='   watupro-question-id-184289'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>41. <\/span>The LIBOR square swap offers the square of the interest rate change between contract inception and settlement date. If LIBOR at inception is y, and upon settlement is x, the contract pays (x - y)2 for x &gt; y; and -(x - y)2 for x &lt; y. <br \/>\r<br>What of the following cannot be a value of the gamma of this contract?<\/div><input type='hidden' name='question_id[]' id='qID_41' value='184289' \/><input type='hidden' id='answerType184289' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184289[]' id='answer-id-741857' class='answer   answerof-184289 ' value='741857'   \/><label for='answer-id-741857' id='answer-label-741857' class=' answer'><span>-2<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184289[]' id='answer-id-741858' class='answer   answerof-184289 ' value='741858'   \/><label for='answer-id-741858' id='answer-label-741858' class=' answer'><span>1<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184289[]' id='answer-id-741859' class='answer   answerof-184289 ' value='741859'   \/><label for='answer-id-741859' id='answer-label-741859' class=' answer'><span>2<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184289[]' id='answer-id-741860' class='answer   answerof-184289 ' value='741860'   \/><label for='answer-id-741860' id='answer-label-741860' class=' answer'><span>0<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-42' style=';'><div id='questionWrap-42'  class='   watupro-question-id-184290'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>42. <\/span>An equity portfolio manager desires to be 'market neutral'. His portfolio is valued at $10m and has a beta of 0.7 to the broad market index. The index is currently at 1000 and an index contract multiplier is specified as 250. <br \/>\r<br>What should he do to make the beta of his portfolio zero?<\/div><input type='hidden' name='question_id[]' id='qID_42' value='184290' \/><input type='hidden' id='answerType184290' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184290[]' id='answer-id-741861' class='answer   answerof-184290 ' value='741861'   \/><label for='answer-id-741861' id='answer-label-741861' class=' answer'><span>Sell 40 contracts of the index futures contract<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184290[]' id='answer-id-741862' class='answer   answerof-184290 ' value='741862'   \/><label for='answer-id-741862' id='answer-label-741862' class=' answer'><span>Buy 28 contracts of the index futures contract<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184290[]' id='answer-id-741863' class='answer   answerof-184290 ' value='741863'   \/><label for='answer-id-741863' id='answer-label-741863' class=' answer'><span>Buy 40 contracts of the index futures contract<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184290[]' id='answer-id-741864' class='answer   answerof-184290 ' value='741864'   \/><label for='answer-id-741864' id='answer-label-741864' class=' answer'><span>Sell 28 contracts of the index futures contract<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-43' style=';'><div id='questionWrap-43'  class='   watupro-question-id-184291'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>43. <\/span>[According to the PRMIA study guide for Exam 1, Simple Exotics and Convertible Bonds have been excluded from the syllabus. You may choose to ignore this question. It appears here solely because the Handbook continues to have these chapters.] <br \/>\r<br>Which of the following statements is true? <br \/>\r<br>I. Knock-out options start lifeless and convert to a plain vanilla option when the barrier is hit <br \/>\r<br>II. Barrier options are cheaper than equivalent vanilla options <br \/>\r<br>III. Average price options are more expensive than equivalent vanilla options <br \/>\r<br>IV. Digital options have a high gamma close to the strike price<\/div><input type='hidden' name='question_id[]' id='qID_43' value='184291' \/><input type='hidden' id='answerType184291' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184291[]' id='answer-id-741865' class='answer   answerof-184291 ' value='741865'   \/><label for='answer-id-741865' id='answer-label-741865' class=' answer'><span>II, III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184291[]' id='answer-id-741866' class='answer   answerof-184291 ' value='741866'   \/><label for='answer-id-741866' id='answer-label-741866' class=' answer'><span>II and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184291[]' id='answer-id-741867' class='answer   answerof-184291 ' value='741867'   \/><label for='answer-id-741867' id='answer-label-741867' class=' answer'><span>I and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184291[]' id='answer-id-741868' class='answer   answerof-184291 ' value='741868'   \/><label for='answer-id-741868' id='answer-label-741868' class=' answer'><span>I, II and IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-44' style=';'><div id='questionWrap-44'  class='   watupro-question-id-184292'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>44. <\/span>What is the running yield on a 6% coupon bond selling at a clean price of $96?<\/div><input type='hidden' name='question_id[]' id='qID_44' value='184292' \/><input type='hidden' id='answerType184292' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184292[]' id='answer-id-741869' class='answer   answerof-184292 ' value='741869'   \/><label for='answer-id-741869' id='answer-label-741869' class=' answer'><span>5.70%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184292[]' id='answer-id-741870' class='answer   answerof-184292 ' value='741870'   \/><label for='answer-id-741870' id='answer-label-741870' class=' answer'><span>6.25%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184292[]' id='answer-id-741871' class='answer   answerof-184292 ' value='741871'   \/><label for='answer-id-741871' id='answer-label-741871' class=' answer'><span>6.30%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184292[]' id='answer-id-741872' class='answer   answerof-184292 ' value='741872'   \/><label for='answer-id-741872' id='answer-label-741872' class=' answer'><span>6.00%<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-45' style=';'><div id='questionWrap-45'  class='   watupro-question-id-184293'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>45. <\/span>An investor holds $1m in a 10 year bond that has a basis point value (or PV01) of 5 cents. She seeks to hedge it using a 30 year bond that has a BPV of 8 cents. <br \/>\r<br>How much of the 30 year bond should she buy or sell to hedge against parallel shifts in the yield curve?<\/div><input type='hidden' name='question_id[]' id='qID_45' value='184293' \/><input type='hidden' id='answerType184293' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184293[]' id='answer-id-741873' class='answer   answerof-184293 ' value='741873'   \/><label for='answer-id-741873' id='answer-label-741873' class=' answer'><span>Sell $1,600,000<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184293[]' id='answer-id-741874' class='answer   answerof-184293 ' value='741874'   \/><label for='answer-id-741874' id='answer-label-741874' class=' answer'><span>Sell $625,000<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184293[]' id='answer-id-741875' class='answer   answerof-184293 ' value='741875'   \/><label for='answer-id-741875' id='answer-label-741875' class=' answer'><span>Buy $1,000,000<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184293[]' id='answer-id-741876' class='answer   answerof-184293 ' value='741876'   \/><label for='answer-id-741876' id='answer-label-741876' class=' answer'><span>Buy $1,600,000<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-46' style=';'><div id='questionWrap-46'  class='   watupro-question-id-184294'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>46. <\/span>If the continuously compounded risk free rate is 4% per year, and the continuous rate of dividend on a broad market index is 1% annually, what is the no-arbitrage 6-month futures price of the index if its spot value is $1000?<\/div><input type='hidden' name='question_id[]' id='qID_46' value='184294' \/><input type='hidden' id='answerType184294' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184294[]' id='answer-id-741877' class='answer   answerof-184294 ' value='741877'   \/><label for='answer-id-741877' id='answer-label-741877' class=' answer'><span>$1015.11<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184294[]' id='answer-id-741878' class='answer   answerof-184294 ' value='741878'   \/><label for='answer-id-741878' id='answer-label-741878' class=' answer'><span>$1015.00<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184294[]' id='answer-id-741879' class='answer   answerof-184294 ' value='741879'   \/><label for='answer-id-741879' id='answer-label-741879' class=' answer'><span>$1030.45<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184294[]' id='answer-id-741880' class='answer   answerof-184294 ' value='741880'   \/><label for='answer-id-741880' id='answer-label-741880' class=' answer'><span>$985.11<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-47' style=';'><div id='questionWrap-47'  class='   watupro-question-id-184295'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>47. <\/span>Backwardation can be explained by:<\/div><input type='hidden' name='question_id[]' id='qID_47' value='184295' \/><input type='hidden' id='answerType184295' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184295[]' id='answer-id-741881' class='answer   answerof-184295 ' value='741881'   \/><label for='answer-id-741881' id='answer-label-741881' class=' answer'><span>expectations of oversupply in the future<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184295[]' id='answer-id-741882' class='answer   answerof-184295 ' value='741882'   \/><label for='answer-id-741882' id='answer-label-741882' class=' answer'><span>convenience yields being greater than the total carrying cost<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184295[]' id='answer-id-741883' class='answer   answerof-184295 ' value='741883'   \/><label for='answer-id-741883' id='answer-label-741883' class=' answer'><span>short term shortages in the spot markets<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184295[]' id='answer-id-741884' class='answer   answerof-184295 ' value='741884'   \/><label for='answer-id-741884' id='answer-label-741884' class=' answer'><span>all of the above<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-48' style=';'><div id='questionWrap-48'  class='   watupro-question-id-184296'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>48. <\/span>The yield to maturity for a zero coupon bond is equivalent to:<\/div><input type='hidden' name='question_id[]' id='qID_48' value='184296' \/><input type='hidden' id='answerType184296' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184296[]' id='answer-id-741885' class='answer   answerof-184296 ' value='741885'   \/><label for='answer-id-741885' id='answer-label-741885' class=' answer'><span>short rates for the maturity of the bond<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184296[]' id='answer-id-741886' class='answer   answerof-184296 ' value='741886'   \/><label for='answer-id-741886' id='answer-label-741886' class=' answer'><span>the coupon rate for the bond<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184296[]' id='answer-id-741887' class='answer   answerof-184296 ' value='741887'   \/><label for='answer-id-741887' id='answer-label-741887' class=' answer'><span>forward rates for the maturity of the bond<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184296[]' id='answer-id-741888' class='answer   answerof-184296 ' value='741888'   \/><label for='answer-id-741888' id='answer-label-741888' class=' answer'><span>the spot rate from now till t years, where t is the maturity of the bond<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-49' style=';'><div id='questionWrap-49'  class='   watupro-question-id-184297'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>49. <\/span>If zero rates with continuous compounding for 4 and 5 years are 4% and 5% respectively, what is the forward rate for year 5?