1

Quantitative B. 3.5%.
C. 4.2%.
M1.Q28. Which of the following risk premiums compensates investors
for the risk of loss relative to an investment's fair value if the
M1.Q69.
investment needs to be converted to cash quickly?
A. Liquidity premium
B. Inflation premium
C. Maturity premium

M1.Q32. The term Big Data refers to:

A. structured data only. Which of the following returns is the largest?
B. unstructured data only. A. The geometric mean annual return
C. both structured and unstructured data. B. The arithmetic mean annual return
C. The two-year holding period return
M1.Q36. The bootstrap resampling method:
A. guarantees that all items will appear in the resamples. M1.Q70. A bank account has a stated annual interest rate of 3.5% with
B. relies on an analytical formula to estimate the distribution of the quarterly compounding. If the current value of the account is
estimators. $100,000, the future value of the account two years from now is
C. mimics the random sampling process by treating the randomly closest to:
drawn sample as if it were the population. A. $107,123.
B. $107,207.
M1.Q38. At a 99% confidence level, the analyst should reject the null C. $107,218.
hypothesis that:
M1.Q73. When testing a hypothesis, the power of a test is best
described as the:
A. same as the level of significance of the test.
B. probability of rejecting a true null hypothesis.
C. probability of correctly rejecting the null hypothesis.

M1.Q76. Goodness of fit measures derived from analysis of variance

(ANOVA) data most likely include the:
A. the intercept is zero. A. coefficient of variation.
B. the slope is less than or equal to 0.75. B. regression coefficients.
C. there is no linear relationship between the country's inflation rate C. standard error of the estimate.
and short-term interest rate.
M1.Q82.
M1.Q42. A positively skewed unimodal distribution of returns most
likely has:
A. a long tail on the left side.
B. a mode that is less than its mean.
C. frequent small gains and a few extreme losses.

M1.Q43. Sampling error is the difference between the observed value The account balance at the end of the second year is closest to:
of a statistic and the: A. €8,432.
A. mean of the sample. B. €9,672.
B. quantity it is intended to estimate. C. €10,912.
C. observed value of the random variable.
M1.Q87.
M1.Q54. The third quintile corresponds to the:
A. 40th percentile.
B. 50th percentile.
C. 60th percentile.

M1.Q64. The expected return on the portfolio is closest to:

A. 8.2%.
B. 10.0%.
C. 10.8%.

M2.Q34. Which of the following statements about bootstrap

resampling is most accurate?
If the annual target return is 4%, the sample target semideviation of The bootstrap resampling process requires:
returns is closest to: A. drawing random samples with replacement.
A. 3.0%. B. an analytic formula to perform statistical inference.
 2
C. the number of repetitions to be equal to the sample size.

M2.Q48.

If a $1,000 deposit is made today, the future value in one year will be
greatest for:
A. Account 1.
If the shortfall level is 5%, which portfolio has the largest safety-first B. Account 2.
ratio? C. Account 3
A. Portfolio X
B. Portfolio Y M2.Q75.
C. Portfolio Z

M2.Q57. With respect to fintech, which of the following statements is

most accurate?
A. Big Data solves the issue of selection bias.
If the value of the independent variable is 2.0, the value of the
B. A neural network that learns a dataset too precisely may indicate
dependent variable predicted by the regression is closest to:
overfitting.
A. 3.5.
C. Machine learning algorithms require assumptions on the underlying
B. 4.0.
probability distribution of the data.
C. 4.5.

M2.Q58. In hypothesis testing, the critical value is determined by the:

M2.Q80. The 'box' in a box and whisker plot represents the:
A. p-value.
A. interquartile range.
B. sample's mean.
B. range between the median and the arithmetic average.
C. level of significance.
C. range between the highest and lowest values of the distribution.

