PRMIA Exam I: Finance Theory Financial Instruments Financial Markets - 2015 Edition - 8006 FREE EXAM DUMPS QUESTIONS & ANSWERS
Which of the following are considered Credit Events under ISDA definitions?
I. Bankruptcy
II. Obligation Acceleration
III. Obligation Default
IV. Restructuring
I. Bankruptcy
II. Obligation Acceleration
III. Obligation Default
IV. Restructuring
Correct Answer: B
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Which of the following indicate a long position on the TED (treasury-Eurodollar) spread?
Correct Answer: A
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What is the yield to maturity for a 5% annual coupon bond trading at par? The bond matures in 10 years.
Correct Answer: C
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Which of the following expressions represents Jensen's alpha, where is the expected return, is the standard deviation of returns, rm is the return of the market portfolio and rf is the risk free rate:
Correct Answer: A
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A borrower pays a floating rate on a loan and wishes to convert it to a position where a fixed rate is paid.
Which of the following can be used to accomplish this objective?
I. A short position in a fixed rate bond and a long position in an FRN
II. An long position in an interest rate collar and long an FRN
III. A short position in a fixed rate bond and a short position in an FRN IV. An interest rate swap where the investor pays the fixed rate
Which of the following can be used to accomplish this objective?
I. A short position in a fixed rate bond and a long position in an FRN
II. An long position in an interest rate collar and long an FRN
III. A short position in a fixed rate bond and a short position in an FRN IV. An interest rate swap where the investor pays the fixed rate
Correct Answer: D
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What is the duration of a 10 year zero coupon bond. Assume the bond is callable (ie, the issuer can buy it back) at face value at any time during its existence.
Correct Answer: A
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Which of the following best describes the efficient frontier?
Correct Answer: C
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The cheapest to deliver bond for a treasury bond futures contract is the one with the :
Correct Answer: C
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Determine the enterprise value of a firm whose expected operating free cash flows are $100 each year and are growing with GDP at 2.5%. Assume its weighted average cost of capital is 7.5% annually.
Correct Answer: B
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