FRM Part I Quants 20 Questions Quiz 2020 Session

Mr. Jimmy Software developer by profession wants to invest his part of savings in mutual funds. After researching he got to know about funds investment styles like mid-cap, small cap and large cap. He forwarded one of the research he found in article which provides probability matrix of probability of choice of mutual fund by similar set of investors and returns beating benchmark (B). Answer following questions using following probability matrix.

Question 1 (Q1) : What is the probability Jimmy choose Small cap mutual fund

Question 2 (Q2): What is the probability of returns are more than benchmark given invested in midcap.

A Data research agency working for an insurance company providing credit card insurance, came up with research on credit cards lost by there owners. Research states in a given city, on an average 40 card owners lose their credit card in a year. What is the probability that exactly 2 owners will lose their credit card in a month?

Read the following statements and choose the correct option.

Statement 1: Interquartile range is the difference between 75% and 25% quantiles.

Statement 2: It is comparable to standard deviation and is affected by outliers

The hedge fund Marcus Ltd primary trades in exotic derivatives. Presently 10 managers are on the floor managing their own portfolio. The mean return generated by the firm is 18%. Assuming standard deviation equal to 7%, the confidence interval at 95% of the mean return is.

Co-kurtosis of a bivariate normal depends on the correlation. Heena, is trying to determine the range for three co-kurtosis k (X,X,Y,Y) symmetrical case. What will be range of co-kurtosis for this case?

Falcon research agency conducted survey to find out relationship between students scoring right answers in exam and number of hours put in preparation for exam. Details are given below.

Using OLS regression method, find out b0.

Which of the following statements regarding linear regression is false?

An analyst decided to run a regression analysis on company XYZ. It says that company’s earnings can be explained by operational costs (OC) and revenue (R). Test the statistical significance of independent variable OC at 5% significance level, assuming number of observations be 43.

Results of regression analysis are as follows:

A population has a known mean of 1,000. Suppose 1,600 samples are randomly drawn (with replacement) from this population. The mean of the observed samples is 998.7, and the standard deviation of the observed samples is 100. What is the standard error of the sample mean?

To be covariance stationery, A time series must exhibit the  following properties except

Which one of the following statement is incorrect regarding seasonality

Tom and Town is an ice cream manufacturer where Choco and Blueberry are top-selling flavors. The quality head is suspicious that Blueberry Flavor might have higher variation in sugar content that Choco Flavor. Quality head took 31 samples of each flavor and tested sugar content and found on average 100 g and 120 g of sugar content per Kg is there in Choco and Blueberry respectively with standard deviation of 20 g and 15 g. Determine if sugar content variation in Choco flavor ice cream is higher than in Blueberry at 5% significance.

Which type of distribution produces the lowest probability for a variable to exceed a specified extreme value that is greater than the mean, assuming the distributions all have the same mean and variance?

On a multiple-choice exam with four choices for each of six questions, what is the probability that a student gets fewer than two questions correct simply by guessing? (Use Binomial method)

After running regression on monthly stock returns with 3 independent variables over a period of 4 years. Total sum of squares for the regression is 300 and sum of squared errors is 100. Calculate R² and adjusted R²

Flipping a fair coin two times is an example of?

Co-skewness is always ___ in a bivariate normal sample because data is symmetrical and normally distributed

What does a hypothesis test at the 5% significance level mean (Type 1 error) ?

.Jarque Bera Test is used to test whether a distribution is normal or not. Which of the following statement/s is/are least accurate about Jarqe – Bera Testb.

1. It uses hypothesis testing for Skewness and Kurtosis of distribution
2. Null is H0: S= 0 and K = 0
3. Students T distribution is used to test the hypothesis.
4. If critical value is 5.99 at 5% confidence and given degrees of freedom. Null is true if T stat is above 5.99.

Based on half yearly data of Newman Inc. stock returns, found that daily variance of return is 0.09. What is annual volatility of stock return (assuming 250 days in year)