Question1:Whydiditbecomeagoodinvestmenttobetagainstmortgage-backedsecurities.A) Thedefaultrateonthemortgageskeptrising.B) Ratingagencieswereaccuratelyassigningratings.C) Bankswereincentivizedtoissuemoreandmoremortgages.D) AandC

Correctanswer:D

Question2:Intermsofthefundamentallaw,whenaimingforhighperformance,youcanmakeupforlowskillwith___.

A) lowbreadthB) lowsharperatioC) highbreadthD) highvolatility

Correctanswer:C

Question3:IsBollingerBandsaleadingindicator?

A) YesB) No,BollingerBandsisalaggingindicatorC) No,BollingerBandsisnotanindicatorD) No,Bollingerbandsisneitheraleadingoralaggingindicator

Correctanswer:B

Question4:WhatshouldyoudowhenthestockhitsthebottomBollingerBand?

A) Holdyourposition(don'tchangeyourpositionatall)B) Exitanypositionyoucurrentlyhaveandthenholdat0sharesC) ShortthestocktohavenegativesharesD) Longthestocktohavepositiveshares

Correctanswer:D

Question5:WhowasthefirstbankMichaelapproachedtomakehimtheCDSs?

A) JPMorganB) GoldmanSachsC) DeutscheBankD) BankofAmerica

Correctanswer:B

Question6:IftheInformationCoefficientisdoubledandthetradingopportunitiesaremultipliedby9,whathappenstotheInformationRatio.

A) TheInformationRatioismultipliedby1(remainsunchanged)B) TheInformationRatioismultipliedby4.5C) TheInformationRatioismultipliedby6D) TheInformationRatioismultipliedby18

Correctanswer:C

Question7:Whatisthebestwayaninvestorwhoislackinginskillcanbeatamoreskillfulinvestor?

A) HireskillfulpeopleB) MakesmartertradesC) MakemoretradesperdayD) Pickbetterstocks

Correctanswer:C

Question8:WhichstatementistrueregardingtheFundamentalLawofPortfolioManagement?

A) IR=IC*sqrt(BR)B) IC=IR*sqrt(BR)C) BR=IC*IRD) IR=IC+sqrt(BR)

Correctanswer:A

Question9:WhichofthefollowingcannotimproveyourperformancebasedontheFundamentalLaw?

A) ImproveyourskillB) IncreasetheBreadthC) IncreasetheICandBRD) Decreasebreadthbutimprovetheskill

Correctanswer:D

Question10:WhatdoesCDSstandfor?

A) CollateralizedDebtSwapB) CreditDefaultSwapC) CollateralizedDebtSecurityD) CreditDefaultSecurity

Correctanswer:B

Question11:Inthemovie“TheBigShort”,whatdidCreditDefaultSwapsdo?A) Insuredthebondsagainstfailureandtheinsurerpaidtheclaimifthe

underlyingbondsfailB) Insuredthebondsagainstfailureandtheinsurerpaidtheclaimifthe

underlyingbondsmakemoneyC) ToincreaseemployeesD) Asanannualpractice

Correctanswer:A

Question12:WhichofthefollowingisnotthekeysofGrinold'sfundamentallaw?

A) SkillB) PerformanceC) LuckD) Breadth

Correctanswer:C

Question13:Whichofthesescenariosdoesnotindicateanupwardtrendinstockprice:

A) Aparticularstock'spricesurpassestheupperBollingerBandB) Aparticularstock's20-daySMAsurpassesits100-daySMAC) Aparticularstock'sshort-termEMAfallsbelowitslong-termEMAD) Thevalueofaparticularstock'sBollingerBandPercentage>0.8

anditsprice/SMAratiois>=1

Correctanswer:C

Question14:WhichofthesecouldrepresentaStateinaReinforcementLearningproblemwhenreferringtoatradingscenario?

A) BUYB) DailyReturnC) ReturnfromTradeD) Alloftheabove

Correctanswer:B

Question15:Whichcelebritychefand"KitchenConfidential"authorexplainscollateralizeddebtobligations(CDOs)bycomparingthemtofishstew?

A) GordonRamsayB) MarioBataliC) ThomasKellerD) AnthonyBourdain

Correctanswer:D

Question16:Followingstatementistrueorfalse:HedgeFundscannotsucceedifEMHapplies.

A) TrueB) False

Correctanswer:B

Question17:InReinforcementLearning,thedefaultMDPhasanassumptionofinfinitehorizonstoovercomethat,weintroduceaconceptof___________rewards.Multiplyingtherewardbyλraisedtot.Whereλ'slimitsare___<λ<=___.

A) [reduced,-1,1]B) [reduced,0,1]C) [discounted,-1,1]D) [discounted,0,1]

Correctanswer:D

Question18:Doyouthinkthatamarketthatissemi-strongefficientisalsoweakformefficient?WhyorWhynot?

A) Yesitdoes,becausesemi-strongEMHstatesthatthepricesadjustimmediatelytoallpubliclyavailableinformation,whichalsoincludestheasset'spricehistoryandvoldata.

B) Noitdoesnot,becausesemi-strongEMHtalksonlyaboutfundamentaldatasuchasthecompany'searnings.

C) Yesitdoes,becausesemi-strongEMHstatesthatthepricesadjustimmediatelytoallpubliclyandprivatelyavailableinformation.

D) Noitdoesnot,assemi-strongEMHtalksaboutinformationthatismutuallyexclusivetoweakformEMH.

Correctanswer:A

Question19:GiventhatEMHisabout3forms,weak,semi-strong,andstrong.Whatwouldbethebehaviorofprices,if,forexample,thestandardinvestorbecameonethatonlyboughtandheldstockspassively?

A) TherewouldbenochangeinthewaythatpricesadjustedB) Priceswillfaileventuallytoshowanytypeofnewinformation.

TherewillbeincentivestotrademoreC) Priceswillcontinuetochangebasedonnewinformationthat

won’tceasetoenterthemarketD) Wewouldprobablyenteranotherrecession

Correctanswer:B

Question20:Thegoalsofunsupervisedlearningandreinforcementlearningare:

A) Thegoalofunsupervisedlearningistofindsimilaritiesanddifferencesbetweendatapoints;thegoalofreinforcementlearningistofindasuitableactionmodeltomaximizecumulativereward;

B) Thegoalofunsupervisedlearningistofindasuitableactionmodeltomaximizecumulativereward;thegoalofreinforcementlearningistofindsimilaritiesanddifferencesbetweendatapoints;

C) Thegoalofbothunsupervisedlearningandreinforcementlearningistofindsimilaritiesanddifferencesbetweendatapoints;

D) hegoalofbothunsupervisedlearningandreinforcementlearningistofindasuitableactionmodeltomaximizecumulativereward.

Correctanswer:A

Question21:Whatisthemeaningof"syntheticCDO"in"thebigshort"movie?A) ACDOthatcontainssubprimemortgagesB) ACDOthatcontainsstudentloanC) ACDOthatcontainscreditdefaultswapsD) ACDOthatcontainscorporatedebt

Correctanswer:C

Question22:AccordingtotheFundamentalLaw,whichofthefollowingstatementsismostaccurate?

A) Increasingskilland/orbreadthwillincreaseperformance,butit'smoredifficulttoincreasebreadththanskill,andincreasingskillisn'taseffectiveasincreasingbreadth.

B) Increasingskilland/orbreadthwillincreaseperformance,butit'smoredifficulttoincreaseskillthanbreadth,andincreasingbreadthisn'taseffectiveasincreasingskill.

C) Utilizingmachinelearningwillincreaseperformance.D) AGeorgiaTecheducationincludingCS7646courseworkwill

increaseperformance.

Correctanswer:BQuestion23:Supposeyoupurchaseacalloptionforasinglestock(assumethatyoucandoso)for$10onadaywherethestockpriceis$7underthestrikeprice.Startingfromthen,thepricerisesmonotonicallythroughtheexpirationdate,onwhichthepriceofthestockis$3abovethestrikeprice.Whatisthemaximumnetprofitthatyoucanmakeduringthistimeperiod,assumingyouronlychoicesaretoeitherexerciseornotexercisetheoption?

A) -$10B) -$7C) -$3D) $3

Correctanswer:B

Question24:WhichofthefollowingstatementsaboutDynaistrue?

A) Dynaisamodel-freebasedmethod.B) DynaisthebasisforQ-Learning.C) Dynaisablendofmodel-freeandmodel-basedmethodsD) DynaismoreexpensivethanQ-Learning

Correctanswer:C

Question25:Inanactivelymanagedportfolio,whatstrategymayhelpyouimprovebreadth?

A) IncreaseyourinformationratioB) FindingadditionalstocksandmarketsC) IncreaseyourinformationcoefficientsD) TradeETFsonly

Correctanswer:B

Question26:WhichofthefollowingattributeofQlearningisimportantinconvergenceoverinfinitehorizon?

A) rarB) radrC) alphaD) gamma

Correctanswer:D

Question27:Accordingtothemovie"TheBigShort",whichofthefollowingisclosestinmeaningtoa"CreditDefaultSwap(CDS)"?

A) Goingshortonthedefaultofmortgage-backedsecuritiesB) Goinglongonthedefaultofmortgage-backedsecuritiesC) CollateralizedDebtObligation(CDO)

Correctanswer:A

Question28:Whichoptionbelowcorrectlydescribestheadvantageofoptions?

A) Youcannotlosemorethanthepremium.B) Youcanalwaysgetthepremiumback.C) Optionsdonothaveexpirationdates.D) Youcanholdoptionsforinfiniteamountoftime.

Correctanswer:A

Question29:WhichofthefollowingisNOTanexampleofastate(s)inreinforcementlearning?

A) HoldingLongB) MomentumValueC) DailyReturnsD) Holdingshort

Correctanswer:C

Question30:Whathasthelowestrisk?