M2.Q61. The central limit theorem is best described as stating that the
M2.Q82. An investor purchases a security for ·500,000. If the value of
sampling distribution of the sample mean will be approximately
the security declines by 10% over the first 3-month period and then
normal for large-size samples:
increases by 9% over the next 3-month period, the holding period
A. if the population distribution is normal.
return over the 6-month period is closest to:
B. if the population distribution is symmetrical.
A. -1.9%.
C. for populations described by any probability distribution.
B. -1.0%.
C. -0.5%.
M2.Q68. An analyst calculates a portfolio's target semideviation of
returns over twelve consecutive months, including seven months of
M2.Q85. A bank has a stated annual interest rate of 7%. If an investor
below-target returns. The sum of the squared deviations below the
deposits 10,000 and earns $712.25 in interest over the first year, what
target is 42%. The target semideviation is closest to:
frequency of compounding does the bank apply?
A. 1.87%.
A. [Link]
B. 1.95%.
B. Continuous
C. 2.65%.
C. Semiannual

M2.Q69. If all observations in a dataset have distinct positive values,

M2.Q90.
which of the following relationships holds?
A. Arithmetic mean < Harmonic mean < Geometric mean
B. Geometric mean < Arithmetic mean < Harmonic mean
C. Harmonic mean < Geometric mean < Arithmetic mean
The F-statistic for the test of fit is closest to:
M2.Q72. A. 3.1.
B. 87.5.
C. 90.6.

M3.Q34.

Using Bayes' formula, the updated probability of X given the new

information is closest to:
A. 0.43.
B. 0.58.
C. 0.84.
The standard deviation of the company's earnings is closest to:
M2.Q74. A. $115 million.
B. $134 million.
C. $375 million.
 3
A. 4.50%.
M3.Q36. Which of the following statements is most accurate? Fintech B. 11.92%.
applications: C. 20.29%.
A. can perform tasks at levels surpassing human capabilities.
B. eliminate the need for humans in providing investment advice to M3.Q59. Which of the following statements about prediction intervals
retail investors. is most accurate?
C. use models that outperform traditional statistical models in All else being equal:
revealing linear relationships. A. the width of the prediction interval does not depend on the
standard error of the estimate.
M3.Q39. An account has a stated annual interest rate of 3.6% with B. a smaller variation of the independent variable will result in a
monthly compounding. narrower prediction interval.
The number of years it will take for an initial investment in the account C. a larger sample size in the regression estimation will result in a
to double is closest to: smaller standard error of the forecast.
A. 19.3.
B. 19.6. M3.Q61. The arithmetic and geometric mean are calculated for the
C. 20.0. same data. If there is variability in the data, compared with the
arithmetic mean, the geometric mean will most likely be:
M3.Q40. When a company's payables turnover ratio is lower compared A. smaller.
to its peers, the company is most likely: B. equal.
A. utilizing early payment discounts. C. greater.
B. taking advantage of lenient supplier terms.
C. receiving payments from customers faster than its peers. M3.Q63. Which of the following statements about kurtosis is most
accurate?
M3.Q41. In hypothesis testing, which of the following is stated in terms A. A fat-tailed distribution is referred to as platykurtic.
of population parameters? B. All distributions with kurtosis above zero are fat-tailed.
A. The null hypothesis only C. The calculation for kurtosis involves finding the average of
B. The alternative hypothesis only deviations from the mean raised to the fourth power.
C. Both the null hypothesis and the alternative hypothesis
M3.Q65.
M3.Q42.

The median value of the items is closest to:

A. 3. Based on the sample, the slope coefficient of the simple linear
B. 4. regression of Y to X is closest to:
C. 5. A. 0.80.
B. 1.03.
M3.Q54. An investor is considering three investments: C. 1.33.
● Investment 1 makes 20 annual payments of $50,000, starting one
year from today. M3.Q68. Which of the following sampling methods involves selecting
● Investment 2 makes 25 annual payments of $45,000, starting today. every kth member from a population until a desired sample size is
● Investment 3 makes annual payments of $40,000 indefinitely, obtained?
starting one year from today. A. Cluster sampling
If the investor's discount rate is 10% per year, which investment has B. Systematic sampling
the highest present value? C. Convenience sampling
A. Investment 1
B. Investment 2 M3.Q86. In jackknife resampling:
C. Investment 3 A. the results are similar for every resample.
B. the required number of repetitions is the same as in bootstrap
M3.Q57. resampling.
C. each subsequent resample has one less observation than the
previous resample.

M3.Q89.

