Floating rate bonds typically have ________ duration which means they have ________ sensitivity to interest
rate changes.

• A.short, small
• B.long, small
• C.long, high
• D.short, high

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Which of the following statements about parametric and nonparametric methods for calculating Value-at-risk
is correct?

• A.Both parametric and nonparametric methods assume returns are normally distributed.
• B.Parametric methods make no assumptions about return distributions, and non-parametric methods
  assume returns are normally distributed.
• C.Both parametric and nonparametric methods make no assumptions about return distributions.
• D.Parametric methods generally assume returns are normally distributed, and non-parametric methods
  make no assumptions about return distributions.

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According to Basel II what constitutes Tier 1 capital?

• A.Profits to reserves and innovative Tier 1 capital
• B.Equity capital and accrued profits to reserves
• C.Equity capital and core capital
• D.Core capital and innovative Tier 1 capital.

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Which one of the following four exotic option types has another option as its underlying asset, and as a result
of its construction is generally believed to be very difficult to model?

• A.Chooser options
• B.Binary options
• C.Compound options
• D.Spread options

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Most loans and deposits in the interbank market have a maturity of:

• A.Less than one year
• B.More than 5 years but less than 10 years
• C.More than 10 years
• D.More than 3 years but less than 5 years

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