A) StocksB) BondsC) StocksandBondsD) PreciousMaterials

Correctanswer:C

Question31:Inthemovie,TheBigShort,charactersinthefilm,suchasMichaelBurry,wouldacquire________inordertoshorttheMBS(MortgageBackedSecurities)whichmeansbettingagainstthehousingmarket.A) SyntheticCDOB) CDOSquaredC) CreditDefaultSwapsD) Sub-primemortgages

Correctanswer:C

Question32:Whathasthelowestriskforreturn?

A) StocksB) BondsC) StocksandBondsD) Preciousmaterial

Correctanswer:C

Question33:Inthemovie,TheBigShort,charactersinthefilm,suchasMichaelBurry,wouldacquire________inordertoshorttheMBS(MortgageBackedSecurities)whichmeansbettingagainstthehousingmarket.

A) SyntheticCDOB) CDOSquaredC) CreditDefaultSwapsD) Sub-primemortgages

Correctanswer:C

Question34:Keymethodtomeasuretheperformanceofaportfoliomanageris:

A) InformationRatioB) CompoundAnnualGrowthRateC) InformationCoefficientD) SpecificRisk

Correctanswer:A

Question35:WhatisTRUEabouttheefficientfrontier

A) TheefficientfrontierwasintroducedbyWilliamF.Sharpe,whoalsodevelopedtheSharperatiomethodforcalculatingrisk-adjustedreturn

B) Youcanfindportfoliosnotontheefficientfrontierthathaveahigherreturnforthesameamountofrisk

C) Youcanfindportfoliosnotontheefficientfrontierthathavehigherriskforthesameamountofreturn

D) Assumingnoneoftheassetisrisk-free,astheexpectedreturndecreases,theriskvalueoftheefficientfrontierwillkeepdecreasing

Correctanswer:C

Question36:WhichofthefollowingstatementsrelatedtoEfficientMarketHypothesisisNOTTRUE?

A) EMHassumesthatagentsarerationalandpeopledoNOToverreactorunderreactwhenfacedwithnewinformation.

B) Semi-strong-formefficiencyimpliesthatneitherfundamentalanalysisnortechnicalanalysistechniqueswillbeabletoreliablyproduceexcessreturns

C) WeakformoftheEMHleavesroomforFundamentalAnalysis.D) InP/EratiovsReturn%datasetgraph,Thecorrelationbetween

Price-Earningsratio,20-yearannualizedreturnscouldbeusedtorefutetheefficientmarkethypothesis.

Correctanswer:A

Question37:Given2companieshavesameInformationRatioCompanyAhasalgorithm100timesmarterthanCompanyBCompanyAtradesfor20daysayearHowmanytradesdoescompanyBneedtoexecute?

A) 200000B) 20000C) 2000000D) 2000

Correctanswer:A

Question38:JaredVennettsellsthe'CreditDefaultSwaps'.WhatdoesMarkBaumuseitfor?

A) Shortthemarket.B) Buythesamecreditswapsagain.C) Buyhalfthecreditswaps.D) Longthemarket.

Correctanswer:A

Question39:Whatisthereasonthatthemaincharactersin"TheBigShort"decideincreditdefaultswaps?

A) Theyallreadapaperthatpredictedthepossiblestockmarketcrash.

B) TheyallnoticedthatthehousingloanmarketwasinflatedwithhighriskloansbeingstructuredintoloanpackageswithaAAArating(lowriskrating)

C) TheyallnoticedthatthehousingloanmarketwasinflatedwithmediumriskloansbeingstructuredintohighriskloanpackageslikeBBtoCCC.

D) TheyallgottippedoffbytheSMAforhousingloanmarketpredictingachangeinthetrend.

Correctanswer:B

Question40:AccordingtoBloombergNews,whatopportunitysimilartoCDOwhichseverallargebankshavestartedsellingsince2015?

A) CollateralizedMortgageObligationB) BespokeTrancheOpportunityC) Asset-BackedSecurityD) SyntheticCDO

Correctanswer:B

Question41:Fillintheblank.TransitionfunctionisathreedimensionalobjectgivenbyT[s,a,s'].Supposeweareinstate"s"andtakeparticularaction"a"thenthesumofallthenextstates"s'(sprime)"wemightendupinshouldsumtobe__.A) always0B) always1C) either0or1D) alwaysmorethan1

Correctanswer:B

Question42:Ifastockissaidtohavegoodrelativestrength,itmeans:

A) Theratioofthepriceofthestocktoagivenmarketindexhastrendedupwards

B) Therecenttradingvolumeofthestockhasexceededitsaveragetradingvolume

C) Thestockhasperformedwellcomparedwithotherstocksinthesameriskcategoryasmeasuredbybeta

D) Thetotalreturnofthestockhasexceededthetotalreturnonotherstocksinthesameindustry

Correctanswer:A

Question43:Whichstockpropertieswouldbestbeconsideredtocompriseanoptimalportfoliowithhighercombinedreturnsandlowerriskthaneitheroftheindividualstocks.

A) StocksABCandDEFwithcovariancevalueof+0.9.B) StocksABCandDEFwithcovariancevalueof-0.9.C) StocksABCandDEFwithcombinedSharpeRatioof1.0.D) StocksABCandDEFwithcombinedSharpeRatioof0.0.

Correctanswer:B

Question44:When2FrontPointtraders,DannyandPortertraveltoMiamitoinvestigatecurrenthousingdevelopment,theylearn...

A) thereareseverallargefamilieslivinginthesamehouse.B) mosthomeownershavedefaultedontheirmortgagesandhave

movedout.C) landlordsintheseareasarekeepingupwiththeirmortgage

payments.D) theyneedtolongthehousingmarket.

Correctanswer:B

Question45:Thediscountfactorallowsustovalue:

A) HelpstoachievemaximumreturnsoverlongtermB) long-termrewardmorethanshorttermrewardC) short-termrewardmorethanlong-termonesD) Noneoftheabove

Correctanswer:C

Question46:WhichofthefollowinghypothesesholdunderEfficientMarketHypothesis?

A) EMHimpliesthatitisimpossibletopredictperfectlyfuturereturns

B) EMHimpliesthatpricesmustincorporateallexistinginformationC) EMHimpliesthatpricesvarywithnoclearreasonD) EMHimpliesthatpricesdonotfluctuate

Correctanswer:B

Question47:Inordertoreduceriskwhilemaximizingreturns,portfoliosoftenallocatestocksbasedupon_____correlationintheshorttermand_____correlationinthelongterm.

A) negative,positiveB) zero,positiveC) positive,positiveD) zero,zero

Correctanswer:A

Question48:Inordertoreduceriskwhilemaximizingreturns,portfoliosoftenallocatestocksbasedupon_____correlationintheshorttermand_____correlationinthelongterm.

A) negative,positiveB) zero,positiveC) positive,positiveD) zero,zero

Correctanswer:A

Question49:ForGrinold’sFundamentalLaw,whatisInformationRatio(performance)similarto?

A) VolatilityB) SharpeRatioC) CumulativeReturnD) DailyReturn

Correctanswer:B

Question50:Whichofthefollowingisanissuewhenwebuyorsellstockswithmostsignificantpricechanges?

A) CertaintyofpricechangeB) DetermininganentrypositionC) BothAandBD) Noneoftheabove

Correctanswer:A

Question51:Itiscurrentlydebatablewhetherthestockmarketisefficientornot(iftheefficientmarkethypothesisiscorrect).Howdoyouexpectthistochangeinthefuture?A) Newinvestorsenterthemarketeveryday,Iexpectmarketefficiency

todeclineinthefuture,astherewillbemorenoiseinthemarket.B) Sophisticatedinvestorsandinstitutionsstillrelyheavilyonhuman

decisionmaking.Iexpectmarketefficiencytoincreaseinthefuture.Asmoreinstitutionsadoptcomputer-automatedandsystematictradingsystems,afair-marketpriceequilibriumshouldbereachedinshortertime.

C) Thestockmarketisperfectlyefficient,anditwillremainthatway.D) Thestockmarketisentirelyinefficient,andwillremainthatway.

Correctanswer:B

Question52:WhichstatementsisFALSEabout"TheBigShort"?

A) ACollateralizeddebtobligation(CDO)canbemadeupofdifferenttypesofassetsandloans.

B) ManyMortgage-BackedSecurities(MBS)arealsoCollateralizeddebtobligations(CDOs).

C) AAAtrancheshavehigherrisksthanBBBtranches.D) MichaelBurrymadeprofitsbypurchasingCreditdefaultswaps

(CDS)fromthebanksandthesebankspaidhimthefullamountofthebondwhentheMortgage-BackedSecurity(MBS)defaulted.

Correctanswer:C

Question53:WhatisInformationRatio?

A) SharpeRatioofthePortfolioB) MeanoftheexcessreturnC) MarketreturnplusexcessreturnD) SharpeRatiooftheexcessreturn

Correctanswer:D

Question54:WhichstatementsisFALSEabout"TheBigShort"?

A) ACollateralizeddebtobligation(CDO)canbemadeupofdifferenttypesofassetsandloans.

B) ManyMortgage-BackedSecurities(MBS)arealsoCollateralizeddebtobligations(CDOs).

C) AAAtrancheshavehigherrisksthanBBBtranches.D) MichaelBurrymadeprofitsbypurchasingCreditdefaultswaps

(CDS)fromthebanksandthesebankspaidhimthefullamountofthebondwhentheMortgage-BackedSecurities(MBS)defaulted.

Correctanswer:C

Question55:YouareusingDyna-Qtolearnapolicytohelpwithtradinganewmutualfund.Youonlyhaveafewdaystotradebeforeyouneedtocashoutforotherreasons.Tomodelthistimeconstraintdoyou:

A) Useahighalpha(learningrate)sothatyoulearnyourpolicyquickly.

