PRIMA 8006 PRM Certification – Exam I: Finance Theory, Financial Instruments, Financial Markets – 2015 Edition Online Training
PRIMA 8006 Online Training
The questions for 8006 were last updated at Apr 23,2024.
- Exam Code: 8006
- Exam Name: PRM Certification - Exam I: Finance Theory, Financial Instruments, Financial Markets – 2015 Edition
- Certification Provider: PRIMA
- Latest update: Apr 23,2024
Calculate the number of S&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&P is currently at 1000 and the contract multiplier is 250.
- A . 4
- B . 8
- C . 6
- D . 2
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.
- A . $70.75
- B . $74.53
- C . $71
- D . $66.98
Euro-dollar deposits refer to
- A . A deposit denominated in the ECU
- B . A US dollar deposit outside the US
- C . A Euro deposit convertible into dollars upon maturity
- D . A Euro deposit in the USA
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?
- A . 6%
- B . 6.9%
- C . 5.5%
- D . 5%
Which of the following statements is INCORRECT according to CAPM:
- A . 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
- B . the return expected by investors for holding the risky asset is a function of the covariance of the risky asset to the market portfolio
- C . securities with a higher standard deviation of returns will have a higher expected return
- D . portfolios on the efficient frontier have different Sharpe ratios
A bank advertises its certificates of deposits as yielding a 5.2% annual effective rate.
What is the equivalent continuously compounded rate of return?
- A . 4.82%
- B . 5%
- C . 5.07%
- D . 5.20%
[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.]
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?
- A . 0.5
- B . 1
- C . 0
- D . None of the above
[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.]
Which of the following describes a ‘quanto’ instrument:
- A . options on options
- B . any two asset hybrid instrument
- C . correlation products
- D . any two asset instrument in which one asset is a foreign currency
A bullet bond refers to a bond:
- A . that carries no coupon payments during its lifetime
- B . that provides for fixed coupons and repayment of principal at maturity
- C . that is issued by a sovereign
- D . that provides for floating rate interest payments during its lifetime
The securities market line (SML) based upon the CAPM expresses the relationship between
- A . asset beta and expected returns
- B . asset standard deviation and expected returns
- C . excess returns from the asset and its standard deviation
- D . market returns and asset returns
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