Free PRMIA 8007 Exam Dumps Questions & Answers

Which of the following can induce a 'multicollinearity' problem in a regression model?

• A.The omission of a relevant explanatory variable
• B.A high positive correlation between two explanatory variables
• C.A large negative correlation between the dependent variable and one of the explanatory variables
• D.A high positive correlation between the dependent variable and one of the explanatory variables

For each of the following functions, indicate whether its graph is concave or convex:
Y = 7x2 + 3x + 9
Y = 6 ln(3x)
Y = exp(-4x)

• A.concave, convex, convex
• B.concave, concave, concave
• C.convex, concave, concave
• D.convex, convex, concave

What is the total derivative of the function f(x,y) = ln(x+y), where ln() denotes the natural logarithmic function?

• A.-x/(x+y) - y/(x+y)
• B.ln(x+y) x + ln(x+y) y
• C.1 / (x+y)
• D.(x + y) / (x+y)

Exploring a regression model for values of the independent variable that have not been observed is most accurately described as...

• A.Hypothesis testing
• B.Prediction
• C.Regression
• D.Estimation

Stress testing portfolios requires changing the asset volatilities and correlations to extreme values. Which of the following would lead to a non positive definite covariance matrix?

• A.Changing all the correlations to be zero
• B.Changing all the correlations to be unity
• C.Changing the volatilities to be greater than 100%
• D.All of the above