B) Usealowlambda(discountrate)becauseyouvaluelaterrewardsless.

C) Usefewerhallucinationcyclessothatyouhavemoretimetotrade.

D) Useasmallersetoftrainingdatatomimicthesmalltimeframeyouwillhavetotrade.

Correctanswer:B

Question56:Assumebetarepresentsthemarketreturnandalpharepresentstheresidualreturn.WhichanswerbelowexactlycontainsthefactorsthatInformationRatioisrelatedto?

A) std(beta),std(alpha),mean(alpha)B) mean(beta),std(beta),std(alpha)C) mean(beta),std(beta)D) mean(alpha),std(alpha)

Correctanswer:D

Question57:WhatisthecorrectsequenceforthecycledescribingtheRLproblem?

A) Analyze,Remember,ActB) Sense,Think,ActC) Think,Sense,ActD) Remember,Act,Analyze,

Correctanswer:B

Question58:Accordingtothemovie,whathappenedinthesecondquarterof'07thatcausedmortgagedefaultstoskyrocket?

A) TheadjustableratesonthemortgageskickedinB) TheFederalReserveraisedinterestratesC) BanksbeganissuingsyntheticCDOsD) LehmanBrothersandBearStearnscollapsed

Correctanswer:A

Question59:WhichofthefollowingmethodsisNOTavalidwayofsolvingareinforcementlearningproblem?

A) TransitionIterationB) ValueIterationC) Q-LearningD) PolicyIteration

Correctanswer:A

Question60:Whichofthefollowingarecharacteristicsoftechnicalanalysis?i.priceofstockii.valueofacompanyiii.volumeofstocktraded

A) ionlyB) iandiiC) iandiiiD) i,ii,andiii

Correctanswer:C

Question61:WhichofthefollowingarenotassumptionsoftheEfficientMarketsHypothesis?A) NewInformationarrivesrandomlyB) SmallnumberofinvestorsC) PricesadjustquicklyD) Pricesreflectallavailableinformation

Correctanswer:B

Question62:WhichofthefollowingistrueaboutMarkovChainproblems?

A) Thesumofallthenextstatesinrewardfunctionis1.B) Thesumoftheallthenextstatesintransitionfunctionis1.C) ThesumofallthenextstatesinsetSis1.D) ThesumofallthenextactioninsetAis1.

Correctanswer:B

Question63:Whyisagoodideatocreateaportfoliothatcombinesassetswithnegativecorrelations?

A) Togetmore"alpha"thananyindividualassetB) TomaximizereturnsbyshortingstocksC) ToreduceportfoliovolatilityD) Tobalanceweightsequallyamongallassets

Correctanswer:C

Question64:Reinforcementlearningalgorithmtriesto(selectonethatapplies)

A) FindapolicypithatminimizesTransitionfunction.B) FindapolicypithatminimizesRewardfunction.C) FindapolicypithatmaximizesTransitionfunction.D) FindapolicypithatmaximizesRewardfunction.

Correctanswer:D

Question65:WhichofthefollowingchoicesisnotanassumptionmadebytheEfficientMarketHypothesis?

A) TherearealargenumberofinvestorsB) PricesadjustquicklyC) PricesreflectallavailableinformationD) Themarketcanbebeatenbyefficienttradingpractices

Correctanswer:D

Question66:ThegoalforreinforcementlearningistofindaPolicyPIthatmapsastatetoanactionthatweshouldtakeanditsgoalistofindthispisuchthatitmaximizessomefuturesumofthereward.Whichofthefollowingisthewaythatwecalculatediscountreward?Supposenisafinitenumber,0<\lambda<1,andr_iistherewardfortheithaction.

A) Sum_{i=1}^{Inf}r_iB) Sum_{i=1}^{n}r_iC) Sum_{i=1}^{Inf}\lambda^{i-1}r_iD) Sum_{i=1}^{n}\lambda^{i-1}r_i

Correctanswer:C

Question67:ToassessweightsforportfoliothatminimizesriskusingMeanVarianceOptimizationtechnique,whataretheinputsrequired?

A) ExpectedReturn,Volatility,Covariance,TargetreturnB) ExpectedReturn,Volatility,StandardDeviation,TargetreturnC) Momentum,Volatility,StandardDeviation,MeanD) Bollingerbands,Volatility,StandardDeviation,Targetreturn

Correctanswer:A

Question68:AccordingtoEMH,whattypeofanalysis/analysescouldprovideexcessreturnsforthesemi-strongform?

A) TechnicalAnalysisB) FundamentalAnalysisC) AandBD) NeitherAorB

Correctanswer:D

Question69:WhichofthefollowingdidMarkBaum(ownerofFrontPointPartners)dointhemovie?

A) OpenuptohiswifeabouthisbrotherB) SellhisswapswhenVenettcouldnotconvincehimtobuymoreC) Discoverthattheratingagencieswouldcorrecttheratingsfor

subprimemortgagesD) MeetwithanacquaintancefromMoody's

Correctanswer:A

Question70:Stockoptionscanincreasethe___________ofaportfolio,astheinvestorcankeepmorecashonhanduptotheexpirationdate.

A) valueB) leverageC) riskinessD) stability

Correctanswer:B

Question71:InthemovieTheBigShort,whatdoesfinallyconvinceMarkBaumtostartbuyingcreditdefaultswapsonmortgages?A) WhenJaredVennetexplainedtheproblemusingaJengatowerB) AftertalkingtoMichaelBurryoverhisfindingsonMortgagebondsC) Afterinvestigatingneighborhoodsandpeoplegettingmultiple

mortgagesD) WhenhetalkedtoratingagenciesabouthowtheyratedCDOs

Correctanswer:C

Question72:Inthemovie"TheBigShort",hedgefundmanagerMichaelBurrydiscoversthattheUnitedStateshousingmarketisextremelyunstable.Therefore,hedecidestotakeashortpositionagainsttheUnitedStateshousingmarket.Whichoptioniscorrectaboutshorting?

A) Youalwayswinmoneywhentakingshortposition.B) Shortsellersborrowsharesofstockthattheydonotownandsell

thosesharesatthecurrentmarketprice.C) Shortsellerssellsharesofstockthattheyownandsellthose

sharesatthecurrentmarketprice.D) Shortsellersborrowsharesofstockthattheydonotownandsell

thosesharesatthelowercurrentmarketprice.

Correctanswer:B

Question73:Whatistherootcauseof2008financialcrisis?

A) hedgefundtradingwithderivativesB) increaseinmortgageinterestrateC) increaseinoilpriceD) decreaseinunemploymentrate

Correctanswer:A

Question74:IdentifytheFALSEstatementaboutthecomponentsthatmakeupaMarkovDecisionProblem.

A) States-afinitesetofstatesthattheprocesscanoccupyatacurrenttime

B) Actions-afinitesetofactionsthatcanbeenactedgivenastateC) Observations-eventsobservedthatareby-productsofthe

currentstateoftheprocessD) Rewards-themotivationgivenfortransitioningfromthecurrent

statetothenextstate

Correctanswer:C

Question75:PleaseselectstatementsthatareTrue:

A) InMarkovdecisiontreeprocesstherewardfromapplyingactiontothecurrentstatedependsonthepreviousstatesandpreviousactionsthatweretakenbytheagent

B) TheendgoaloftheMarkovdecisionproblemistofindapolicythatmaximizestotalrewards

C) Agentcanonlyreceiveonetypeofarewardatatime:eitheranimmediaterewardoradiscountedfuturereward

D) Transitionfunctionmapssetsofactionsintosetsofrewards

Correctanswer:B

Question76:WhichofthesemetricsarenotusedintheBollingerBandcalculationintroducedinlecture?

A) StandardDeviationB) MomentumC) SimpleMovingAverageD) Price

Correctanswer:B

Question77:ThecurrentmarketpriceofXYZis$pershare.Aninvestorplantopurchase1XYZ50callswith$2premiumpershareand1XYZ50putswith$2premiumpershare.Whatisthebreakevenpointsofthispurchase:

A) 46and52B) 48and54C) 46and54D) 48and52

Correctanswer:C

Question78:Supposeyouuseabutterflystrategy:buya105callat7.16anda115callat0.53,writetwo110callsat2.73.Whatisthebreak-evenpriceofthestrategy?

A) 107.23B) 107.76C) 110D) 110.53

Correctanswer:A

Question79:Whatproblemwouldbemosteffectivelyaddressedbyreinforcementlearning?

A) Forecastingtheweatherbyanalyzinginstantaneousmeasurements

B) ScoringwinebasedongradedtastefeaturesC) UsingsensorstonavigateanenvironmentD) Recognizingasongaftersamplingasmallportionofit

Correctanswer:C

Question80:WhichversionoftheEfficientMarketHypothesissuggeststhatinsidertradingcannotbepossible?

A) StrongB) Semi-strongC) WeakD) Alloftheabove

Correctanswer:A

Question81:WhichofthefollowingisnotpartoftheMarkovdecisionproblems:A) SetofstatesSB) SetofactionsAC) TransitionfunctionD) Valuefunction

Correctanswer:D

Question82:WhichofthefollowingdistinguishesaModel-BasedReinforcementLearningalgorithmfromaModel-Freealgorithm?

A) AModel-BasedalgorithmobservesthetransitionofanenvironmentfromstateStostateS’

B) AModel-BasedalgorithmusesrandomnesstoexploretheenvironmentwhileaModel-Freealgorithmdoesnot.

C) WhileaModel-Freealgorithmdoesnotattempttocreateamodelofthetransitionfunctionoftheenvironment(T[S,A,S’],itdoesattempttom摯汥琠敨爠睥牡�畦据楴湯⠠删嬠�嵁楬敫愠䴠摯汥䈭獡摥愠杬牯瑩浨మ �潂桴䄠愠摮䌠 挀档湥㍧㔰a䤀�慭歲瑥椠�数晲捥汴⁹晥楦楣湥ⱴ眠

D) BothAandC

Correctanswer:A

Question83:Ifmarketisperfectlyefficient,whichofthefollowingswillstillbeabletogeneratereturns?