<\/div><input type='hidden' name='question_id[]' id='qID_49' value='184297' \/><input type='hidden' id='answerType184297' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184297[]' id='answer-id-741889' class='answer   answerof-184297 ' value='741889'   \/><label for='answer-id-741889' id='answer-label-741889' class=' answer'><span>5%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184297[]' id='answer-id-741890' class='answer   answerof-184297 ' value='741890'   \/><label for='answer-id-741890' id='answer-label-741890' class=' answer'><span>9%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184297[]' id='answer-id-741891' class='answer   answerof-184297 ' value='741891'   \/><label for='answer-id-741891' id='answer-label-741891' class=' answer'><span>9.097%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184297[]' id='answer-id-741892' class='answer   answerof-184297 ' value='741892'   \/><label for='answer-id-741892' id='answer-label-741892' class=' answer'><span>7%<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-50' style=';'><div id='questionWrap-50'  class='   watupro-question-id-184298'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>50. <\/span>According to the CAPM, the expected return from a risky asset is a function of:<\/div><input type='hidden' name='question_id[]' id='qID_50' value='184298' \/><input type='hidden' id='answerType184298' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184298[]' id='answer-id-741893' class='answer   answerof-184298 ' value='741893'   \/><label for='answer-id-741893' id='answer-label-741893' class=' answer'><span>how much the risky asset contributes to portfolio risk<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184298[]' id='answer-id-741894' class='answer   answerof-184298 ' value='741894'   \/><label for='answer-id-741894' id='answer-label-741894' class=' answer'><span>diversifiable risk that the asset brings<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184298[]' id='answer-id-741895' class='answer   answerof-184298 ' value='741895'   \/><label for='answer-id-741895' id='answer-label-741895' class=' answer'><span>the riskiness, ie the volatility of the risky asset alone<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184298[]' id='answer-id-741896' class='answer   answerof-184298 ' value='741896'   \/><label for='answer-id-741896' id='answer-label-741896' class=' answer'><span>all of the above<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-51' style=';'><div id='questionWrap-51'  class='   watupro-question-id-184299'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>51. <\/span>A trader finds that a stock index is trading at 1000, and a six month futures contract on the same index is available at 1020. The risk free rate is 2% per annum, and the dividend rate is 1% per annum. <br \/>\r<br>What should the trader do?<\/div><input type='hidden' name='question_id[]' id='qID_51' value='184299' \/><input type='hidden' id='answerType184299' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184299[]' id='answer-id-741897' class='answer   answerof-184299 ' value='741897'   \/><label for='answer-id-741897' id='answer-label-741897' class=' answer'><span>Buy the index spot and sell the futures contract<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184299[]' id='answer-id-741898' class='answer   answerof-184299 ' value='741898'   \/><label for='answer-id-741898' id='answer-label-741898' class=' answer'><span>Buy the futures contract and sell the index spot<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184299[]' id='answer-id-741899' class='answer   answerof-184299 ' value='741899'   \/><label for='answer-id-741899' id='answer-label-741899' class=' answer'><span>Buy the index spot and buy the futures contract<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184299[]' id='answer-id-741900' class='answer   answerof-184299 ' value='741900'   \/><label for='answer-id-741900' id='answer-label-741900' class=' answer'><span>Sell the futures contract<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-52' style=';'><div id='questionWrap-52'  class='   watupro-question-id-184300'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>52. <\/span>A portfolio comprising a long call and a short put option has the same payoff as:<\/div><input type='hidden' name='question_id[]' id='qID_52' value='184300' \/><input type='hidden' id='answerType184300' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184300[]' id='answer-id-741901' class='answer   answerof-184300 ' value='741901'   \/><label for='answer-id-741901' id='answer-label-741901' class=' answer'><span>a long underlying asset and a short bond position<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184300[]' id='answer-id-741902' class='answer   answerof-184300 ' value='741902'   \/><label for='answer-id-741902' id='answer-label-741902' class=' answer'><span>a short underlying asset and a short bond position<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184300[]' id='answer-id-741903' class='answer   answerof-184300 ' value='741903'   \/><label for='answer-id-741903' id='answer-label-741903' class=' answer'><span>a long underlying asset and a long bond position<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184300[]' id='answer-id-741904' class='answer   answerof-184300 ' value='741904'   \/><label for='answer-id-741904' id='answer-label-741904' class=' answer'><span>a short underlying asset and a long bond position<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-53' style=';'><div id='questionWrap-53'  class='   watupro-question-id-184301'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>53. <\/span>A utility function expresses:<\/div><input type='hidden' name='question_id[]' id='qID_53' value='184301' \/><input type='hidden' id='answerType184301' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184301[]' id='answer-id-741905' class='answer   answerof-184301 ' value='741905'   \/><label for='answer-id-741905' id='answer-label-741905' class=' answer'><span>Risk probabilities<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184301[]' id='answer-id-741906' class='answer   answerof-184301 ' value='741906'   \/><label for='answer-id-741906' id='answer-label-741906' class=' answer'><span>Risk alternatives<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184301[]' id='answer-id-741907' class='answer   answerof-184301 ' value='741907'   \/><label for='answer-id-741907' id='answer-label-741907' class=' answer'><span>Risk assessment<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184301[]' id='answer-id-741908' class='answer   answerof-184301 ' value='741908'   \/><label for='answer-id-741908' id='answer-label-741908' class=' answer'><span>Risk attitude<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-54' style=';'><div id='questionWrap-54'  class='   watupro-question-id-184302'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>54. <\/span>What is the standard deviation (in dollars) of a portfolio worth $10,000, of which $4,000 is invested in Stock A, with an expected return of 10% and standard deviation of 20%; and the rest in Stock B, with an expected return of 12% and a standard deviation of 25%. The correlation between the two stocks is 0.6.<\/div><input type='hidden' name='question_id[]' id='qID_54' value='184302' \/><input type='hidden' id='answerType184302' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184302[]' id='answer-id-741909' class='answer   answerof-184302 ' value='741909'   \/><label for='answer-id-741909' id='answer-label-741909' class=' answer'><span>$2,081<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184302[]' id='answer-id-741910' class='answer   answerof-184302 ' value='741910'   \/><label for='answer-id-741910' id='answer-label-741910' class=' answer'><span>$1,201<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184302[]' id='answer-id-741911' class='answer   answerof-184302 ' value='741911'   \/><label for='answer-id-741911' id='answer-label-741911' class=' answer'><span>$1,204<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184302[]' id='answer-id-741912' class='answer   answerof-184302 ' value='741912'   \/><label for='answer-id-741912' id='answer-label-741912' class=' answer'><span>$4,330,000<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-55' style=';'><div id='questionWrap-55'  class='   watupro-question-id-184303'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>55. <\/span>An investor has a bullish outlook on the market. <br \/>\r<br>Which of the following option strategies would suit him? <br \/>\r<br>I. Risk reversal <br \/>\r<br>II. Collar <br \/>\r<br>III. Bull spread <br \/>\r<br>IV. Butterfly spread<\/div><input type='hidden' name='question_id[]' id='qID_55' value='184303' \/><input type='hidden' id='answerType184303' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184303[]' id='answer-id-741913' class='answer   answerof-184303 ' value='741913'   \/><label for='answer-id-741913' id='answer-label-741913' class=' answer'><span>II and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184303[]' id='answer-id-741914' class='answer   answerof-184303 ' value='741914'   \/><label