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| Section | Objectives |
|---|---|
| Topic 1: Stochastic Processes and Time Series | - Stochastic processes basics
|
| Topic 2: Simulation and Numerical Methods | - Monte Carlo simulation
|
| Topic 3: Probability and Statistics Foundations | - Random variables and probability distributions
|
| Topic 4: Risk Measurement Techniques | - Volatility and correlation
|
In a binomial tree lattice, at each step the underlying price can move up by a factor of u = 1.1 or down by a factor of . The continuously compounded risk free interest rate over each time step is 1% and there are no dividends paid on the underlying. The risk neutral probability for an up move is:
Correct Answer: B 🗳️
What is the sum of the first 20 terms of this sequence: 3, 5, 9, 17, 33, 65,...?
Correct Answer: D 🗳️
Suppose that f(x) and g(x,y) are functions. What is the partial derivative of f(g(x,y)) with respect to y?
Correct Answer: D 🗳️
Let a, b and c be real numbers. Which of the following statements is true?
Correct Answer: B 🗳️
Your stockbroker randomly recommends stocks to his clients from a tip sheet he is given each day. Today, his tip sheet has 3 common stocks and 5 preferred stocks from Asian companies and 3 common stocks and 5 preferred stocks from European companies. What is the probability that he will recommend a common stock AND/OR a European stock to you when you call and ask for one stock to buy today?
Correct Answer: D 🗳️
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