A) HighfrequencytradersB) ActiveportfoliomanagersC) Passiveportfoliomanagers

Correctanswer:D

Question84:WhichofthefollowingisanotassumedaspartoftheEfficientMarketsHypothesis?

A) Thecurrentpricereflectsallavailableinformationandquicklyadjustsbasedondemand

B) TherearealargenumberofinvestorscompetingforgainsC) NewinformationarrivesconstantlyarrivesandrandomlyD) Thecurrentpricereflectsallavailableinformationandslowly

adjustsbasedondemand

Correctanswer:D

Question85:WhichoneofthefollowingstatementsisNOTcorrect?

A) Stockoptionsaresoldbyonepartytoanother.B) Theoptionbuyerhastherighttobuyorsellastockataspecific

price.C) Stockoptionswillexpireifthebuyersdon'texercised.D) BothAmericanoptionsandEuropeanoptionscanbeexercised

anytimebeforetheexpirationdate.

Correctanswer:D

Question86:Googlehasimplementedreinforcementlearningtotrainahumanrobothowtowalk.Therobotcanbesimplifiedasamulti-bodyobjectlinkedbyjoints(actuators).Googlewouldwanttotrainarobotthat:•Staystandaslongaspossible,donotfalldown• Moveasfastaspossible,donotrunoffthecenteroftheroad• beasefficientaspossible,theactuatorshouldapplyappropriateforce/torquetothejointThegoogleteamwantstoturntoyouforhelp:howcantheysolvethisproblemandformaRLproblem?PleaseselectthecorrectitemthatwouldbestmatchState,ActionandReward.

A) State:theforcesappliedtothejoints.Action:thecurrentpositionandvelocityofthejoint.Thesurfaceconditionoftheroad.Reward:AfunctionR=Vx–0.5(Vy+Vz)–0.5y2–0.5F2+0.01

B) State:thecurrentpositionandvelocityofthejoint.Thesurfaceconditionoftheroad.Action:theforcesappliedtothejointsReward:AfunctionR=-Vx+0.5(Vy+Vz)–0.5y2–0.5F2+0.01

C) State:thecurrentpositionandvelocityofthejoint.ThesurfaceconditionoftheroadAction:theforcesappliedtothejointsReward:AfunctionR=Vx–0.5(Vy+Vz)–0.5y2–0.5F2+0.01

D) State:ThesurfaceconditionoftheroadAction:Theforcesappliedtothejoints.Thecurrentpositionandvelocityofthejoint.Reward:AfunctionR=Vx–0.5(Vy+Vz)–0.5y2–0.5F2+0.01

Correctanswer:C

Question87:WhatisNOTcorrectregardingtheQ-learningupdaterule?

A) Alphaislearningrate,indicatingthedependenceofthenewQ-valueontheoldone.

B) WeneedtofindtheactionthatmaximizetheQ-valueamongallpossibleactionswhencalculatingnewQ-value.

C) DiscountandimmediaterewardofbothpastandfutureactionsshouldbeconsideredwhencalculatingnewQ-value.

D) Thediscountfactorisusedtoreducethevalueoffuturerewards.

Correctanswer:C

Question88:IfyoubelieveintheweakformversionoftheEfficientMarketHypothesis,whichofthefollowingwouldyouNOTbelikelytoconsidervaluableinformation?

A) StockvolatilityoverthelastmonthB) InsiderknowledgeofanimpendingCEOchangeC) ThebookvalueofthecompanyD) Earningsreportcontents

Correctanswer:A

Question89:ThelowestpossibleSharperatioofaportfoliothatcontainsatleasttwostocksis:

A) higherthanthelowestSharperatioofanyonestockintheportfolio

B) equaltothelowestSharperatioofanyonestockintheportfolioC) lowerthanthelowestSharperatioofanyonestockinthe

portfolioD) noneoftheabove

Correctanswer:C

Question90:TheFundamentalLawofPortfoliomanagementstateswhichofthefollowing:

A) PortfolioperformanceincreasesasskillincreasesB) Portfolioperformanceincreasesastradingopportunities

increasesC) Highportfolioperformancecanonlybeguaranteedthrough

diversificationD) Both(A)and(B)

Correctanswer:D

Question91:Thegoalofreinforcementlearningistofindtheoptimalpolicy.Whatarepossibleoutputsofapolicyfunction?A) AsingleactionthatshouldbetakennextwheninaparticularstateB) AprobabilitydistributionoverasetofactionsC) AandBD) Noneoftheabove

Correctanswer:C

Question92:Iftwoportfoliomanagershavethesameinvestmentskills,whichoneyouwouldprefer?

A) Theonewhoworksinafamouscompanyoftheworld'stop500,butwithlimitedinvestopportunities.

B) Theonewhoworksinaverysmallcompany,buthavemanyopportunitiestoinvest

C) BotharegoodcandidatesduetothesameinvestmentskillsD) Aboveanswersarewrongduetothelackoffurtherinformation

Correctanswer:B

Question93:Iftwoportfoliomanagershavethesameinvestmentskills,whichoneyouwouldprefer?

A) Theonewhoworksinafamouscompanyoftheworld'stop500,butwithlimitedinvestopportunities.

B) Theonewhoworksinaverysmallcompany,buthavemanyopportunitiestoinvest

C) BotharegoodcandidatesduetothesameinvestmentskillsD) Aboveanswersarewrongduetothelackoffurtherinformation

Correctanswer:B

Question94:AboutQ-learning,whichstatementiswrong?

A) Q-learningisareinforcementlearningtechniqueusedinmachinelearning.

B) ThegoalofQ-learningistolearnapolicy.C) Itisdesignedtomakefuturerewardsworthmorethanimmediate

rewards.D) StateandactionaretwokeyelementsinQ-learning.

Correctanswer:C

Question95:SupposeyourbestfriendsisaCEOofacompany,andyoucouldalwaysacquirethelatestinsideinformationofthiscompany.ButonedayyoufindthatyoucouldNOTusethisadvantagetomakeprofits.Whichofthefollowingstatementsabouttheefficientmarkethypothesis(EMH)issupportedbyyourexperience?

A) TheweakversionofEMHisvalid.B) Thesemi-strongversionofEMHisvalid.C) ThestrongversionofEMHisvalid.D) Noneofabove

Correctanswer:C

Question96:TechnicalAnalysisismosteffectivefor...

A) MakingcomplextradingdecisionsB) AnalyzingcashflowandbookvalueC) MakingsimpletradingdecisionsD) Makinglong-termtradingdecisions

Correctanswer:C

Question97:WhichofthefollowingcanbeinferredbytheweakformoftheEfficientMarketHypothesis?

A) FuturepricesofAAPLcannotbepredictedbyanalyzinghistoricalprices.

B) PricesofAAPLwilladjustrapidlytoanynewinformationaboutthecompany.

C) PricesofAAPLreflectallknowledgeaboutthecompany,publicandprivate.

D) FuturepricesforAAPLcanbepredictedaccuratelybyanalyzinghistoricprices.

Correctanswer:A

Question98:WhenthinkingabouttradingstocksasaReinforcementLearningproblem.Whichchoiceisdefinedasanaction?

A) BuyB) HoldingLongC) DailyReturnsD) BollingerValue

Correctanswer:A

Question99:IncreaseinSMA(SimpleMovingAverage)overaperiodoftimeindicates:

A) IncreaseinvolatilityofthestockforthetimeperiodB) DecreaseinStockpriceforthetimeperiodC) IncreaseintheStockpriceforthetimeperiodD) NoChangeinstockprice

Correctanswer:C

Question100:Whichofthefollowingarestatesinatradingreinforcementlearningproblem?(LookingforanS)

A) BuyingB) HoldingLongC) LeverageD) CumulativeReturn

Correctanswer:B

Question101:Whatisconsideredamajorbenefitofexchange-tradedstockoptions?A) ThepremiumcanberefundedatanytimebeforetheexpirationdateB) Thelossiscappedtothepremium

Correctanswer:B

Question102:SayDISstockiscurrentlytradingat$50pershare.Nowwepurchaseonecalloptioncontract(100shares)onDISwitha$70strikeandatapriceof$5.00percontract.Pleaseselectthecorrectdescriptionbelow:

A) IntheU.S.WecanonlyexercisetheoptionontheexpirationdateB) Thecostofbuyingtheoptionis$500C) Ifweexercisetheoptionwhenthestockpriceis$70,theactual

profitwillbe$2000D) Wewillmakeaprofitifexercisetheoptionwhenthestockprice

goesupto$60

Correctanswer:B

Question103:Howwillinformationratiochangeifaddingadditionalcashtotheportfolio?

A) Noeffect.B) Theinformationratiowillincrease.C) Theinformationratiowilldecrease.D) Theeffectdependsonmarketconditions.

Correctanswer:C

Question104:WhichofthefollowingistruefortradingwithBollingerBands?

A) Largebreakoutsoftenoccurafterperiodsoflowvolatilitywhenthebandscontract.

B) Nobreakoutsusuallyoccurafterperiodsoflowvolatilitywhenthebandscontract.

C) Bearishbreakoutsoftenoccurafterperiodsoflowvolatilitywhenthebandscontract.

D) Bullishbreakoutsoftenoccurafterperiodsoflowvolatilitywhenthebandscontract.

Correctanswer:A

Question105:StockAandstockBeachgivesa12%annualreturn.DailyreturnsstandarddeviationofstockAis0.0027andstockBis0.0031.Ifyouhave$100whichoneofbelow4optionswouldbethebestinvestmentstrategytoinvestthe$100?

