Question 1

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 2

A trader on the interest rate desk of a large bank entered into a customized 2-year interest rate swap contract on July 31, 2020, on a notional amount of USD 7.5 million. According to the terms of the swap, the bank received an annual fixed rate of 2.3% and paid an annual rate of SOFR as of the first day of the month of payment plus 1.95%. Payments were made every 6 months. The table below displays the relevant SOFR rates over the 2-year period:Date AND 6-month SOFR1-Jul-20: 0.11%1-Jan-21: 0.10%1-Jul-21: 0.05%1-Jan-22: 0.05%1-Jul-22: 1.52%Assuming no default, which of the following was the best estimate to the net amount that the bank paid or received on July 31, 2022?

Options :

A : Paid USD 87,750

B : Received USD 9,000

C : Paid USD 43,875

D : Received USD 29,250

Answer: C

Question 3

Sue Johnson, FRM, has an elderly client with a very large asset base. The client intends to start divesting her fortune to various charities. Johnson is on the Board of a local charitable foundation. Johnson most appropriately:

Options :

A : should solicit the client herself, along with other Board members, to obtain a larger contribution.

B : can discuss her client-s situation with the charitable foundation as long as she informs other local charities of her client-s intentions.

C : must not discuss anything regarding her client and her client-s intentions with the charitable foundation without permission.

D : can make this known to the charitable foundation so that they can solicit the client, since it is the client-s wish to divest assets to charities in the future.

Answer: C

Question 4

An analyst is estimating whether a fund's excess return for a quarter is related to interest rates and last quarter's excess return. The regression equation is found to have unconditional heteroskedasticity and serial correlation. Which of the following is most accurate? Parameter estimates will be:

Options :

A : accurate and statistical inference about the parameters will be valid.

B : inaccurate but statistical inference about the parameters will be valid.

C : inaccurate and statistical inference about the parameters will not be valid.

D : accurate but statistical inference about the parameters will not be valid.

Answer: C

Question 5

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

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