for='answer-id-741914' id='answer-label-741914' class=' answer'><span>I, III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184303[]' id='answer-id-741915' class='answer   answerof-184303 ' value='741915'   \/><label for='answer-id-741915' id='answer-label-741915' class=' answer'><span>I and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184303[]' id='answer-id-741916' class='answer   answerof-184303 ' value='741916'   \/><label for='answer-id-741916' id='answer-label-741916' class=' answer'><span>I, II, III and IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-56' style=';'><div id='questionWrap-56'  class='   watupro-question-id-184304'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>56. <\/span>Suppose the S&amp;P is trading at a level of 1000. Using continuously compounded rates, calculate the futures price for a contract expiring in three months, assuming expected dividends to be 2% and the interest rate for futures funding to be 5% (both rates expressed as continuously compounded rates)<\/div><input type='hidden' name='question_id[]' id='qID_56' value='184304' \/><input type='hidden' id='answerType184304' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184304[]' id='answer-id-741917' class='answer   answerof-184304 ' value='741917'   \/><label for='answer-id-741917' id='answer-label-741917' class=' answer'><span>$1,007.50<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184304[]' id='answer-id-741918' class='answer   answerof-184304 ' value='741918'   \/><label for='answer-id-741918' id='answer-label-741918' class=' answer'><span>$1,000.00<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184304[]' id='answer-id-741919' class='answer   answerof-184304 ' value='741919'   \/><label for='answer-id-741919' id='answer-label-741919' class=' answer'><span>$1,007.53<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184304[]' id='answer-id-741920' class='answer   answerof-184304 ' value='741920'   \/><label for='answer-id-741920' id='answer-label-741920' class=' answer'><span>$1,012.58<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-57' style=';'><div id='questionWrap-57'  class='   watupro-question-id-184305'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>57. <\/span>How are foreign exchange futures quoted against the US dollar?<\/div><input type='hidden' name='question_id[]' id='qID_57' value='184305' \/><input type='hidden' id='answerType184305' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184305[]' id='answer-id-741921' class='answer   answerof-184305 ' value='741921'   \/><label for='answer-id-741921' id='answer-label-741921' class=' answer'><span>Futures forex prices are always quoted as the number of units of the foreign currency that one US dollar can buy<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184305[]' id='answer-id-741922' class='answer   answerof-184305 ' value='741922'   \/><label for='answer-id-741922' id='answer-label-741922' class=' answer'><span>It depends upon the currency - futures forex prices follow the same convention as for spot prices<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184305[]' id='answer-id-741923' class='answer   answerof-184305 ' value='741923'   \/><label for='answer-id-741923' id='answer-label-741923' class=' answer'><span>Futures forex prices are always quoted as the number of US dollars one unit of the foreign currency can buy<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184305[]' id='answer-id-741924' class='answer   answerof-184305 ' value='741924'   \/><label for='answer-id-741924' id='answer-label-741924' class=' answer'><span>It can be quoted either way, based on whether the contract is for a short maturity or long<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-58' style=';'><div id='questionWrap-58'  class='   watupro-question-id-184306'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>58. <\/span>What is the duration of a 10 year zero coupon bond. Assume the bond is callable (ie, the issuer can buy it back) at face value at any time during its existence.<\/div><input type='hidden' name='question_id[]' id='qID_58' value='184306' \/><input type='hidden' id='answerType184306' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184306[]' id='answer-id-741925' class='answer   answerof-184306 ' value='741925'   \/><label for='answer-id-741925' id='answer-label-741925' class=' answer'><span>0 years<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184306[]' id='answer-id-741926' class='answer   answerof-184306 ' value='741926'   \/><label for='answer-id-741926' id='answer-label-741926' class=' answer'><span>5 years<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184306[]' id='answer-id-741927' class='answer   answerof-184306 ' value='741927'   \/><label for='answer-id-741927' id='answer-label-741927' class=' answer'><span>1 year<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184306[]' id='answer-id-741928' class='answer   answerof-184306 ' value='741928'   \/><label for='answer-id-741928' id='answer-label-741928' class=' answer'><span>10 years<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-59' style=';'><div id='questionWrap-59'  class='   watupro-question-id-184307'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>59. <\/span>The forward price of a physical asset is affected by:<\/div><input type='hidden' name='question_id[]' id='qID_59' value='184307' \/><input type='hidden' id='answerType184307' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184307[]' id='answer-id-741929' class='answer   answerof-184307 ' value='741929'   \/><label for='answer-id-741929' id='answer-label-741929' class=' answer'><span>the spot price, the risk-free rate, carrying costs, any other cash flows from holding the asset and the volatility of spot prices<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184307[]' id='answer-id-741930' class='answer   answerof-184307 ' value='741930'   \/><label for='answer-id-741930' id='answer-label-741930' class=' answer'><span>the spot price, the risk-free rate, carrying costs, any other cash flows from holding the asset and the time to maturity of the forward contract<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184307[]' id='answer-id-741931' class='answer   answerof-184307 ' value='741931'   \/><label for='answer-id-741931' id='answer-label-741931' class=' answer'><span>the spot price, the risk-free rate, carrying costs and any other cash flows from holding the asset<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184307[]' id='answer-id-741932' class='answer   answerof-184307 ' value='741932'   \/><label for='answer-id-741932' id='answer-label-741932' class=' answer'><span>The spot price of the asset and the market's prevailing view of the commodity's direction in the future<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-60' style=';'><div id='questionWrap-60'  class='   watupro-question-id-184308'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>60. <\/span>If the implied volatility for a call option is 30%, the implied volatility for the corresponding put option is:<\/div><input type='hidden' name='question_id[]' id='qID_60' value='184308' \/><input type='hidden' id='answerType184308' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184308[]' id='answer-id-741933' class='answer   answerof-184308 ' value='741933'   \/><label for='answer-id-741933' id='answer-label-741933' class=' answer'><span>-70%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184308[]' id='answer-id-741934' class='answer   answerof-184308 ' value='741934'   \/><label for='answer-id-741934' id='answer-label-741934' class=' answer'><span>30%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184308[]' id='answer-id-741935' class='answer   answerof-184308 ' value='741935'   \/><label for='answer-id-741935' id='answer-label-741935' class=' answer'><span>-30%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184308[]' id='answer-id-741936' class='answer   answerof-184308 ' value='741936'   \/><label for='answer-id-741936' id='answer-label-741936' class=' answer'><span>70%<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-61' style=';'><div id='questionWrap-61'  class='   watupro-question-id-184309'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>61. <\/span>Which of the following statements are true: <br \/>\r<br>I. A deep in-the-money call option has a value very close to that of a forward contract with a forward price equal to the exercise price <br \/>\r<br>II. If the volatility of a stock goes down to zero, the value of a call option on the stock will tend to be close to that of a forward contract so long as the option is in the money. <br \/>\r<br>III. All other things remaining the same, the issue of stock warrants exercisable at a future date will cause a decline in the current stock price <br \/>\r<br>IV. Implied volatilities are calculated from market prices of options and are forward looking<\/div><input type='hidden' name='question_id[]' id='qID_61' value='184309' \/><input type='hidden' id='answerType184309' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184309[]' id='answer-id-741937' class='answer   answerof-184309 ' value='741937'   \/><label for='answer-id-741937' id='answer-label-741937' class=' answer'><span>I and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184309[]' id='answer-id-741938' class='answer   answerof-184309 ' value='741938'   \/><label for='answer-id-741938' id='answer-label-741938' class=' answer'><span>II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184309[]' id='answer-id-741939' class='answer   answerof-184309 ' value='741939'   \/><label for='answer-id-741939' id='answer-label-741939' class=' answer'><span>III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184309[]' id='answer-id-741940' class='answer   answerof-184309 ' value='741940'   \/><label for='answer-id-741940' id='answer-label-741940' class=' answer'><span>All of the above<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-62' style=';'><div id='questionWrap-62'  class='   watupro-question-id-184310'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>62. <\/span>Which of the following statements are true:<\/div><input type='hidden' name='question_id[]' id='qID_62' value='184310' \/><input type='hidden' id='answerType184310' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184310[]' id='answer-id-741941' class='answer   answerof-184310 ' value='741941'   \/><label for='answer-id-741941' id='answer-label-741941' class=' answer'><span>Selling a call + Selling a put = Buying the stock + Bank deposit<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184310[]' id='answer-id-741942' class='answer   answerof-184310 ' value='741942'   \/><label for='answer-id-741942' id='answer-label-741942' class=' answer'><span>Buying