A) $55inStockA,$45inStockBB) $100inStockBC) $45inStockA,$55inStockBD) $100inStockA

Correctanswer:D

Question106:Youhave30candidateliquiddriversymbolse.g.SPY,XLE,XLFetc.Youbelievethereexistsalinearrelationshipbetweenthose30liquidinstruments'returnsandanilliquidinstrument'sreturnse.g.SNOW:r_SNOW=\Beta_SPY*r_SPY+\Beta_XLE*r_XLE+\Beta_XLF*r_XLF+\cdots.However,youbelievetherelationshipissparsei.e.mostBetasarezero.Whichofthefollowingregressiontechniqueswouldproduceasparselinearrelationship?Hint:ThinkabouthowapenaltybehaveswhentheBetaissmall.

A) LassoRegressioni.e.penalizetheabsolutevalueofeachregressor'sbeta

B) RidgeRegressioni.e.penalizethesquareofeachregressor'sbetaC) RANSACi.e.fitasimplelinearmodelfromrandomsubsetsof

"inliers".D) SimpleLinearRegressiononthePrincipalComponentsofthe

LiquidInstruments

Correctanswer:A

Question107:Youhave30candidateliquiddriversymbolse.g.SPY,XLE,XLFetc.Youbelievethereexistsalinearrelationshipbetweenthose30liquidinstruments'returnsandanilliquidinstrument'sreturnse.g.SNOW:r_SNOW=\Beta_SPY*r_SPY+\Beta_XLE*r_XLE+\Beta_XLF*r_XLF+\cdots.However,youbelievetherelationshipissparsei.e.mostBetasarezero.Whichofthefollowingregressiontechniqueswouldproduceasparselinearrelationship?Hint:ThinkabouthowapenaltybehaveswhentheBetaissmall.

A) LassoRegressioni.e.penalizetheabsolutevalueofeachregressor'sbeta

B) RidgeRegressioni.e.penalizethesquareofeachregressor'sbetaC) RANSACi.e.fitasimplelinearmodelfromrandomsubsetsof

"inliers".D) SimpleLinearRegressiononthePrincipalComponentsofthe

LiquidInstruments

Correctanswer:A

Question108:WhatdoesthehousingcrisissuggestabouttheEfficientMarketHypothesis?

A) ItcorroboratestheEMHbecausecertainhedgefundswereabletoshortthehousingmarketusingdatacollectedfrommortgagedata.

B) Marketbubblesdon'texist.TheEconomyisperfect.Everythingisalwaysfine.

C) ItcontradictstheEMHbecauseinformationrelevanttothecrashwasnotreflectedinhousingmarketshareprices.

D) ItcorroboratestheEMHbecausethecrashcouldhavebeeneasilypredictedfromtheavailablestockpriceinformation.

Correctanswer:C

Question109:Assumeyoubought100buyoptioncallsat$110strikepriceofAAPLstock,whichtakes$300asthepremium.Thestockpricemovedfrom$115to$120.Whatisthemaximumreturnavailable?

A) 10000B) 300C) 9700D) noneofabove

Correctanswer:C

Question110:WhichofthebelowstatementsismostcorrectaboutDyna?

A) Dynautilizesamodel-freebasedmethod.B) Dynautilizesamodel-basedmethod.C) AandB.D) Noneoftheabove.

Correctanswer:C

Question111:Accordingtoportfoliooptimizationandtheefficientfrontier,whatisdefinedas"Risk"?A) VolatilitybetweentwostocksB) StandarddeviationofhistoricaldailyreturnsC) StandarddeviationofhistoricalyearlyreturnsD) Whenthetotalmarketcapofacompanyishigherthanitsbook

value,itis"risky"

Correctanswer:B

Question112:WhichofthefollowingstatementaboutefficientmarketassumptionsisFALSE?

A) Pricesaredrivenbysmallgroupsofwallstreethedgefundswithefficientalgorithms.

B) Priceadjustquickly.C) Newinformationarrivesrandomlyandtransparently.D) Neithertechnicalnorfundamentalanalysiscanproducerisk-

adjustedexcessreturnsunderefficientmarketassumptions.

Correctanswer:A

Question113:WhichofthefollowingstatementaboutefficientmarketassumptionsisFALSE?

A) Pricesaredrivenbysmallgroupsofwallstreethedgefundswithefficientalgorithms.

B) Priceadjustquickly.C) Newinformationarrivesrandomlyandtransparently.D) Neithertechnicalnorfundamentalanalysiscanproducerisk-

adjustedexcessreturnsunderefficientmarketassumptions.

Correctanswer:A

Question114:IftheweakformoftheEMHiscorrectthen

A) Technicalanalysiswillbesuccess(predictionthefuturepricebasedonhistoricalpriceandvolumedata)

B) TechnicalanalysiscannotsucceedC) FundamentalanalysiscannotworkD) BandC

Correctanswer:B

Question115:WhatarethetwocomponentsoftakingactionainstatesforQ[s,a]?

A) maximumreward,minimumrewardB) immediatereward,discountedrewardC) longreward,shortrewardD) callreward,putreward

Correctanswer:B

Question116:Whatisthemostimportantfactortomakealessvolatileportfolioforthecombinationsofseveralstocks?

A) AveragepriceofstocksB) CovarianceofstocksC) AveragedailyreturnofstocksD) Standarddeviationofdailyreturnofstocks

Correctanswer:B

Question117:Aportfoliocanlieabovetheefficientfrontier.

A) Correct,theefficientfrontierrepresentsthehighestriskportfolioforagivenlevelofreturn.

B) Correct,theefficientfrontierrepresentsthelowestriskportfolioforagivenlevelofreturn.

C) Incorrect,theefficientfrontierrepresentsthehighestriskportfolioforagivenlevelofreturn.

D) Incorrect,theefficientfrontierrepresentsthelowestriskportfolioforagivenlevelofreturn.

Correctanswer:D

Question118:Selectonethathasoptionsonbesidesstocks:

A) CommoditiesB) InsuranceC) House

Correctanswer:A

Question119:Whichoneofthefollowingsentencesistruefortheefficientmarkethypothesis?

A) TherearefourformsoftheEMH:weak,semi,semi-strongandstrong

B) IftheEMHiscorrectthenhedgefundmanagerscannotsucceedC) Sinceallthehedgefundmanagerscanidentifysimilar

opportunitiestheyhavetoactontheseASAP.D) Alloftheabove

Correctanswer:C

Question120:TheassumptionthatpriceswilladjustrapidlytonewpublicinformationrepresentswhichformoftheEfficientMarketsHypothesis?

A) WeakB) Semi-strongC) StrongD) Quick

Correctanswer:B

Question121:Whatisrisk?A) standarddeviationofhistoricaldailyreturnB) covarianceofhistoricaldailyreturnC) inverseofsharpratioD) geometricaveragerateoflogarithmicofannualreturn

Correctanswer:A

Question122:Yourfriendhasbeenmonitoringthemarket,waitingforagoodtimetobuysomeGOOGL.Whichofthefollowingisthebesttechnicalindicatortomoveforwardwiththepurchase?

A) PriceshavebeenincreasingforafewdaysandjusthitthehigherBollingerBond.

B) PriceshavebeenincreasingforafewdaysandjusthitthelowerBollingerBond.

C) GOOGLannouncesearnings,whichwasmorethanexpectations.D) GOOGLannouncesearnings,whichwaslessthanexpectations.

Correctanswer:B

Question123:Doespolicyguaranteetoconverge?Ifitconverges,doestheoptimalpolicygeneratesoptimalvaluefunction?

A) Yes,YesB) Yes,NoC) No,YesD) No,No

Correctanswer:A

Question124:Basedsolelyontheforegoingprices,howwouldyoubestdescribetherelationshipbetweenStockAandStockB?Date(dd/mm/yyyy)StockAPriceStockBPrice1.02/05/2018$50.00$32.212.05/05/2018$51.09$31.983.07/05/2018$50.24$32.734.12/05/2018$53.19$30.745.23/05/2018$53.24$30.50

A) PositivelycorrelatedB) NegativelycorrelatedC) InsufficientdatatodeterminecorrelationD) Nocorrelation

Correctanswer:B

Question125:Whichofthefollowingschemaismodelfree?

A) PolicyIterationB) ValueIterationC) QLearningD) DecisionTree

Correctanswer:C

Question126:WhichofthefollowingwasNOTacontributingfactortothehousingcrisisinthemovieTheBigShort?

A) FEMAunablepayinsuranceclaimsfordamagetohomesduetoaveryhighcostofnaturaldisastersinprecedingyears.

B) Banksintentionallylendingtolowerqualityborrowerstocontinueissuingmanyhomeloans.

C) Thebeliefthatapositionofacombinedlargenumberofhighriskmortgagesecurities(strengthinnumbers)willresultinanoverallverylowriskpositioninthelongterm.

D) Toomanypeopletakingoutmortgagestopurchasehomesthattheycouldn'tafford.

Correctanswer:A

Question127:WhichofthestatementofQ-learningbelowisFalse?

A) Theagentsjobistomaximizecumulativereward.B) Q-learningdoesnotrequireamodeloftheenvironmentandcan

handleproblemswithstochastictransitionsandrewards.C) Agentsactionsaffectthesubsequentdataitreceives.D) Thelearningratedeterminestheimportanceoffuturerewards.

Correctanswer:D

Question128:Whichoneofthestatementsbelowiscorrectconsideringmovingaverage?

A) Amovingaveragehelpsremovedailyfluctuationfromanalysis.B) Theshorterthetimeperiodunderconsideration,theeasieritisto

predictlong-termtrends.C) Thelongerthetimeperiodunderconsideration,themore

sensitivethemovingaverageistowardsdailyvolatility.D) Amovingaverageisalwayscomputedusingthesamearithmetic

model.

Correctanswer:A

Question129:InQ-Learninganexperiencetupleisdenotedby.Whatdothevariabless,a,s'andrstandfor?

