Exam style questions across every 8006 domain
Last Update 2 days ago
Total Questions : 287
Start with our free 8006 practice questions, carefully crafted to mirror the domains, phrasing, and difficulty of the real PRM Certification exam. Each 8006 exam question comes with a detailed rationale that explains not just which answer is correct but why the others fall short. That's how concepts stick. Use the free set to benchmark yourself: identify your PRMIA weak domains, see where you're losing marks, and build a focused study plan in minutes.
A stock has a spot price of $102. It is expected that it will pay a dividend of $2.20 per share in 6 months. What is the price of the stock 9 months forward? Assume zero coupon interest rates for 6 months to be 6%, for 9 months to be 7%, and 12 months to be 8% - all continuously compounded.
The spot exchange rate between USD and AUD is 0.70. The risk free interest rates in the US and Australia are 2% and 3.5% respectively. What is the forward exchange rate between the two currencies one year hence?
Security A has a beta of 1.2 while security B has a beta of 1.5. If the risk free rate is 3%, and the expected total return from security A is 8%, what is the excess return expected from security B?
A bond with a 5% coupon trades at 95. An increase in interest rates by 10 bps causes its price to decline to $94.50. A decrease in interest rates by 10 bps causes its price to increase to $95.60. Estimate the convexity of the bond.
Which of the following are valid credit enhancements used for credit derivatives:
I. Overcollateralization
II. Excess spread
III. Cash reserves
IV. Margin requirements
Which of the following is one of the basic axioms on which the principle of maximum expected utility is based:
The yield offered by a bond with 18 months remaining to maturity is 5%. The coupon is 3%, paid semi-annually, and there are two more coupon payments to go in addition to the interest payment made at maturity. What is the bond's price?
The zero rates for 1, 2 and 3 years respectively are 2%, 2.5% and 3% compounded annually. What is the value of an FRA to a bank which will pay 4% on a principal of $10m in year 3?
Which of the following statements is true:
I. The standard deviation of a short position is the same as the standard deviation of a long position
II. The expected return of a short position is the same as that a long position in the same asset
III. If two assets are perfectly positively correlated, then a short position in one and a long position in the other are negatively correlated
IV. If we increase the weight of an asset in a portfolio, its correlation with other assets in the portfolio scales up proportionately
[According to the PRMIA study guide for Exam 1, Simple Exotics and Convertible Bonds have been excluded from the syllabus. You may choose to ignore this question. It appears here solely because the Handbook continues to have these chapters.]
A company that uses physical commodities as an input into its manufacturing process wishes to use options to hedge against a rise in its raw material costs. Which of the following options would be the most cost effective to use?