a call + Bank Deposit = Buying the stock + Selling a put<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184310[]' id='answer-id-741943' class='answer   answerof-184310 ' value='741943'   \/><label for='answer-id-741943' id='answer-label-741943' class=' answer'><span>Buying a call + Selling a put = Buying the stock + Bank deposit<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184310[]' id='answer-id-741944' class='answer   answerof-184310 ' value='741944'   \/><label for='answer-id-741944' id='answer-label-741944' class=' answer'><span>Buying a call + Bank Deposit = Buying the stock + Buying a put<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-63' style=';'><div id='questionWrap-63'  class='   watupro-question-id-184311'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>63. <\/span>Futures initial margin requirements are<\/div><input type='hidden' name='question_id[]' id='qID_63' value='184311' \/><input type='hidden' id='answerType184311' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184311[]' id='answer-id-741945' class='answer   answerof-184311 ' value='741945'   \/><label for='answer-id-741945' id='answer-label-741945' class=' answer'><span>determined based on the client's credit history<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184311[]' id='answer-id-741946' class='answer   answerof-184311 ' value='741946'   \/><label for='answer-id-741946' id='answer-label-741946' class=' answer'><span>determined by the members based on the SPAN framework<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184311[]' id='answer-id-741947' class='answer   answerof-184311 ' value='741947'   \/><label for='answer-id-741947' id='answer-label-741947' class=' answer'><span>determined based on the length of the settlement period<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184311[]' id='answer-id-741948' class='answer   answerof-184311 ' value='741948'   \/><label for='answer-id-741948' id='answer-label-741948' class=' answer'><span>determined by the exchange<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-64' style=';'><div id='questionWrap-64'  class='   watupro-question-id-184312'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>64. <\/span>The relationship between covariance and correlation for two assets x and y is expressed by which of the following equations (where covarx,y is the covariance between x and y , x and y are the respective standard deviations and x,y is the correlation between x and y ): <br \/>\r<br>A) <br \/>\r<br><br><img decoding=\"async\" width=104 height=36 src=\"https:\/\/www.dumpsbase.com\/freedumps\/wp-content\/uploads\/2021\/07\/image010-3.jpg\" v:shapes=\"_x0000_i1029\"><br><br \/>\r<br>B) <br \/>\r<br><br><img decoding=\"async\" width=95 height=38 src=\"https:\/\/www.dumpsbase.com\/freedumps\/wp-content\/uploads\/2021\/07\/image012-3.jpg\" v:shapes=\"_x0000_i1030\"><br><br \/>\r<br>C) <br \/>\r<br><br><img decoding=\"async\" width=80 height=33 src=\"https:\/\/www.dumpsbase.com\/freedumps\/wp-content\/uploads\/2021\/07\/image014-3.jpg\" v:shapes=\"_x0000_i1031\"><br><br \/>\r<br>D) <br \/>\r<br>None of the above<\/div><input type='hidden' name='question_id[]' id='qID_64' value='184312' \/><input type='hidden' id='answerType184312' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184312[]' id='answer-id-741949' class='answer   answerof-184312 ' value='741949'   \/><label for='answer-id-741949' id='answer-label-741949' class=' answer'><span>Option A<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184312[]' id='answer-id-741950' class='answer   answerof-184312 ' value='741950'   \/><label for='answer-id-741950' id='answer-label-741950' class=' answer'><span>Option B<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184312[]' id='answer-id-741951' class='answer   answerof-184312 ' value='741951'   \/><label for='answer-id-741951' id='answer-label-741951' class=' answer'><span>Option C<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184312[]' id='answer-id-741952' class='answer   answerof-184312 ' value='741952'   \/><label for='answer-id-741952' id='answer-label-741952' class=' answer'><span>Option D<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-65' style=';'><div id='questionWrap-65'  class='   watupro-question-id-184313'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>65. <\/span>Which of the following are valid credit enhancements used for credit derivatives: <br \/>\r<br>I. Overcollateralization <br \/>\r<br>II. Excess spread <br \/>\r<br>III. Cash reserves <br \/>\r<br>IV. Margin requirements<\/div><input type='hidden' name='question_id[]' id='qID_65' value='184313' \/><input type='hidden' id='answerType184313' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184313[]' id='answer-id-741953' class='answer   answerof-184313 ' value='741953'   \/><label for='answer-id-741953' id='answer-label-741953' class=' answer'><span>I, II and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184313[]' id='answer-id-741954' class='answer   answerof-184313 ' value='741954'   \/><label for='answer-id-741954' id='answer-label-741954' class=' answer'><span>II, III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184313[]' id='answer-id-741955' class='answer   answerof-184313 ' value='741955'   \/><label for='answer-id-741955' id='answer-label-741955' class=' answer'><span>I, II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184313[]' id='answer-id-741956' class='answer   answerof-184313 ' value='741956'   \/><label for='answer-id-741956' id='answer-label-741956' class=' answer'><span>I, II, III and IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-66' style=';'><div id='questionWrap-66'  class='   watupro-question-id-184314'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>66. <\/span>The gamma of a call option is 0.08. <br \/>\r<br>What is the gamma of the corresponding put option?<\/div><input type='hidden' name='question_id[]' id='qID_66' value='184314' \/><input type='hidden' id='answerType184314' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184314[]' id='answer-id-741957' class='answer   answerof-184314 ' value='741957'   \/><label for='answer-id-741957' id='answer-label-741957' class=' answer'><span>-0.08<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184314[]' id='answer-id-741958' class='answer   answerof-184314 ' value='741958'   \/><label for='answer-id-741958' id='answer-label-741958' class=' answer'><span>0.92<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184314[]' id='answer-id-741959' class='answer   answerof-184314 ' value='741959'   \/><label for='answer-id-741959' id='answer-label-741959' class=' answer'><span>0.08<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184314[]' id='answer-id-741960' class='answer   answerof-184314 ' value='741960'   \/><label for='answer-id-741960' id='answer-label-741960' class=' answer'><span>-0.92<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-67' style=';'><div id='questionWrap-67'  class='   watupro-question-id-184315'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>67. <\/span>For an investor short a bond, which of the following is true: <br \/>\r<br>I. Higher convexity is preferable to lower convexity <br \/>\r<br>II. An increase in yields is preferable to a decrease in yield <br \/>\r<br>III. Negative convexity is preferable to positive convexity<\/div><input type='hidden' name='question_id[]' id='qID_67' value='184315' \/><input type='hidden' id='answerType184315' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184315[]' id='answer-id-741961' class='answer   answerof-184315 ' value='741961'   \/><label for='answer-id-741961' id='answer-label-741961' class=' answer'><span>I and II<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184315[]' id='answer-id-741962' class='answer   answerof-184315 ' value='741962'   \/><label for='answer-id-741962' id='answer-label-741962' class=' answer'><span>II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184315[]' id='answer-id-741963' class='answer   answerof-184315 ' value='741963'   \/><label for='answer-id-741963' id='answer-label-741963' class=' answer'><span>I, II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184315[]' id='answer-id-741964' class='answer   answerof-184315 ' value='741964'   \/><label for='answer-id-741964' id='answer-label-741964' class=' answer'><span>I and III<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-68' style=';'><div id='questionWrap-68'  class='   watupro-question-id-184316'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>68. <\/span>Which of the following markets are characterized by the presence of a market maker always making two-way prices?<\/div><input type='hidden' name='question_id[]' id='qID_68' value='184316' \/><input type='hidden' id='answerType184316' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184316[]' id='answer-id-741965' class='answer   answerof-184316 ' value='741965'   \/><label for='answer-id-741965' id='answer-label-741965' class=' answer'><span>Exchanges<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184316[]' id='answer-id-741966' class='answer   answerof-184316 ' value='741966'   \/><label for='answer-id-741966' id='answer-label-741966' class=' answer'><span>OTC markets<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184316[]' id='answer-id-741967' class='answer   answerof-184316 ' value='741967'   \/><label for='answer-id-741967' id='answer-label-741967' class=' answer'><span>ECNs<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184316[]' id='answer-id-741968' class='answer   answerof-184316 ' value='741968'   \/><label for='answer-id-741968' id='answer-label-741968' class=' answer'><span>Dark pools<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-69' style=';'><div id='questionWrap-69'  class='   watupro-question-id-184317'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>69. <\/span>A borrower pays a floating rate on a loan and wishes to convert it to a position where a fixed rate is paid. <br \/>\r<br>Which of the following can be used to accomplish this objective? <br \/>\r<br>I. A short position in a fixed rate bond and a long position in an FRN <br \/>\r<br>II. An long position in an interest rate collar and long an FRN <br \/>\r<br>III. A short position in a fixed rate bond and a short position in an FRN <br \/>\r<br>IV. An interest rate swap where the investor pays the fixed rate<\/div><input type='hidden' name='question_id[]' id='qID_69' value='184317' \/><input type='hidden' id='answerType184317' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184317[]' id='answer-id-741969' class='answer   answerof-184317 ' value='741969'   \/><label for='answer-id-741969' id='answer-label-741969' class=' answer'><span>None of the above<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184317[]' id='answer-id-741970' class='answer   answerof-184317 ' value='741970'   \/><label for='answer-id-741970' id='answer-label-741970' class=' answer'><span>I and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184317[]' id='answer-id-741971' class='answer   answerof-184317 ' value='741971'   \/><label for='answer-id-741971' id='answer-label-741971' class=' answer'><span>I, II and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184317[]' id='answer-id-741972' class='answer   answerof-184317 ' value='741972'   \/><label for='answer-id-741972' id='answer-label-741972' class=' answer'><span>II and III<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-70' style=';'><div id='questionWrap-70'  class='   watupro-question-id-184318'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>70. <\/span>Which of the following best describes a 'when-issued' market?