A) s=initialstate,a=action,s'=newstate,r=riskB) s=initialstate,a=action,s'=newstate,r=rewardC) s=newstate,a=action,s'=initialstate,r=rewardD) s=initialstate,a=alphavalue,s'=newstate,r=risk

Correctanswer:B

Question130:Asillustratedintheplotofthemovie"TheBigShort,"whichofthefollowingarecontributorsforthehousingmarketcollapseof2008:

A) increasingamountsofsub-primehomeloansawardedtounqualifiedbuyers

B) therepackagingofsub-primemortgagesintoCDOswhichobscuredtheirinherentrisk

C) incorrect(possiblyfraudulent)ratingsformortgage-backedsecurities/CDOsfromthemajorcreditratingagencies

D) alloftheabove

Correctanswer:D

Question131:WhentryingtoincreaseperformanceaccordingtotheFundamentalLaw,ingeneral,whichiseasiertoincrease:skillorbreadth?A) SkillB) Breadth

Correctanswer:B

Question132:InformationRatioIRistheSharpeRatioof:

A) ExcessDailyReturnB) CumulativeReturnC) AverageDailyReturnD) BenchmarkReturn

Correctanswer:A

Question133:Ifaportfoliomanager'sskillremainsconstant(IC)andtoimprovetheoverallperformance(IR)ofportfolioby5times,usingthefundamentallawhowmuchshouldthenumberoftradesincreaseby?

A) 5timesB) 25timesC) 10timesD) 100times

Correctanswer:B

Question134:FortheupdateruleofQtable,ahighervalueofalphaandahighervalueofgammaindicatewhichofthefollowing?

A) ThepreviousvalueofQispreservedless;Thelearningprocessislessquickly;Thelaterrewardsarevaluedmore

B) ThepreviousvalueofQispreservedmore;Thelearningprocessislessquickly;Theimmediaterewardsarevaluedless

C) ThepreviousvalueofQispreservedless;Thelearningprocessismorequickly;Thelaterrewardsarevaluedmore

D) ThepreviousvalueofQispreservedless;Thelearningprocessismorequickly;Thelaterrewardsarevaluedless

Correctanswer:C

Question135:Foraportfolioconsistingoftwostocks,whatkindofcorrelationbetweenthestocksminimizesthevolatilityorriskoftheportfolio?

A) Positivecorrelation(i.e.near+1correlation)B) Correlationdoesnotaffectportfoliorisk,onlycovariance.C) Nocorrelation(i.e.near0correlation)D) Negativecorrelation(i.e.near-1correlation)

Correctanswer:D

Question136:WhichisNOTtheassumptionofefficientmarketshypothesis?

A) PricedoesnotreflectallavailableinformationB) LargenumberofinvestorsinthemarketC) NewinformationisconstantlyarrivingD) Priceadjustquickly

Correctanswer:A

Question137:WhichformoftheEfficientMarketHypothesisstatesthatstockpricesareaffectedbyONLYthepastpriceinformation.

A) WeakB) Semi-strongC) StrongD) Alloftheabove.

Correctanswer:A

Question138:WhatisthenameofthewayhedgefundmanagerMichaelBurryshortstheUShousingmarket?

A) CollateralizedDebtObligationB) CreditDefaultSwapC) Stop-LimitOrderD) Mortgage-BackedSecurity

Correctanswer:B

Question139:Accordingtothemovie“thebigshort”,whichofthefollowingisright?

A) Modernmortgagebondsaregraded.AgradebondshavelessrisksthanBandC.

B) "Thebigshort"shortedAmericanhousemarketwithCDS(CreditDefaultSwap).

C) LTV(Loan-To-ValueRatio)isusuallyataround80%andshouldremainbelow100%.

D) Adjustable-ratemortagesofferflexiblepaymentoptionandaregoodforhousebuyers.

Correctanswer:B

Question140:AndreyMarkovwasaRussianmathematicianthatcreatedtheconceptofstochasticprocessmodelingthatwenowcalltheMarkovdecisionprocess(MDP).InthemathematicsofMDPs,Snormallyrepresentsthepossiblestates,Arepresentsthepossibleactionsthatcanbetaken,andRrepresentstherewards.Whatdoesπrepresent?

A) TheoptimalpolicyB) ThecurrentestimateofthepolicyC) TheoptimalvalueofthestateD) Thecurrentestimateofvalueatthatstate

Correctanswer:B

Question141:Considerthreedifferentfundsthatincreaseby10%overatrialperiod.FundAholds1stock,FundBholds2stocksthatareanti-correlated,andFundCholds2stocksthatarepositivelycorrelated.Whichfundcarriestheleastrisk?A) FundAB) FundBC) FundCD) FundBandFundCcarryequivalentlylowrisk.

Correctanswer:B

Question142:Whichofthefollowingisfalsewhenthinkingofamarketasareinforcementproblem?

A) SellingisastateB) MarketistheEnvironmentC) PriceisastateD) Marketfeatureisastate

Correctanswer:A

Question143:WhichofthefollowingisnotanEfficientMarketHypothesisassumption?

A) Therearealargenumberofinvestorsinteractinginthemarketforprofit.

B) Newinformationarrivesrandomly.C) Currentpricereflectsallavailableinformation.D) Singlestocksoftenoutperformthemarket.

Correctanswer:D

Question144:howdoesBollingerbandpredictthepriceofthestock?

A) thepriceofthestockisbracketedbyanupperandlowerbandalongwitha21-daysimplemovingaverage.

B) thepriceofthestockisthesameassimplemovingaverage.C) averagepriceofthestockofthesameday.D) thedifferenceofupperbandandlowerband.

Correctanswer:A

Question145:Theinformationcoefficient(IC)ofamanageris0.2.Themanagermakesmonthlybetson27stocks.Whatistheinformationratio(IR)(orperformance)ofthemanager?

A) 0.6*sqrt(3)B) 5.4C) 0.45*sqrt(3)D) 3.6

Correctanswer:D

Question146:TheequationforGrinold'sFundamentalLawofActivePortfolioManagementis:

A) InformationRatio(IR)=InformationCoefficient(IC)*sqrt(Breadth)

B) InformationRatio(IR)=InformationCoefficient(IC)*BreadthC) InformationCoefficient(IC)=InformationRatio(IR)*

sqrt(Breadth)D) InformationCoefficient(IC)=InformationRatio(IR)*Breadth

Correctanswer:A

Question147:howdoesBollingerbandpredictthepriceofthestock?

A) thepriceofthestockisbracketedbyanupperandlowerbandalongwitha21-daysimplemovingaverage.

B) thepriceofthestockisthesameassimplemovingaverage.C) averagepriceofthestockofthesameday.D) thedifferenceofupperbandandlowerband.

Correctanswer:A

Question148:Whatportfolioslieontheefficientfrontier?

A) TheportfolioswiththehighestSharperatioB) ThelowestriskportfoliosforeachlevelofreturnC) ThehighestreturnportfoliosforeachlevelofSharperatioD) Theportfolioswiththelowerrisk

Correctanswer:B

Question149:WhatwasthetypeofthederivativecontractsusedbythemaincharactersinthefilmTheBigShort?

A) CollateralizedDebtObligationsB) CreditDefaultSwapsC) Mortgage-BackedSecurityD) Adjustable-RateMortgages

Correctanswer:B

Question150:Considertradingasareinforcementlearningproblem.Whichofthefollowingdefinesthestateoftheenvironmentofthetradingproblem?

A) BuyB) SellC) ReturnfromtradeD) BollingerValue

Correctanswer:D

Question151:WhichofthefollowingistrueabouttheEfficientMarketHypothesis?A) ThereareasmallnumberofinvestorsB) NewinformationarrivesrandomlyC) PricesadjustslowlyD) pricesdon'treflectallavailableinformation

Correctanswer:B

Question152:Usingtheprinciplesbehindportfoliooptimizationwhatisoneelementweshouldbeconsideringinordertominimiseourportfolioriskifourportfolioconsistsoftwostocks?

A) Ensuretheco-variancebetweenthetwostocksispositiveB) EnsurethatthestandarddeviationofthestockpricesisminimalC) Ensurethattheco-variancebetweenthetwostocksisnegativeD) Usetheairspeedofanunladenswallowtodetermineportfolio

percentage.

Correctanswer:C

Question153:Ifacalloptionisfar'outofthemoney'thevalueoftheoptionwillbe:

A) EqualtothevalueofaputoptionwiththesameexercisepriceB) Greaterthanthevalueofaputoptionwiththesameexercise

priceC) LessthanthevalueofaputoptionwiththesameexercisepriceD) Noneoftheaboveiscorrect

Correctanswer:C

Question154:WhatisaSyntheticCDO?

A) CDOofdefaultedmortgagesB) CDOoftriple-AratedbondsC) CDOofbetsplacedbasedontheperformanceofotherassetsD) CDOoftreasurybonds

Correctanswer:C

Question155:Ifyourrewardfunctionoutputspositivevaluesforcorrectanswersandzeroforincorrectanswers,whatcouldbecausingawrongpolicyaftertraining?

A) Nothavingabalancednumberoftraininginstancesforeachstate.B) Usingarecursivefunctionforpolicylearning.C) Therewardfunctionshouldonlyoutputpositivevalues.D) Alloftheabovearecorrect.

Correctanswer:A

Question156:Consider5stocksA,B,C,DandE,eachhavingadailyreturnof10%.Followingistheircovariancematrix:ABCDEA10.9-0.9-0.9-0.9B0.91-0.9-0.9-0.9C-0.9-0.910.90.9D-0.9-0.90.910.9E-0.9-0.90.90.91Whichofthefollowingwouldbemostoptimalportfolio?

A) 20%A,20%B,20%C,20%D,20%EB) 25%A,25%B,16.6%C,16.6%D,16.6%EC) 33.3%C,33.3%D,33.3%ED) 50%A,50%B

Correctanswer:B

Question157:Whatisthesemi-strongformofEfficientMarketsHypothesis?

