Free PRMIA 8007 Exam Dumps Questions & Answers

Variance reduction is:

• A.  A technique that is applied in regression models to improve the accuracy of the coefficient estimates
• B.  A method for reducing the number of simulations required in a Monte Carlo simulation
• C.  A numerical method for finding portfolio weights to minimize the variance of a portfolio that has a given expected return
• D.  A numerical method for finding the variance of the underlying that is implicit in a market price of an option

The bisection method can be used for solving f(x)=0 for a unique solution of x, when

• A.  The function f(x) is differentiable
• B.  The function f(x) is continuous
• C.  The function f(x) is continuous and monotonic
• D.  The function f(x) is differentiable and we have an explicit expression for the derivative

Let f(x) = c for x in [0,4] and 0 for other values of x.
What is the value of the constant c that makes f(x) a probability density function; and what if f(x) = cx for x in
[0,4]?

• A.  1/4 and 1/6
• B.  None of the above
• C.  1/4 and 1/7
• D.  1/7 and 1/9

What is the 40th term in the following series: 4, 14, 30, 52, ...?

• A.  4598
• B.  4840
• C.  4960
• D.  240

Maximum likelihood estimation is a method for:

• A.  Finding parameter estimates of a given density function
• B.  Estimating the solution of a partial differential equation
• C.  Estimating the implied volatility of a simple European option
• D.  Solving a portfolio optimization problem