Free PRMIA 8002 Exam Dumps Questions & Answers

Suppose I trade an option and I wish to hedge that option for delta and vega. Another option is available to trade. To complete the hedge I would

• A.  trade the other option in such a way as to make the portfolio delta and vega neutral.
• B.  trade the other option in such a way as to make the portfolio vega neutral, and then trade the underlying in such a way as to make the portfolio delta neutral.
• C.  trade the underlying in such a way as to make the portfolio delta neutral, and then trade the other option in such a way as to make the portfolio vega neutral.
• D.  trade the underlying in such a way as to make the portfolio delta and vega neutral.

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

• A.  Regression
• B.  Hypothesis testing
• C.  Prediction
• D.  Estimation

Consider the linear regression model for the returns of stock A and the returns of stock B.
Stock A is 50% more volatile than stock B.
Which of the following statements is TRUE?

• A.  Beta must be greater in absolute value than the correlation of the stocks ( )
• B.  Alpha must be positive ( )
• C.  The stocks must be positively correlated ( )
• D.  Beta must be positive ( )

Evaluate the derivative of ln(1+ x2) at the point x = 1

• A.  1
• B.  2
• C.  0.5
• D.  0

Over four consecutive years fund X returns 1%, 5%, -3%, 8%. What is the average growth rate of fund X over this period?

• A.  2.49%
• B.  2.75%
• C.  None of the above
• D.  2.67%