A) Tellsusthatanasset'spricereflectsallpubliclyavailableinfoB) Tellsusthatanasset'spricereflectsallpublicandprivateinfo

availableC) Tellsusthatanasset'spricereflectspasttradingvolumesand

correspondingprices

Correctanswer:A

Question158:WhatdoesbreadthrefertointheFundamentallawofactiveportfoliomanagement?

A) Breadthofinvestor'sexpertiseB) Investor'sSkilllevelC) Numberoftrades/OpportunitiesthattheinvestorhasaccesstoD) AandC

Correctanswer:C

Question159:Inwhichtradinghorizonisfundamentalanalysismorevaluablethantechnicalanalysis?

A) DaysB) MillisecondsC) YearsD) Alloftheabove

Correctanswer:C

Question160:Anoptionthatcanbeexercisedprofitablyfortheholderissaidtobe____;otherwise,itis______.

A) outofthemoney;inthemoneyB) inthemoney;outofthemoneyC) ataxliability;speculativebetD) coveredcall;nakedcall

Correctanswer:B

Question161:WhichoftheseisNOTinputtoMean-VarianceOptimization?A) ExpectedReturnB) VolatilityC) CovarianceD) Risk

Correctanswer:D

Question162:What’sthedifferentstepsrequiredtodefineaReinforcementLearningproblem?

A) Setofstates(S),Setofactions(A),Transitionfunction(T),Rewardfunction(R)

B) Setofstates(S),Setofactions(A),Transitionfunction(T),Rewardfunction(R),Policy(π)

C) Transitionfunction(T),Rewardfunction(R)D) Setofstates(S),Setofactions(A)

Correctanswer:B

Question163:WhichofthefollowingisNOTTRUEintheFundamentalLaw

A) informationratioisrelatedtothebetacomponentofthereturnofaportfolio

B) performanceismeasuredasinformationratioC) breadthisrelatedtonumberoftradesD) performance=skill*sqrt(breadth)

Correctanswer:A

Question164:WhichofthefollowingistrueaboutweakformofEMH:

A) Thereisnotypeofinformationthatcangiveaninvestoranadvantageonthemarket.

B) Onescannotpredictfuturestockpricesonthebasisofpaststockprices.

C) Onescannotpredictfuturestockpricesonthebasisofallinformation,futureproductlaunches,R&DDevelopments.

D) BothAandB.

Correctanswer:B

Question165:Accordingtothesemi-strongformofEfficientMarketHypothesis,peoplewhoinvestinstocksofacompanyafterthecompanyreleasesverypositivenewsconcerningthestockcanexpecttoearna/an

A) Normalreturnbecausethestockwillbefairlypricedwhenbought.

B) Lossbecausethingsareusuallynotwhattheyseem.C) Zeroreturnbecausethenextpriceofstockisexpectedtobethe

sameasthelastprice.D) Veryhighreturnbecausethenewinformationwillnotaffectthe

stockpriceuntillater.

Correctanswer:A

Question166:ConsiderstocksA,B,C.AandBhaveapositivecovarianceof0.8,BandChaveanegativecovarianceof-0.8.Whichofthefollowingallocationswouldhaveminimumrisk,butachievestargetreturns?

A) A:0.5B:0.5C:0.0B) A:0.0B:0.5C:0.5C) A:0.25B:0.25C:0.5D) A:0.5B:0.25C:0.25

Correctanswer:C

Question167:REQUIREDIMAGE:https://imgur.com/0TLM8HEUsethefigurelinkedabovetoanswerthefollowingquestion: Letthischartrepresenttheefficientfrontierforsomeportfolio,theminimumreturndenotedbythegreenline,andthemaximumriskbytheredline.Whichoftheseportfolio(s)areconsidered"acceptable"?

A) a,b,anddB) bandcC) dandaD) b

Correctanswer:D

Question168:Whatarethe'layers'ofamortgagebondcalled(i.e.AAA,BBB,etc.)?

A) LevelsB) TranchesC) PropertiesD) Pools

Correctanswer:B

Question169:Whichofthefollowingisn'taninputtoMeanVarianceOptimization?

A) VolatilityB) ExpectedReturnsC) SharpeRatioD) Covariance

Correctanswer:C

Question170:Johncreatesaportfolioofassetsperformingabovetheefficientfrontier.Whatdoesthismean?

A) Hisportfolioisoptimal.B) Hisportfolioissuboptimal.C) Hisportfolioissuperoptimal.D) Hisportfolioisnotpossible.

Correctanswer:D

Question171:WhichofthefollowingisacharacterizationoftheEfficientMarketsHypothesis?A) Marketsefficientlyincorporateallpublicinformation,which

consequentlyrendersbeatingthemarketimpossible.B) ThestockmarketintheU.S.outperformseveryotherstockmarketin

theworld.C) Stocksearnahigherreturnthanbonds,becausetheyareriskier

investments.D) TheEfficientMarketsCorporationshouldbeincludedintheS&P500

index.

Correctanswer:A

Question172:Howmanysharesaretypicallyincludedinanoptionscontract?

A) 10B) 50C) 100D) 1000

Correctanswer:C

Question173:Whatisasymptomof"mania"asdescribedinthemovieTheBigShort?

A) NegativepublicsentimentB) ArapidriseincomplexityandratesoffraudC) BullishmarketsentimentD) Suddendownwardspikesinsecurityprices

Correctanswer:B

Question174:Asyouincreasethe"lookback"periodfrom5daysto100days,howwillthelinerepresentingthesimplemovingaverage(SMA)change?

A) Itwilllikelybecomemore"staggered"looking,withmanymorehighsandlows

B) Itwilllikelybecome"smoother"looking,withfewerhighsandlows.

C) Itwillbecomeindistinguishablefromthepriceline.D) Itdependsonthestock,thereisnotenoughinformationtotell.

Correctanswer:B

Question175:WhatistheequationforGrinold'sFundamentalLaw?

A) performance=skill*sqrt(breadth)B) performance=breadth*sqrt(skill)C) breadth=skill*sqrt(performance)D) performance=skill*breadth^2

Correctanswer:A

Question176:BasedontheFundamentalLawofactiveportfoliomanagement,InformationRation(IR)canbeidentifiedas:

A) Thecorrelationofthemanager’sforecastonactualreturns.B) Thebetaoftheportfoliotimesthereturnonthemarketforthat

day.C) Thesharperatioofexcessreturn.D) Theaverageofthehistoricdailyvaluesofalphaovertheaverage

ofthehistoricdailyvaluesofbetaforaportfolio.

Correctanswer:C

Question177:Whichchoicewillincreasetheinformationratiothemost?

A) Increaseinformationcoefficientby0.1B) Increaseinformationcoefficientby600C) Increasebreadthby300D) Increasebreadthby500

Correctanswer:D

Question178:InregardtoQLearning,whichofthefollowingintermsofrewardresultsinfasterconvergence?

A) r=dailyreturnB) r=0untilexit,thencumulativereturnC) NoneoftheaboveD) BothAandBarecorrect

Correctanswer:A

Question179:Ifyouthinkthatyoucanbeatthemarketusingonlypriortradingdata,youbelievethat

A) Themarketisinefficientandtheweakformoftheefficientmarkethypothesisisfalse.

B) Themarketisefficientandtheweakformoftheefficientmarkethypothesisistrue.

C) Themarketisinefficientandthestrongformoftheefficientmarkethypothesisisfalse.

D) Themarketisefficientandthestrongformoftheefficientmarkethypothesisistrue.

Correctanswer:A

Question180:WhatisthecorrectorderofbuildingaQ-Learningmodel:(1)definecombinedstates,actions,rewards(2)choosein-sampletrainingperiod(3)iterateandupdatetheQ-table(4)implementingbacktesting

A) (1)(2)(3)(4)B) (1)(3)(2)(4)C) (3)(1)(2)(4)D) (2)(1)(4)(3)

Correctanswer:A

Question181:Whatmakesreinforcementlearningdifferentfromothermachinelearningparadigms?A) Thereisnosupervisor,onlyarewardsignalB) FeedbackisinstantaneousC) TimedoesnotmattersD) Agent'sactionsdonotaffectthesubsequentdataitreceives

Correctanswer:A

Question182:Accordingtothelectures,whichoftheseisNOTaninputtomean-varianceOptimization?

A) ExpectedreturnB) VolatilityC) CovarianceD) Assetweights

Correctanswer:D

Question183:Informationwhichisreflectedincurrentmarketpriceswithhelpofpastpricemovementsisclassifiedas

A) weakformefficiencyB) semistrongformefficiencyC) strongformefficiencyD) marketefficiency

Correctanswer:A

Question184:Accordingtolectures,whichoftheseisNOToneofthefourinputsformean-varianceoptimization?

A) TargetreturnB) ExpectedReturnC) CovarianceD) AssetWeights

Correctanswer:D

Question185:Whichofthefollowingcannotbeusedfortechnicalanalysis?

A) intrinsicvalueB) percentbollingerC) SimpleMovingAverageOfPriceD) percentchangeinvolumne

Correctanswer:B

Question186:TheCEOofacreditratingagencylearnsfromhisCTOthattheirdatabaseswerebreachedbyattackersinamassiveattack,buttheknowledgehasnotbeenmadepublicyet.HetellshisfamilytoSHORThiscompany'sstockbeforethepressconferencetoannouncethebreach.Underwhichform(s)oftheEfficientMarketsHypothesiswillthisyieldresultsforhisfamily?

A) StrongformB) StrongandSemi-strongformsC) Semi-strongandWeakformsD) Semi-strongform

Correctanswer:CQuestion187:Thefundamentallawstatesthatinordertoincreasetheperformance(IR),breadthandinformationcoefficientwillhavewhateffect?