If the target return is 5% per quarter, the target downside deviation is

closest to:
 4
If the equity weighting is 70%, the fixed-income weighting is 30% and A. sum of squares regression.
the portfolio is rebalanced annually, the portfolio's annual geometric B. standard error of the forecast.
mean return is closest to: C. variation of the independent variable.
A. 0.60%.
B. 0.83%. M4.Q59.
C. 1.82%.

M4.Q30. Which of the following statements about dispersion

measures is most accurate?
A. The range shows how the data are distributed
B. The variance is expressed in the same unit of measurement as the
The value of the standard error of the estimate is closest to:
observations
A. 0.68.
C. The number of degrees of freedom in estimating the population
B. 0.78.
variance with the sample variance is equal to the sample size minus
C. 1.05.
one

M4.Q61. An investor turned 25 years old today. She plans to deposit

M4.Q32. If all paired observations of random variables X and Y satisfy
$5,000 in a savings account at the end of each year, with the first
the equation Y =-0.2 + 0.8X, the correlation between X and Y is:
deposit to be made one year from today. The last deposit will be made
A. 0.6.
on her 65th birthday. If the annual return is 4%, the total savings on
B. 0.8.
the day of her last deposit will be closest to:
C. 1.0.
A. $452,046.
B. $475,128.
M4.Q35. With respect to fintech applications, data curation is best
C. $499,133.
described as the process of:
A. ensuring data quality and accuracy.
M4.Q62.
B. collecting and transforming data into a format that can be used.
C. recording, archiving, and accessing data from the underlying
database.

M4.Q36.
The standard deviation of EPS is closest to:
A. $2.4.
B. $4.0.
C. $5.8.

M4.Q66.
If the short-term nominal risk-free interest rate is 4.0%, the yield on
the bond is closest to:
A. 6.0%.
B. 8.5%.
C. 10.0%.
The standard error of the sample mean is closest to:
M4.Q41. A. 0.12.
B. 0.41.
C. 0.64.

M4.Q67.

The continuously compounded return from time t = 0 to time t = 3 is

closest to:
A. 6.07%. The second quartile of the observations is closest to:
B. 6.20%. A. 2.0.
C. 6.25%. B. 2.5.
C. 3.0.
M4.Q45. Which of the following is best referred to as a nonparametric
hypothesis test concerning correlation? A test using the: M4.Q72.
A. Pearson correlation coefficient
B. bivariate correlation coefficient
C. Spearman rank correlation coefficient

M4.Q58. The standard error of the slope coefficient for a simple linear
regression model is the ratio of the model's standard error of the
estimate to the square root of the:
 5
The 2012 return needed to achieve a trailing five-year geometric mean
annualized return of 5% when calculated at the end of 2012 is closest
to:
A. 17.9%.
B. 27.6%.
C. 35.2%.
The standard error of the estimate for the regression is closest to:
A. 3.5.
M4.Q73. Two populations are normally distributed with unknown
B. 6.9.
variances that are assumed to be equal. If a large independent
C. 12.0.
random sample is drawn from each population, the most appropriate
test statistic for testing the difference between the population
M5.Q46.
means is the:
A. t-statistic.
B. z-statistic.
C. F-statistic.

