Exam (elaborations)
SOA IFM Exam Questions and answers | Newest 2024/25 Rated A+
- Course
- Institution
SOA IFM Exam Questions and answers | Newest 2024/25 Rated A+
[Show more]
Content preview
SOA IFM Exam Questions and answers |Newest 2024/25 Rated A+
Derivative Security (Chp. 1) - Correct Answers A financial instrument whose value
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
depends on another security.
ll ll ll ll
ll Option (Chp. 1) - Correct Answers An agreement allowing the buyer of the option to buy
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll or sell an asset at a specific price on a specific day.
ll ll ll ll ll ll ll ll ll ll ll
ll Clearinghouses (Chp. 1) - Correct Answers Matches the buyers and the sellers and ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll keeps track of their obligations and payments.
ll ll ll ll ll ll
Measures of Market Size and Activity (Chp. 1) - Correct Answers 1) Trading Volumne
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
2) Market Value
ll ll
3) Notional Value
ll ll
4) Open Interest
ll ll
Purpose of Derivatives (Chp. 1) - Correct Answers 1) Risk Management
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
2) Speculation
ll
3) Reduced Transaction Costs
ll ll ll
4) Regulatory Arbitrage
ll ll
ll Hedging (Chp. 1) - Correct Answers Guaranteeing a buying or selling price.
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
Derivative Perspectives (Chp. 1) - Correct Answers 1) End User
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
2) Market-Maker
ll
3) Economic Observer
ll ll
ll Bid Price (Chp. 1) - Correct Answers The amount that a person will pay for an asset.
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll Offer Price/Ask Price (Chp. 1) - Correct Answers The price an asset can be bought for.
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll Bid-Ask Spread (Chp. 1) - Correct Answers The difference between the bid and ask
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll prices.
Stock Orders (Chp. 1) - Correct Answers 1) Market Order
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
2) Limit Order
ll ll
3) Stop Loss Sales Order
ll ll ll ll
ll Market Order (Chp. 1) - Correct Answers Pays the market price (ask/bid) to buy or sell
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll stock immediately.
ll
, ll Limit Order (Chp. 1) - Correct Answers Specifies the max buying price or min selling
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll price and not fulfilled until that price is avaliable.
ll ll ll ll ll ll ll ll
ll Stop Loss Sales Order (Chp. 1) - Correct Answers Specifies that the stock is sold if the
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll price decreases to the specified amount.
ll ll ll ll ll
ll Long Position (Chp. 1) - Correct Answers Positive number of units in which the
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll instrument was bought. ll ll
ll Short Position (Chp. 1) - Correct Answers Negative number of units in which the
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll instrument was sold. ll ll
Short Selling Purposes (Chp. 1) - Correct Answers 1) Speculation
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
2) Financing
ll
3) Hedging
ll
ll Lease Rate (Chp. 1) - Correct Answers The annual cost of holding an asset as a
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll percentage of the asset value. ll ll ll ll
Repo Rate/Short Rate (Chp. 1) - Correct Answers Repo: interst rate paid by the lender
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
for bonds.
ll ll
Short: interst rate paid by the lender for stocks.
ll ll ll ll ll ll ll ll
ll Cost of Capital (Chp. 2) - Correct Answers Interest rate paid to investors of the project.
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll NPV [Formula] (Chp. 2) - Correct Answers
ll ll ll ll ll ll ll ll ll ll ll ll
ll NPV Perpetuity [Formula] (Chp. 2) - Correct Answers NPV = 1/i
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll NPV Growth Rate [Formula] (Chp. 2) - Correct Answers NPV = 1/(i-g)
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll Break - Even Analysis (Chp. 2) - Correct Answers Determine the value of each
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll assumption parameter for which the NPV is 0. ll ll ll ll ll ll ll
ll IRR (Chp. 2) - Correct Answers Internal Rate of Return
ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll Sensitivity Analysis (Chp. 2) - Correct Answers Caluclating the change in the NPV
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll resulting from a change in a parameter. ll ll ll ll ll ll
ll Scenario Analysis (Chp. 2) - Correct Answers Calculate the NPV for various scenarios.
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
Risk Measures (Chp. 2) - Correct Answers 1) Variance
ll ll ll ll ll ll ll ll ll ll ll ll ll ll
2) Semi-Variance
ll
3) VaR ll
4) TVarll
, ll Variance [Formula] (Chp. 2) - Correct Answers Var(R) = σ² = E[(R - µ)²] = E[R²] - µ²
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll Standard Deviation [Formula] (Chp. 2) - Correct Answers SD(R) = √(Var(R)) = σll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll Volatility (Chp. 2) - Correct Answers Standard Deviation = Volatility ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll Semi-Variance [Downside Semi-Variance] (Chp. 2) - Correct Answers The square ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll difference from the mean only when that difference is negative. ll ll ll ll ll ll ll ll ll
ll Semi-Variance [Downside Semi-Variance] [Formula] (Chp. 2) - Correct Answers σ² = ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll E[min(0,(R - µ))²] ll ll
ll Sample Semi-Variance [Sample Downside Semi-Variance] [Formula] (Chp. 2) - Correct
ll ll ll ll ll ll ll ll ll ll
ll Answers σ² = (1/n) ∑[min(0,(Ri - R))]² ll ll ll ll ll ll ll ll ll ll
ll Value-At-Risk [VaR] [Formula] (Chp. 2) - Correct Answers VaRα(X) = Fx⁻¹(α) ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll Downside Tail Value-At-Risk [TVaR] [Formula] (Chp. 2) - Correct Answers TVaRα(X) = ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll E[x|x<VaRα(X)] = (∫xf(x)dx)/α ll ll
ll Upside Tail Value-At-Risk [TVaR] [Formula] (Chp. 2) - Correct Answers TVaRα(X) =
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll E[x|x>VaRα(X)] = (∫xf(x)dx)/(1-α) ll ll
ll Risk Measure Properties (Chp. 2) - Correct Answers 1) Translation Invariance
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll g(x+c) = g(x) + c ll ll ll ll
2) Positive Homogeneity
ll ll
g(cx) = (c)g(x)
ll ll ll
3) Subadditivity
ll
g(x+y) ≤ g(x) + g(y) [Upside]
ll ll ll ll ll ll
g(x+y) ≥ g(x) + g(y) [Downside]
ll ll ll ll ll ll
4) Monotonicity
ll
g(x) ≤ g(y) if Pr(x ≤ y) = 1 [Upside]
ll ll ll ll ll ll ll ll ll ll
g(x) ≥ g(y) if Pr(x ≥ y) = 1 [Downside]
ll ll ll ll ll ll ll ll ll ll
ll PV with Growth Rate [Formula] (Chp. 2) - Correct Answers PV = [1 - [(1+g)/(1+r)]ⁿ]/(r-g)
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
Monte Carlo Simulation (Chp. 3) - Correct Answers Generates pseudorandom numbers
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
from a distribution.
ll ll ll
Inversion for Exponential [Formula] (Chp. 3) - Correct Answers u = F(x) = 1 - e∧(-x/θ)
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
x = -θln(1-u)
ll ll
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller STUVATE. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75759 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now