<\/div><input type='hidden' name='question_id[]' id='qID_70' value='184318' \/><input type='hidden' id='answerType184318' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184318[]' id='answer-id-741973' class='answer   answerof-184318 ' value='741973'   \/><label for='answer-id-741973' id='answer-label-741973' class=' answer'><span>where members of the syndicate bringing a bond issue to the market are obliged to not undercut the issue price till the first settlement date<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184318[]' id='answer-id-741974' class='answer   answerof-184318 ' value='741974'   \/><label for='answer-id-741974' id='answer-label-741974' class=' answer'><span>The when-issued market is one where dealers trade in a security after its price has been set but before the bonds are available for delivery<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184318[]' id='answer-id-741975' class='answer   answerof-184318 ' value='741975'   \/><label for='answer-id-741975' id='answer-label-741975' class=' answer'><span>The when-issued market is one where securities are traded on the OTC forward markets prior to their issue<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184318[]' id='answer-id-741976' class='answer   answerof-184318 ' value='741976'   \/><label for='answer-id-741976' id='answer-label-741976' class=' answer'><span>The when-issues market is one where the lead manager agreed to buy an entire bond issue at an agreed price, and having done so may sell them onwards to institutional or other investors<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-71' style=';'><div id='questionWrap-71'  class='   watupro-question-id-184319'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>71. <\/span>Which of the following statements is a correct description of the phrase present value of a basis point?<\/div><input type='hidden' name='question_id[]' id='qID_71' value='184319' \/><input type='hidden' id='answerType184319' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184319[]' id='answer-id-741977' class='answer   answerof-184319 ' value='741977'   \/><label for='answer-id-741977' id='answer-label-741977' class=' answer'><span>It refers to the present value impact of 1 basis point move in an interest rate on a fixed income security<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184319[]' id='answer-id-741978' class='answer   answerof-184319 ' value='741978'   \/><label for='answer-id-741978' id='answer-label-741978' class=' answer'><span>It refers to the discounted present value of 1\/100th of 1% of a future cash flow<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184319[]' id='answer-id-741979' class='answer   answerof-184319 ' value='741979'   \/><label for='answer-id-741979' id='answer-label-741979' class=' answer'><span>It is another name for duration<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184319[]' id='answer-id-741980' class='answer   answerof-184319 ' value='741980'   \/><label for='answer-id-741980' id='answer-label-741980' class=' answer'><span>It is the principal component representation of the duration of a bond<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-72' style=';'><div id='questionWrap-72'  class='   watupro-question-id-184320'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>72. <\/span>According to the dividend discount model, if d be the dividend per share in perpetuity of a company and g its expected growth rate, what would the share price of the company be. 'r' is the discount rate.<\/div><input type='hidden' name='question_id[]' id='qID_72' value='184320' \/><input type='hidden' id='answerType184320' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184320[]' id='answer-id-741981' class='answer   answerof-184320 ' value='741981'   \/><label for='answer-id-741981' id='answer-label-741981' class=' answer'><span>https:\/\/riskprep.com\/images\/stories\/questions\/123.01.a.png<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184320[]' id='answer-id-741982' class='answer   answerof-184320 ' value='741982'   \/><label for='answer-id-741982' id='answer-label-741982' class=' answer'><span>https:\/\/riskprep.com\/images\/stories\/questions\/123.01.c.png<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184320[]' id='answer-id-741983' class='answer   answerof-184320 ' value='741983'   \/><label for='answer-id-741983' id='answer-label-741983' class=' answer'><span>https:\/\/riskprep.com\/images\/stories\/questions\/123.01.d.png<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184320[]' id='answer-id-741984' class='answer   answerof-184320 ' value='741984'   \/><label for='answer-id-741984' id='answer-label-741984' class=' answer'><span>https:\/\/riskprep.com\/images\/stories\/questions\/123.01.b.png<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-73' style=';'><div id='questionWrap-73'  class='   watupro-question-id-184321'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>73. <\/span>Which of the following statements are true? <br \/>\r<br>I. The square-root-of-time rule for scaling volatility over time assumes returns on different <br \/>\r<br>days are independent <br \/>\r<br>II. If daily returns are positively correlated, realized volatility will be less than that calculated using the square-root-of time rule <br \/>\r<br>III. If daily returns are negatively correlated, realized volatility will be less than that calculated using the square-root-of-time rule <br \/>\r<br>IV. If stock prices are said to follow a random walk, it means daily returns are independent of each other and have an expected value of zero<\/div><input type='hidden' name='question_id[]' id='qID_73' value='184321' \/><input type='hidden' id='answerType184321' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184321[]' id='answer-id-741985' class='answer   answerof-184321 ' value='741985'   \/><label for='answer-id-741985' id='answer-label-741985' class=' answer'><span>I, II and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184321[]' id='answer-id-741986' class='answer   answerof-184321 ' value='741986'   \/><label for='answer-id-741986' id='answer-label-741986' class=' answer'><span>III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184321[]' id='answer-id-741987' class='answer   answerof-184321 ' value='741987'   \/><label for='answer-id-741987' id='answer-label-741987' class=' answer'><span>I and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184321[]' id='answer-id-741988' class='answer   answerof-184321 ' value='741988'   \/><label for='answer-id-741988' id='answer-label-741988' class=' answer'><span>All the statements are correct<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-74' style=';'><div id='questionWrap-74'  class='   watupro-question-id-184322'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>74. <\/span>An investor enters into a 4 year interest rate swap with a bank, agreeing to pay a fixed rate of 4% on a notional of $100m in return for receiving LIBOR. <br \/>\r<br>What is the value of the swap to the investor two years hence, immediately after the net interest payments are exchanged? Assume the current zero coupon bond yields for 1, 2 and 3 years are 5%, 6% and 7% respectively. Also assume that the yield curve stays the same after two years (ie, at the end of year two, the rates for the following three years are 5%, 6%, and 7% <br \/>\r<br>respectively).<\/div><input type='hidden' name='question_id[]' id='qID_74' value='184322' \/><input type='hidden' id='answerType184322' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184322[]' id='answer-id-741989' class='answer   answerof-184322 ' value='741989'   \/><label for='answer-id-741989' id='answer-label-741989' class=' answer'><span>$2,749,326<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184322[]' id='answer-id-741990' class='answer   answerof-184322 ' value='741990'   \/><label for='answer-id-741990' id='answer-label-741990' class=' answer'><span>-$2,749,326<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184322[]' id='answer-id-741991' class='answer   answerof-184322 ' value='741991'   \/><label for='answer-id-741991' id='answer-label-741991' class=' answer'><span>$3,630,846<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184322[]' id='answer-id-741992' class='answer   answerof-184322 ' value='741992'   \/><label for='answer-id-741992' id='answer-label-741992' class=' answer'><span>- $3,630,846<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-75' style=';'><div id='questionWrap-75'  class='   watupro-question-id-184323'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>75. <\/span>The price of an interest rate cap is determined by: <br \/>\r<br>I. The period to which the cap relates <br \/>\r<br>II. Volatility of the underlying interest rate <br \/>\r<br>III. The exercise or the strike rate <br \/>\r<br>IV. The risk free rate<\/div><input type='hidden' name='question_id[]' id='qID_75' value='184323' \/><input type='hidden' id='answerType184323' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184323[]' id='answer-id-741993' class='answer   answerof-184323 ' value='741993'   \/><label for='answer-id-741993' id='answer-label-741993' class=' answer'><span>I, II, III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184323[]' id='answer-id-741994' class='answer   answerof-184323 ' value='741994'   \/><label for='answer-id-741994' id='answer-label-741994' class=' answer'><span>I, II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184323[]' id='answer-id-741995' class='answer   answerof-184323 ' value='741995'   \/><label for='answer-id-741995' id='answer-label-741995' class=' answer'><span>II, III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184323[]' id='answer-id-741996' class='answer   answerof-184323 ' value='741996'   \/><label for='answer-id-741996' id='answer-label-741996' class=' answer'><span>I, II and IV<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-76' style=';'><div id='questionWrap-76'  class='   watupro-question-id-184324'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>76. <\/span>Which of the following correctly describes a &quot;reverse repo&quot;?