PRM Certification - Exam II: Mathematical Foundations of Risk Measurement (8002) - PRMIA Actual Exam Questions
Last updated on May 06, 2026
For a quadratic equation, which of the following is FALSE?
If the discriminant is negative, there are no real solutions
If the discriminant is zero, there is only one solution
If the discriminant is negative there are two different real solutions
If the discriminant is positive there are two different real solutions
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You work for a brokerage firm that charges its client x per share. The volume of trade of a client of type A depends on the per share commission in the following manner. If the commission is x, the client of type A will trade e-ax shares on average each week. What is the optimal commission x that maximizes the income from client A, noting that a is greater than zero?
1
a
42
a2
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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.
-4
0.25
-0.5
-0.25
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Consider a binomial lattice where a security price S moves up by a factor u with probability p, or down by a factor d with probability
p. If we set d > 1/u then which of the following will be TRUE?
The lattice will not recombine
The probability of an up move will not be constant
There will always be a downward drift in the lattice
None of the above
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Which of the following statements are true about Maximum Likelihood Estimation? (i) MLE can be applied even if the error terms are not i.i.d. normal. (ii) MLE involves integrating a likelihood function or a log-likelihood function. (iii) MLE yields parameter estimates that are consistent.
(i) and (ii)
(i) only
(i) and (iii)
(i), (ii), and (iii)
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