Question 1

Robert Patterson, an options trader, believes that the return on options trading is higher on Mondays than on other days. In order to test his theory, he formulates a null hypothesis.Which of the following would be an appropriate null hypothesis? Returns on Mondays are:

Options :

A : less than returns on other days.

B : not less than returns on other days.

C : not greater than returns on other days.

D : greater than returns on other days.

Answer: C

Question 2

Given the spot rates for the 6-month and 1-year maturing bond, the 6-month forward rate 6 months from now is closest to:

Options :

A : 7.28%.

B : 6.54%.

C : 5.86%.

D : 6.04%.

Answer: B

Question 3

As a research analyst, you're analyzing the probability that the prices of dollar will go below 72 after theupcoming budget. Suppose that the prices of dollar are uniformly distributed with a floor at Rs. 70 and a ceiling atRs. 75 imposed by the government, then what is the probability that the prices of gold will be set below 72?

Options :

A : 0.625

B : 0.425

C : 0.4

D : 0.815

Answer: C

Question 4

Which of the following statements regarding securitization is least accurate?

Options :

A : Securitization enabled the originate-to-distribute banking model.

B : Securitization enables an originating institution to transfer the default risk of the underlying pool of assets.

C : Securitization may allow institutional investors to indirectly hold assets that they are prevented from holding directly.

D : Securitization gives originating banks greater incentive to approve and monitor loans carefully.

Answer: D

Question 5

Which of the following liquidity de nitions is most likely associated with funding liquidity?

Options :

A : The length of time it will take an asset to regain its price after the price has fallen temporarily.

B : The loss that would be sustained by a trader who sells an asset and then immediately buys it back.

C : The number of units of an asset a trader can buy or sell at the current market quote (bid and ask prices).

D : The risk that investors may not be able to roll over short-term debt to nance the purchase of an asset.

Answer: D

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