M5.Q28. A portfolio invested in two assets has an expected return of

11%. If expected returns for Assets A and B, respectively, are 8% and The covariance (in % squared) between the returns on the foreign
12%, then the portfolio weight of Asset B is closest to: portfolio and
A. 25%. the foreign currency is closest to:
B. 50%. A. 294.
C. 75%. B. 378.
C. 819.
M5.Q31. An individual can invest $19,000 today and receive $20,000 in
one year's time. M5.Q55.
If her required rate of return is 5%, the rate of return on the
investment is:
A. less than the required rate of return.
B. equal to the required rate of return. The test statistic is closest to:
C. greater than the required rate of return. A. 2.3.
B. 2.5.
M5.Q33. A portfolio has a mean return of 2.2% and a standard C. 2.7.
deviation of returns of 2.5%. If the specified minimum target return is
2.2%, the sample target semideviation is: M5.Q58. Which of the following areas is most likely to apply natural
A. less than 2.5%. language processing?
B. equal to 2.5%. A. Data encryption
C. greater than 2.5%. B. Compliance functions
C. Analysis of structured data
M5.Q35. An analyst examines the distribution of portfolio returns in
bullish and bearish market scenarios. To calculate the expected M5.Q68. An investment makes ten payments of $10,000 per year, with
return on the portfolio in a bearish market scenario, the most the first payment today. If the annual discount rate is 6%, the present
appropriate approach is to use: value of the investment is closest to:
A. the multiplication rule. A. $72,098.
B. conditional expected values. B. $73,601.
C. the total probability rule for expected value. C. $78,017.
M5.Q69. With respect to a simple linear regression, the F-distributed
M5.Q38. Which is the first step in the standard process of hypothesis test statistic is most appropriate to use when testing if:
testing? A. the intercept is significantly different from zero.
A. Collect data B. the independent and dependent variables are significantly
B. State the hypothesis positively correlated.
C. Specify the level of significance C. there is a significant linear relationship between the dependent
and independent variables.
M5.Q40. An analyst gathers the following sample: 0, 2, 3, 4, 6. The
value of the fourth quintile is: M5.Q82. In contrast to non-probability sampling, probability sampling:
A. 4.0. A. depends on factors other than probability considerations.
B. 4.8. B. has a high risk of generating a non-representative sample.
C. 5.6. C. gives every member of the population an equal chance of being
selected.
M5.Q41.
M5.Q83. A random variable Y = exp(X) is lognormally distributed,
where X is normally distributed. The distribution of Y:
A. is skewed to the left.
 6
B. is often used to model stock prices.
C. has a mean equal to exp(M), where y is the mean of X.

M6.Q32. Which of the following return measures is equivalent to the

internal rate of return of an investment?
A. Time-weighted return
B. Geometric mean return
C. Money-weighted return

M6.Q35. The interquartile range of the Sharpe ratios is closest to:

A. 0.6.
B. 0.8.
C. 1.4.

M6.Q66. Which of the following most accurately describes a

The predicted value of NPM for a forecasted RDR of 7% is closest to:
distribution that is more peaked than normal?
A. 4.20%.
A. Leptokurtic
B. 13.18%.
B. Mesokurtic
C. 21.58%.
C. Platykurtic

M6.Q36. Which of the following measures best expresses the amount

M6.Q70.
of a portfolio's risk per unit of mean return?
A. Sharpe ratio
B. Standard deviation
C. Coefficient of variation

M6.Q38. If a stock priced at $100 experiences a 45% decline in price

over a 1-year holding period, the continuously compounded return is
closest to: The geometric mean annual return is closest to:
A. -60%. A. 1.45%.
B. -45%. B. 1.78%.
C. -36%. C. 5.93%.

M6.Q41. In a simple linear regression model, the residual for an M6.Q71.

observation of Y is computed as:
A. the observed value of Y divided by the expected value of Y.
B. the unexplained variation in Y divided by the explained variation in Y.
C. the difference between the observed value of Y and the estimated
value of Y.
The investor wants to withdraw $25,000 at year end without
withdrawing any of their initial $500,000 capital.
M6.Q43. A sample of 240 managed portfolios has a mean annual
According to Roy's safety-first criterion, the optimal portfolio is:
return of 0.11 and a standard deviation of returns of 0.23. The standard
A. Portfolio 1.
error of the sample mean is closest to:
B. Portfolio 2.
A. 0.00096.
C. Portfolio 3.
B. 0.00710.
C. 0.01485.
M6.Q75. In machine learning, overfitting can most likely be mitigated
by using:
M6.Q51. An investor plans to contribute $10,000 each year into an
A. higher computing power.
account that earns an annual interest rate of 5%. If the first
B. a simpler machine-learning model.
contribution is made one year from today, the value of the account
C. an unsupervised machine-learning model.
immediately after the 10* contribution is closest to:
A. $125,779.
M6.Q79. Which of the following correlation coefficients is most
B. $132,068.
appropriate to use in a hypothesis test concerning the correlation
C. $142,068.
between two non-normally distributed variables?
A. Pearson correlation
M6.Q55.
B. Bivariate correlation
C. Spearman rank correlation

M6.Q89. When analyzing differences between the variances of two

normally distributed populations, the most appropriate test is a(n):
A. F-test.
B. chi-square test.
 7
C. paired comparisons test.