<\/div><input type='hidden' name='question_id[]' id='qID_76' value='184324' \/><input type='hidden' id='answerType184324' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184324[]' id='answer-id-741997' class='answer   answerof-184324 ' value='741997'   \/><label for='answer-id-741997' id='answer-label-741997' class=' answer'><span>An asset swap that is offset by an identical but opposite swap<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184324[]' id='answer-id-741998' class='answer   answerof-184324 ' value='741998'   \/><label for='answer-id-741998' id='answer-label-741998' class=' answer'><span>Lending cash with securities as a collateral<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184324[]' id='answer-id-741999' class='answer   answerof-184324 ' value='741999'   \/><label for='answer-id-741999' id='answer-label-741999' class=' answer'><span>Borrowing cash while posting securities as a collateral<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184324[]' id='answer-id-742000' class='answer   answerof-184324 ' value='742000'   \/><label for='answer-id-742000' id='answer-label-742000' class=' answer'><span>A repo with an undefined maturity period<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-77' style=';'><div id='questionWrap-77'  class='   watupro-question-id-184325'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>77. <\/span>A bond with a 5% coupon trades at 95. An increase in interest rates by 10 bps causes its price to decline to $94.50. A decrease in interest rates by 10 bps causes its price to increase to $95.60. Estimate the modified duration of the bond.<\/div><input type='hidden' name='question_id[]' id='qID_77' value='184325' \/><input type='hidden' id='answerType184325' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184325[]' id='answer-id-742001' class='answer   answerof-184325 ' value='742001'   \/><label for='answer-id-742001' id='answer-label-742001' class=' answer'><span>5<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184325[]' id='answer-id-742002' class='answer   answerof-184325 ' value='742002'   \/><label for='answer-id-742002' id='answer-label-742002' class=' answer'><span>5.79<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184325[]' id='answer-id-742003' class='answer   answerof-184325 ' value='742003'   \/><label for='answer-id-742003' id='answer-label-742003' class=' answer'><span>5.5<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184325[]' id='answer-id-742004' class='answer   answerof-184325 ' value='742004'   \/><label for='answer-id-742004' id='answer-label-742004' class=' answer'><span>-5<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-78' style=';'><div id='questionWrap-78'  class='   watupro-question-id-184326'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>78. <\/span>What can the buyer of a 6 x 12 FRA expect to receive (or pay) if the contracted rate is 10% and the settlement rate is 12%? Assume contract notional is $100m.<\/div><input type='hidden' name='question_id[]' id='qID_78' value='184326' \/><input type='hidden' id='answerType184326' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184326[]' id='answer-id-742005' class='answer   answerof-184326 ' value='742005'   \/><label for='answer-id-742005' id='answer-label-742005' class=' answer'><span>Pay $1,000,000<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184326[]' id='answer-id-742006' class='answer   answerof-184326 ' value='742006'   \/><label for='answer-id-742006' id='answer-label-742006' class=' answer'><span>Receive $1,000,000<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184326[]' id='answer-id-742007' class='answer   answerof-184326 ' value='742007'   \/><label for='answer-id-742007' id='answer-label-742007' class=' answer'><span>Pay $943,396<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184326[]' id='answer-id-742008' class='answer   answerof-184326 ' value='742008'   \/><label for='answer-id-742008' id='answer-label-742008' class=' answer'><span>Receive $943,396<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-79' style=';'><div id='questionWrap-79'  class='   watupro-question-id-184327'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>79. <\/span>[According to the PRMIA study guide for Exam 1, Simple Exotics and Convertible Bonds have been excluded from the syllabus. You may choose to ignore this question. It appears here solely because the Handbook continues to have these chapters.] <br \/>\r<br>Which of the following best describes a shout option?<\/div><input type='hidden' name='question_id[]' id='qID_79' value='184327' \/><input type='hidden' id='answerType184327' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184327[]' id='answer-id-742009' class='answer   answerof-184327 ' value='742009'   \/><label for='answer-id-742009' id='answer-label-742009' class=' answer'><span>an option in which the holder of the option has the right to reset the strike price to be at-the-money once during the life of the option<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184327[]' id='answer-id-742010' class='answer   answerof-184327 ' value='742010'   \/><label for='answer-id-742010' id='answer-label-742010' class=' answer'><span>an option which kicks in as a plain vanilla option if the underlying hits an agreed threshold<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184327[]' id='answer-id-742011' class='answer   answerof-184327 ' value='742011'   \/><label for='answer-id-742011' id='answer-label-742011' class=' answer'><span>an option in which the buyer of the option has the option to extend the expiry of the option upon the payment of an extra premium<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184327[]' id='answer-id-742012' class='answer   answerof-184327 ' value='742012'   \/><label for='answer-id-742012' id='answer-label-742012' class=' answer'><span>an option whose expiry is automatically extended if it finishes out of the money.<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-80' style=';'><div id='questionWrap-80'  class='   watupro-question-id-184328'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>80. <\/span>Which of the following statements is false:<\/div><input type='hidden' name='question_id[]' id='qID_80' value='184328' \/><input type='hidden' id='answerType184328' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184328[]' id='answer-id-742013' class='answer   answerof-184328 ' value='742013'   \/><label for='answer-id-742013' id='answer-label-742013' class=' answer'><span>Forward contracts are settled at the end of the contract while futures gains and losses are settled daily<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184328[]' id='answer-id-742014' class='answer   answerof-184328 ' value='742014'   \/><label for='answer-id-742014' id='answer-label-742014' class=' answer'><span>Futures are OTC instruments with transparent pricing while forward contracts are not<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184328[]' id='answer-id-742015' class='answer   answerof-184328 ' value='742015'   \/><label for='answer-id-742015' id='answer-label-742015' class=' answer'><span>Forward contracts, unless collateralized, carry credit risks while the exchange practically eliminates the credit risk on a futures contract.<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184328[]' id='answer-id-742016' class='answer   answerof-184328 ' value='742016'   \/><label for='answer-id-742016' id='answer-label-742016' class=' answer'><span>Forward and futures prices differ due to differences in the timing of cash flows<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-81' style=';'><div id='questionWrap-81'  class='   watupro-question-id-184329'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>81. <\/span>What kind of a risk attitude does a utility function with downward sloping curvature indicate?<\/div><input type='hidden' name='question_id[]' id='qID_81' value='184329' \/><input type='hidden' id='answerType184329' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184329[]' id='answer-id-742017' class='answer   answerof-184329 ' value='742017'   \/><label for='answer-id-742017' id='answer-label-742017' class=' answer'><span>risk mitigation<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184329[]' id='answer-id-742018' class='answer   answerof-184329 ' value='742018'   \/><label for='answer-id-742018' id='answer-label-742018' class=' answer'><span>risk averse<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184329[]' id='answer-id-742019' class='answer   answerof-184329 ' value='742019'   \/><label for='answer-id-742019' id='answer-label-742019' class=' answer'><span>risk seeking<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184329[]' id='answer-id-742020' class='answer   answerof-184329 ' value='742020'   \/><label for='answer-id-742020' id='answer-label-742020' class=' answer'><span>risk neutral<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-82' style=';'><div id='questionWrap-82'  class='   watupro-question-id-184330'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>82. <\/span>A normal yield curve is generally:<\/div><input type='hidden' name='question_id[]' id='qID_82' value='184330' \/><input type='hidden' id='answerType184330' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184330[]' id='answer-id-742021' class='answer   answerof-184330 ' value='742021'   \/><label for='answer-id-742021' id='answer-label-742021' class=' answer'><span>Flat<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184330[]' id='answer-id-742022' class='answer   answerof-184330 ' value='742022'   \/><label for='answer-id-742022' id='answer-label-742022' class=' answer'><span>Humped<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184330[]' id='answer-id-742023' class='answer   answerof-184330 ' value='742023'   \/><label for='answer-id-742023' id='answer-label-742023' class=' answer'><span>Downward sloping<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184330[]' id='answer-id-742024' class='answer   answerof-184330 ' value='742024'   \/><label for='answer-id-742024' id='answer-label-742024' class=' answer'><span>Upward sloping<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-83' style=';'><div id='questionWrap-83'  class='   watupro-question-id-184331'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>83. <\/span>The quote for which of the following methods of physical delivery of a futures contract would be the cheapest?