8002 PRMIA PRM Certification - Exam II: Mathematical Foundations of Risk Measurement Free Practice Exam Questions (2025 Updated)
Prepare effectively for your PRMIA 8002 PRM Certification - Exam II: Mathematical Foundations of Risk Measurement certification with our extensive collection of free, high-quality practice questions. Each question is designed to mirror the actual exam format and objectives, complete with comprehensive answers and detailed explanations. Our materials are regularly updated for 2025, ensuring you have the most current resources to build confidence and succeed on your first attempt.
The Newton-Raphson method
In a quadratic Taylor approximation, a function is approximated by:
Which of the following statements is true?
A biased coin has a probability of getting heads equal to 0.3. If the coin is tossed 4 times, what is the probability of getting heads at least two times?
Find the first-order Taylor approximation p(x) for the function: at the point .
What is the sum of the first 20 terms of this sequence: 3, 5, 9, 17, 33, 65,…?
When calculating the implied volatility from an option price we use the bisection method and know initially that the volatility is somewhere between 1% and 100%. How many iterations do we need in order to determine the implied volatility with accuracy of 0.1%?
Let E(X ) = 1, E(Y ) = 3, Corr(X, Y ) = -0.2, E(X2 ) = 10 and E(Y2 ) = 13. Find the covariance between X and Y
Find the roots, if they exist in the real numbers, of the quadratic equation
Let X be a random variable distributed normally with mean 0 and standard deviation 1. What is the expected value of exp(X)?
Let A be a square matrix and denote its determinant by x. Then the determinant of A transposed is:
At what point x does the function f(x) = x3 - 4x2 + 1 have a local minimum?
When a number is written with a fraction as an exponent, such as , which of the following is the correct computation?
The Lagrangian of a constrained optimisation problem is given by L(x,y,λ) = 16x+8x2+4y-λ(4x+y-20), where λ is the Lagrange multiplier. What is the solution for x and y?
Which of the following statements about skewness of an empirical probability distribution are correct?
1. When sampling returns from a time series of asset prices, discretely compounded returns exhibit higher skewness than continuously compounded returns
2. When the mean is significantly less than the median, this is an indication of negative skewness
3. Skewness is a sign of asymmetry in the dispersion of the data
An option has value 10 when the underlying price is 99 and value 9.5 when the underlying price is 101. Approximate the value of the option delta using a first order central finite difference.
Variance reduction is:
The sum of the infinite series 1+1/2+1/3+1/4+1/5+.... equals:
A simple linear regression is based on 100 data points. The total sum of squares is 1.5 and the correlation between the dependent and explanatory variables is 0.5. What is the explained sum of squares?
A 95% confidence interval for a parameter estimate can be interpreted as follows:
