Free PRMIA 8013 Exam Questions

Question 1

Which of the following statements is true:I. The standard deviation of a short position is the same as the standard deviation of a long positionII. The expected return of a short position is the same as that a long position in the same assetIII. If two assets are perfectly positively correlated, then a short position in one and a long position in theother are negatively correlated IV. If we increase the weight of an asset in a portfolio, its correlation with other assets in the portfolio scales up proportionately

A : I, II, III and IV

B : II and IV

C : I and III

D : II, III and IV

Answer: C

Question 2

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.

A : $2,081

B : $1,201

C : $1,204

D : $4,330,000

Answer: A

Question 3

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.

A : $2,081

B : $1,201

C : $1,204

D : $4,330,000

Answer: A

Question 4

What is the price of a treasury bill with $100 face maturing in 90 days and yielding 5%?

A : $95.24

B : $95.00

C : $98.78

D : $101.23

Answer: C

Question 5

Backwardation can be explained by:

A : expectations of oversupply in the future

B : convenience yields being greater than the total carrying cost

C : short term shortages in the spot markets

D : all of the above

Answer: D