<\/div><input type='hidden' name='question_id[]' id='qID_83' value='184331' \/><input type='hidden' id='answerType184331' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184331[]' id='answer-id-742025' class='answer   answerof-184331 ' value='742025'   \/><label for='answer-id-742025' id='answer-label-742025' class=' answer'><span>Free on board<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184331[]' id='answer-id-742026' class='answer   answerof-184331 ' value='742026'   \/><label for='answer-id-742026' id='answer-label-742026' class=' answer'><span>Free alongside ship<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184331[]' id='answer-id-742027' class='answer   answerof-184331 ' value='742027'   \/><label for='answer-id-742027' id='answer-label-742027' class=' answer'><span>In store<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184331[]' id='answer-id-742028' class='answer   answerof-184331 ' value='742028'   \/><label for='answer-id-742028' id='answer-label-742028' class=' answer'><span>Cost, insurance and freight<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-84' style=';'><div id='questionWrap-84'  class='   watupro-question-id-184332'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>84. <\/span>The greatest risk in energy derivatives trading comes from:<\/div><input type='hidden' name='question_id[]' id='qID_84' value='184332' \/><input type='hidden' id='answerType184332' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184332[]' id='answer-id-742029' class='answer   answerof-184332 ' value='742029'   \/><label for='answer-id-742029' id='answer-label-742029' class=' answer'><span>interest rate risks<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184332[]' id='answer-id-742030' class='answer   answerof-184332 ' value='742030'   \/><label for='answer-id-742030' id='answer-label-742030' class=' answer'><span>risk of default by derivatives' counterparties<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184332[]' id='answer-id-742031' class='answer   answerof-184332 ' value='742031'   \/><label for='answer-id-742031' id='answer-label-742031' class=' answer'><span>hedging risk<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184332[]' id='answer-id-742032' class='answer   answerof-184332 ' value='742032'   \/><label for='answer-id-742032' id='answer-label-742032' class=' answer'><span>price volatility<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-85' style=';'><div id='questionWrap-85'  class='   watupro-question-id-184333'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>85. <\/span>Which of the following statements is true: <br \/>\r<br>I. The maximum value of the delta of a call option can be infinity <br \/>\r<br>II. The value of theta for a deep out of the money call approaches zero <br \/>\r<br>III. The vega for a put option is negative <br \/>\r<br>IV. For a at the money cash-or-nothing digital option, gamma approaches zero<\/div><input type='hidden' name='question_id[]' id='qID_85' value='184333' \/><input type='hidden' id='answerType184333' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184333[]' id='answer-id-742033' class='answer   answerof-184333 ' value='742033'   \/><label for='answer-id-742033' id='answer-label-742033' class=' answer'><span>I and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184333[]' id='answer-id-742034' class='answer   answerof-184333 ' value='742034'   \/><label for='answer-id-742034' id='answer-label-742034' class=' answer'><span>III only<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184333[]' id='answer-id-742035' class='answer   answerof-184333 ' value='742035'   \/><label for='answer-id-742035' id='answer-label-742035' class=' answer'><span>II and III<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184333[]' id='answer-id-742036' class='answer   answerof-184333 ' value='742036'   \/><label for='answer-id-742036' id='answer-label-742036' class=' answer'><span>II only<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-86' style=';'><div id='questionWrap-86'  class='   watupro-question-id-184334'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>86. <\/span>A bank holding a basket of credit sensitive securities transfers these to a special purpose vehicle (SPV), which sells notes based on these securities to third party investors. <br \/>\r<br>Which of the following terms best describes this arrangement?<\/div><input type='hidden' name='question_id[]' id='qID_86' value='184334' \/><input type='hidden' id='answerType184334' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184334[]' id='answer-id-742037' class='answer   answerof-184334 ' value='742037'   \/><label for='answer-id-742037' id='answer-label-742037' class=' answer'><span>n-th to default swap<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184334[]' id='answer-id-742038' class='answer   answerof-184334 ' value='742038'   \/><label for='answer-id-742038' id='answer-label-742038' class=' answer'><span>A credit default swap purchase<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184334[]' id='answer-id-742039' class='answer   answerof-184334 ' value='742039'   \/><label for='answer-id-742039' id='answer-label-742039' class=' answer'><span>A synthetic CDO creation<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184334[]' id='answer-id-742040' class='answer   answerof-184334 ' value='742040'   \/><label for='answer-id-742040' id='answer-label-742040' class=' answer'><span>A collateralized debt obligation issuance<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-87' style=';'><div id='questionWrap-87'  class='   watupro-question-id-184335'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>87. <\/span>An investor expects stock prices to move either sharply up or down. <br \/>\r<br>His preferred strategy should be to:<\/div><input type='hidden' name='question_id[]' id='qID_87' value='184335' \/><input type='hidden' id='answerType184335' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184335[]' id='answer-id-742041' class='answer   answerof-184335 ' value='742041'   \/><label for='answer-id-742041' id='answer-label-742041' class=' answer'><span>buy a butterfly spread<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184335[]' id='answer-id-742042' class='answer   answerof-184335 ' value='742042'   \/><label for='answer-id-742042' id='answer-label-742042' class=' answer'><span>buy a condor<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184335[]' id='answer-id-742043' class='answer   answerof-184335 ' value='742043'   \/><label for='answer-id-742043' id='answer-label-742043' class=' answer'><span>buy a collar<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184335[]' id='answer-id-742044' class='answer   answerof-184335 ' value='742044'   \/><label for='answer-id-742044' id='answer-label-742044' class=' answer'><span>buy a straddle<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-88' style=';'><div id='questionWrap-88'  class='   watupro-question-id-184336'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>88. <\/span>For a forward contract on a commodity, an increase in carrying costs (all other factors remaining constant) has the effect of:<\/div><input type='hidden' name='question_id[]' id='qID_88' value='184336' \/><input type='hidden' id='answerType184336' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184336[]' id='answer-id-742045' class='answer   answerof-184336 ' value='742045'   \/><label for='answer-id-742045' id='answer-label-742045' class=' answer'><span>increasing the forward price<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184336[]' id='answer-id-742046' class='answer   answerof-184336 ' value='742046'   \/><label for='answer-id-742046' id='answer-label-742046' class=' answer'><span>decreasing the forward price<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184336[]' id='answer-id-742047' class='answer   answerof-184336 ' value='742047'   \/><label for='answer-id-742047' id='answer-label-742047' class=' answer'><span>increasing the spot price<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184336[]' id='answer-id-742048' class='answer   answerof-184336 ' value='742048'   \/><label for='answer-id-742048' id='answer-label-742048' class=' answer'><span>decreasing the spot price<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-89' style=';'><div id='questionWrap-89'  class='   watupro-question-id-184337'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>89. <\/span>What would be the expected return on a stock with a beta of 1.2, when the risk free rate is 3% and the broad market index is expected to earn 8%?<\/div><input type='hidden' name='question_id[]' id='qID_89' value='184337' \/><input type='hidden' id='answerType184337' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184337[]' id='answer-id-742049' class='answer   answerof-184337 ' value='742049'   \/><label for='answer-id-742049' id='answer-label-742049' class=' answer'><span>7%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184337[]' id='answer-id-742050' class='answer   answerof-184337 ' value='742050'   \/><label for='answer-id-742050' id='answer-label-742050' class=' answer'><span>7.4%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184337[]' id='answer-id-742051' class='answer   answerof-184337 ' value='742051'   \/><label for='answer-id-742051' id='answer-label-742051' class=' answer'><span>9%<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184337[]' id='answer-id-742052' class='answer   answerof-184337 ' value='742052'   \/><label for='answer-id-742052' id='answer-label-742052' class=' answer'><span>9.6%<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-90' style=';'><div id='questionWrap-90'  class='   watupro-question-id-184338'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>90. <\/span>Which of the following statements are true: <br \/>\r<br>I. A credit default swap provides exposure to credit risk alone and none to credit spreads <br \/>\r<br>II. A CDS contract provides exposure to default risk and credit spreads <br \/>\r<br>III. A TRS can be used as a funding source by the party paying LIBOR or other floating rate <br \/>\r<br>IV. A CLN is an unfunded security for getting exposure to credit risk<\/div><input type='hidden' name='question_id[]' id='qID_90' value='184338' \/><input type='hidden' id='answerType184338' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184338[]' id='answer-id-742053' class='answer   answerof-184338 ' value='742053'   \/><label for='answer-id-742053' id='answer-label-742053' class=' answer'><span>I, III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184338[]' id='answer-id-742054' class='answer   answerof-184338 ' value='742054'   \/><label for='answer-id-742054' id='answer-label-742054' class=' answer'><span>II, III and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184338[]' id='answer-id-742055' class='answer   answerof-184338 ' value='742055'   \/><label for='answer-id-742055' id='answer-label-742055' class=' answer'><span>II and IV<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184338[]' id='answer-id-742056' class='answer   answerof-184338 ' value='742056'   \/><label for='answer-id-742056' id='answer-label-742056' class=' answer'><span>II and III<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-91' style=';'><div id='questionWrap-91'  class='   watupro-question-id-184339'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>91. <\/span>An investor enters into a 4 year interest rate swap with a bank, agreeing to pay a fixed rate of 4% on a notional of $100m in return for receiving LIBOR. <br \/>\r<br>What is the value of the swap to the investor two years hence, immediately after the net interest payments are exchanged? Assume the 2 year swap rate is 5%, and the yield curve is also flat at 5%<\/div><input type='hidden' name='question_id[]' id='qID_91' value='184339' \/><input type='hidden' id='answerType184339' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184339[]' id='answer-id-742057' class='answer   answerof-184339 ' value='742057'   \/><label for='answer-id-742057' id='answer-label-742057' class=' answer'><span>$1,859,410<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184339[]' id='answer-id-742058' class='answer   answerof-184339 ' value='742058'   \/><label for='answer-id-742058' id='answer-label-742058' class=' answer'><span>$1,904,762<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184339[]' id='answer-id-742059' class='answer   answerof-184339 ' value='742059'   \/><label for='answer-id-742059' id='answer-label-742059' class=' answer'><span>-$1,859,410<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184339[]' id='answer-id-742060' class='answer   answerof-184339 ' value='742060'   \/><label for='answer-id-742060' id='answer-label-742060' class=' answer'><span>-$1,904,762<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-92' style=';'><div id='questionWrap-92'  class='   watupro-question-id-184340'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>92. <\/span>Which of the following expressions represents Jensen's alpha, where is the expected return, is the standard deviation of returns, rm is the return of the market portfolio and rf is the risk free rate:<\/div><input type='hidden' name='question_id[]' id='qID_92' value='184340' \/><input type='hidden' id='answerType184340' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184340[]' id='answer-id-742061' class='answer   answerof-184340 ' value='742061'   \/><label for='answer-id-742061' id='answer-label-742061' class=' answer'><span>https:\/\/www.riskprep.com\/images\/stories\/questions\/102.12.b.png \r\nB) \r\nhttps:\/\/www.riskprep.com\/images\/stories\/questions\/102.12.d.png \r\nC) \r\nhttps:\/\/www.riskprep.com\/images\/stories\/questions\/102.12.c.png \r\nD) \r\nhttps:\/\/www.riskprep.com\/images\/stories\/questions\/102.12.a.png<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184340[]' id='answer-id-742062' class='answer   answerof-184340 ' value='742062'   \/><label for='answer-id-742062' id='answer-label-742062' class=' answer'><span>Option A<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184340[]' id='answer-id-742063' class='answer   answerof-184340 ' value='742063'   \/><label for='answer-id-742063' id='answer-label-742063' class=' answer'><span>Option B<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184340[]' id='answer-id-742064' class='answer   answerof-184340 ' value='742064'   \/><label for='answer-id-742064' id='answer-label-742064' class=' answer'><span>Option C<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184340[]' id='answer-id-742065' class='answer   answerof-184340 ' value='742065'   \/><label for='answer-id-742065' id='answer-label-742065' class=' answer'><span>Option D<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-93' style=';'><div id='questionWrap-93'  class='   watupro-question-id-184341'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>93. <\/span>When graphing the efficient frontier, the two axes are:<\/div><input type='hidden' name='question_id[]' id='qID_93' value='184341' \/><input type='hidden' id='answerType184341' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184341[]' id='answer-id-742066' class='answer   answerof-184341 ' value='742066'   \/><label for='answer-id-742066' id='answer-label-742066' class=' answer'><span>Asset beta and standard deviation of the market portfolio<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184341[]' id='answer-id-742067' class='answer   answerof-184341 ' value='742067'   \/><label for='answer-id-742067' id='answer-label-742067' class=' answer'><span>Expected return and asset's beta<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184341[]' id='answer-id-742068' class='answer   answerof-184341 ' value='742068'   \/><label for='answer-id-742068' id='answer-label-742068' class=' answer'><span>Portfolio return and market standard deviation<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184341[]' id='answer-id-742069' class='answer   answerof-184341 ' value='742069'   \/><label for='answer-id-742069' id='answer-label-742069' class=' answer'><span>Portfolio return and portfolio standard deviation<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-94' style=';'><div id='questionWrap-94'  class='   watupro-question-id-184342'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>94. <\/span>Backwardation can happen in markets where<\/div><input type='hidden' name='question_id[]' id='qID_94' value='184342' \/><input type='hidden' id='answerType184342' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184342[]' id='answer-id-742070' class='answer   answerof-184342 ' value='742070'   \/><label for='answer-id-742070' id='answer-label-742070' class=' answer'><span>convenience yield is less than the total interest and carrying costs<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184342[]' id='answer-id-742071' class='answer   answerof-184342 ' value='742071'   \/><label for='answer-id-742071' id='answer-label-742071' class=' answer'><span>convenience yields are greater than the total interest, storage and other carrying costs<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184342[]' id='answer-id-742072' class='answer   answerof-184342 ' value='742072'   \/><label for='answer-id-742072' id='answer-label-742072' class=' answer'><span>convenience yields are positive<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184342[]' id='answer-id-742073' class='answer   answerof-184342 ' value='742073'   \/><label for='answer-id-742073' id='answer-label-742073' class=' answer'><span>convenience yields are zero<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-95' style=';'><div id='questionWrap-95'  class='   watupro-question-id-184343'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>95. <\/span>If the spot price for a commodity is lower than the forward price, the market is said to be in:<\/div><input type='hidden' name='question_id[]' id='qID_95' value='184343' \/><input type='hidden' id='answerType184343' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184343[]' id='answer-id-742074' class='answer   answerof-184343 ' value='742074'   \/><label for='answer-id-742074' id='answer-label-742074' class=' answer'><span>contango<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184343[]' id='answer-id-742075' class='answer   answerof-184343 ' value='742075'   \/><label for='answer-id-742075' id='answer-label-742075' class=' answer'><span>backwardation<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184343[]' id='answer-id-742076' class='answer   answerof-184343 ' value='742076'   \/><label for='answer-id-742076' id='answer-label-742076' class=' answer'><span>a short squeeze<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184343[]' id='answer-id-742077' class='answer   answerof-184343 ' value='742077'   \/><label for='answer-id-742077' id='answer-label-742077' class=' answer'><span>disequilibrium<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div class='watu-question ' id='question-96' style=';'><div id='questionWrap-96'  class='   watupro-question-id-184344'>\n\t\t\t<div class='question-content'><div><span class='watupro_num'>96. <\/span>The cheapest to deliver bond for a treasury bond futures contract is the one with the :<\/div><input type='hidden' name='question_id[]' id='qID_96' value='184344' \/><input type='hidden' id='answerType184344' value='checkbox'><!-- end question-content--><\/div><div class='question-choices watupro-choices-columns '><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184344[]' id='answer-id-742078' class='answer   answerof-184344 ' value='742078'   \/><label for='answer-id-742078' id='answer-label-742078' class=' answer'><span>the lowest yield to maturity adjusted by the conversion factor<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184344[]' id='answer-id-742079' class='answer   answerof-184344 ' value='742079'   \/><label for='answer-id-742079' id='answer-label-742079' class=' answer'><span>the lowest coupon<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184344[]' id='answer-id-742080' class='answer   answerof-184344 ' value='742080'   \/><label for='answer-id-742080' id='answer-label-742080' class=' answer'><span>the lowest basis when comparing cash price to the futures spot price adjusted by the conversion factor<\/span><\/label><\/div><div class='watupro-question-choice  ' dir='auto' ><input type='checkbox' name='answer-184344[]' id='answer-id-742081' class='answer   answerof-184344 ' value='742081'   \/><label for='answer-id-742081' id='answer-label-742081' class=' answer'><span>the highest coupon<\/span><\/label><\/div><!-- end question-choices--><\/div><!-- end questionWrap--><\/div><\/div><div style='display:none' id='question-97'>\n\t<div class='question-content'>\n\t\t<img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.dumpsbase.com\/freedumps\/wp-content\/plugins\/watupro\/img\/loading.gif\" width=\"16\" height=\"16\" alt=\"Loading...\" title=\"Loading...\" \/>&nbsp;Loading...\t<\/div>\n<\/div>\n\n<br \/>\n\t\n\t\t\t<div class=\"watupro_buttons flex \" id=\"watuPROButtons5561\" >\n\t\t  <div id=\"prev-question\" style=\"display:none;\"><input type=\"button\" value=\"&lt; Previous\" onclick=\"WatuPRO.nextQuestion(event, 'previous');\"\/><\/div>\t\t  \t\t  \t\t   \n\t\t   \t  \t\t<div><input type=\"button\" name=\"action\" 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