Free PRMIA 8007 Exam Dumps Questions & Answers

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.

• A.(i) and (ii)
• B.(i) and (iii)
• C.(i), (ii), and (iii)
• D.(i) only

For the function f(x) =3x-x3 which of the following is true?

• A.x = 0 is a minimum
• B.x = 2 is a maximum
• C.x = -3 is a maximum
• D.None of these

The correlation between two asset returns is 0.5. What is the largest eigenvalue of their correlation matrix?

• A.None of the above
• B.1
• C.0.5
• D.1.5

I have $5m to invest in two stocks: 75% of my capital is invested in stock 1 which has price 100 and the rest is invested in stock 2, which has price 125. If the price of stock 1 falls to 90 and the price of stock 2 rises to 150, what is the return on my portfolio?

• A.2.50%
• B.5%
• C.-2.50%
• D.-5%

Which of the following can be used to evaluate a regression model?
(i) Magnitude of R2
(ii) Magnitude of TSS (total sum of squares)
(iii) Tests for statistical significance
(iv) Sign and magnitude of each regression parameter

• A.(i), (iii), and (iv)
• B.(i) and (iv)
• C.(i), (ii), (iii), and (iv)
• D.(i), (ii), and (iii)