A) IfincreasingthebreadthcomponentbytwotimesthecurrentBR,theIRwillincreasebytwotimes

B) IfincreasingthebreadthcomponentbyfourtimesthecurrentBR,theIRwillincreasebytwotimes

C) IfincreasingtheinformationcoefficientbytwotimesthecurrentIC,theIRwillincreasebyfourtimes

D) IfincreasingtheinformationcoefficientbyfourtimesthecurrentIC,theIRwillincreasebyfourtimes

Correctanswer:B

Question188:WhichofthefollowingstatementsaboutQ-LearningandDynaisTRUE?

A) Q-LearningisguaranteedtoconvergetotheoptimalpolicyB) Q-LearningisagreedyalgorithmC) Q-Learningwillconvergefasterusinglong-termrewardsinstead

ofshort-termrewardsD) Dynaisusefulforspeedingupruntime

Correctanswer:A

Question189:Ifthesemi-strongefficientmarkethypothesiswereproventrue,whichofthefollowingwouldremainreliablyprofitabletradingstrategies?

A) InvestinginahedgefundwithahighalphaB) Tradingbasedoninsiderinformation(andgettingawaywithit)C) BuildingatradingstategybasedonpastpricemovementsD) Quicklyidentifinggoodandbadnewsconcerninganassetand

tradingitaccordingly

Correctanswer:B

Question190:WhenisTechnicalAnalysiseffective?Choosecorrectanswers.

A) WorksbetteroverlongertimeperiodsthanshortertimeperiodsB) Tolookforcontrasts(stockvsmarket)C) CombinationsformultipleindicatorsareweakerD) Individualindicatorsarestrong

Correctanswer:B

Question191:WhichfactoroftheFundamentalLawiseasiesttoimprove?A) PerformanceB) SkillC) BreadthD) InformationCoefficient

Correctanswer:C

Question192:Fromthefundamentallaw,whichwillshowthebestperformance?

A) Highskill,highbreadthB) Highskill,lowbreadthC) lowskill,lowbreadthD) lowskill,highbreadth

Correctanswer:A

Question193:WhenisTechnicalAnalysiseffective?Choosecorrectanswers.

A) WorksbetteroverlongertimeperiodsthanshortertimeperiodsB) Tolookforcontrasts(stockvsmarket)C) CombinationsformultipleindicatorsareweakerD) Individualindicatorsarestrong

Correctanswer:B

Question194:WhichofthefollowingstatementsaboutQlearningistrue?

A) AlowvalueofalphameansthatpreviousQvalueismorestronglypreserved.

B) AlowvalueofalphameansthatnewQvalueismorestronglypreserved.

C) Alowvalueofgammameansthatwevaluelaterrewardsverysignificantly

D) Noneoftheabove

Correctanswer:A

Question195:IntheCoinFlipCasinoproblem,therisk-adjustedrewardinamultibetscenarioisgivenby:

A) sqrt(SR_single)*sqr(BR)B) sqr(SR_single)*sqrt(BR)C) SR_single*sqrt(BR)D) SR_single*sqr(BR)

Correctanswer:C

Question196:Pricetoearningsratiosshowpersistentcorrelationwithlong-termannualizedreturnsonstocks.Thisdataappearstorefute:

A) weakformofEfficientMarketHypothesis(EMH)B) Semi-strongformofEMHC) Both(a)and(b)D) NoversionsofEMH,asitisalreadypricedintostockvalues

Correctanswer:B

Question197:Q-SelectthestatementwhichisTRUEregardingusingRLformarkettrading?

A) Wecanusethepolicyiterationalgorithmtofindtheoptimumpolicybecauseourtransitionmatrixiswelldefined.

B) Wecanusethevalueiterationalgorithmtofindtheoptimumpolicybecauseourrewardfunctioniswelldefined.

C) Wecanlookatprevioustransitionsanduseamodeltoformanoptimumpolicy.

D) Ifweknowtherewarddiscountrate(denotedbygamma),wecanusethevalue-iterationalgorithmtofindtheoptimalpolicy.

Correctanswer:C

Question198:ReinforcementLearningcanbeappliedfortradinginthefollowingcontext

A) PredictFuturePriceofaStockB) UseasaPriceIndicatorC) PredictwhethertoBuyorSellD) ItsonlyforbeatingGameslikeGo

Correctanswer:C

Question199:Whatarethe3variantsoftheefficient-markethypothesis?

A) Weak,semi-strong,strongB) Weak,average,strongC) Unrelated,weak,strongD) Unrelated,semi-strong,strong

Correctanswer:A

Question200:Q-WhichstatementisTRUEregardingusingReinforcementLearningformarkettrading?

A) Wecanusethepolicyiterationalgorithmtofindtheoptimumpolicyasourtransitionmatrixiswelldefined.

B) Wecanusethevalueiterationalgorithmtofindtheoptimumpolicyasourrewardfunctioniswelldefined.

C) Wecanlookatprevioustransitionsanduseamodeltoformanoptimumpolicy.

D) Ifweknowtherewarddiscountrate(denotedbygamma),wecanusethevalue-iterationalgorithmtofindtheoptimalpolicy.

Correctanswer:C

Question201:Whichoneofthefollowinginformationwouldholdusback(notencourage)fromapplyingTechnicalAnalysisforastock?A) Currentpriceofthestock&pricemovementsdiscountseverything

i.e.pricesfullyreflectalltheinformationB) Performanceofannual,quarterlyreports(earnings,employeecosts,

developmentcosts)C) Informationonpercentagechangeinvolumeofstockssince

beginningD) Pricecorrelationinformationofthestockwithmarket

Correctanswer:B

Question202:Whatchangesinthe1970’sleduptothe2008financialcrises?

A) FederalReservedroppedinterestratesandhigherinflationB) Mortgage-backedsecuritieswerecreatedC) OilpricesincreasedcreatedhighercostsgloballyD) WallStreetandBanksregulationswererelaxedbythefederal

goverment

Correctanswer:B

Question203:WhatdoSyntheticCDOs(CollateralizedDebtObligation)primarilyinvestin?

A) RealestateequityB) MortgageBondsC) HousingpropertyD) Creditdefaultswaps

Correctanswer:D

Question204:Alice'sportfoliohasthesamemeanperformancealpha,aswellasthesamevolatilityasBob'sportfolio.Alicemakes4tradesperyearandBobmakes64tradesperyear.Comparingeachoftheirskilllevelsinmakingtradeswecansaythat:

A) Aliceis4timesmoreskillfulthanBobB) Aliceis16timesmoreskillfulthanBobC) Bobis4timesmoreskillfulthanAliceD) AliceandBobhavethesameskilllevel

Correctanswer:A

Question205:WhichofthefollowingisFALSEbasedonTheFundamentalLawappliedtoactiveportfoliomanagement?

A) SharpeRatiogrowsfasterasbreadthincreases(relativetoskill)B) HigheralphageneratesahigherSharpeRatioC) MoretradingopportunitiesprovidesahigherSharpeRatioD) SharpeRatiogrowsfasterasskillincreases(relativetobreadth)

Correctanswer:A

Question206:WhichformoftheEfficientMarketHypothesispreventsprofitingfromTechnicalAnalysis?

A) WeakB) Weak&Semi-StrongC) Semi-Strong&StrongD) Weak&Semi-Strong&Strong

Correctanswer:D

Question207:WhichofthefollowingstatementsisFALSEaboutdiscountedreward?

A) Theclosergammaisto1,thelesswevaluerewardsinthefuture.B) Theclosergammaisto0,thelesswevaluerewardsinthefuture.C) Ifthegamma=1,thentheequationisthesameasinfinitehorizon.D) Gammaisavaluefrom0.0to1.0

Correctanswer:A

Question208:WhichEfficientMarketHypothesisassumptiondoesnotleadtoprohibitingfundamentalinformationformakinginvestmentdecisions?

A) LargeNumberofInvestors--sincethefundamentalinformationisknowntoeveryonethenumberofinvestorsdoesnotaffecthowtheinformationisused

B) NewInformationarrivesRandomly--sincethefundamentalinformationisreleasedatregularintervalstoeveryone,thereisnotrandomnessinhowinformationarrives

C) PricesAdjustQuickly--sincethefundamentalinformationisbroadknowledgeaboutthecompany,itdoesnotmatterhowquicklythepricechanges

D) PricesReflectallAvailableInformation--sinceIasaninvestorhavethisfundamentalinformationandhavenotmadeaninvestmentchoice,thiscannotbetrue

Correctanswer:B

Question209:WhichofthefollowingisNOTassumedbytheefficientmarkethypothesis?

A) Thereisalargenumberofinvestorsparticipatinginthemarket.B) Newinformationarrivespredictably.C) Astockspricequicklyadjusttoanynewinformation.D) Astockscurrentpricereflectsallinformationaboutthatstock.

Correctanswer:B

Question210:Alice'sportfoliohasthesamemeanperformancealpha,aswellasthesamevolatilityasBob'sportfolio.Alicemakes4tradesperyearandBobmakes64tradesperyear.Comparingtheirskilllevelsinmakingtrades,wecansaythat:

A) Aliceis4timesmoreskillfulthanBobB) Aliceis16timesmoreskillfulthanBobC) AliceandBobhavethesameskilllevelD) Bobis4timesmoreskillfulthanAlice

Correctanswer:A

Question211:Whentryingtomaximizerewardinreinforcementlearning,whatformulationisnotvalid?A) infinitehorizonB) MarkovdecisionC) finitehorizonD) discountedreward

Correctanswer:B

Question212:InformationRatioaccordingtoGrinoldsFundamentalLawis

A) IR=ICxsqrt(Breadth)B) IR=sqrt(ICxBreadth)C) IR=ICxBreadthD) IR=sqrt(IC)xBreadth

Correctanswer:A

Question213:Whennormalizingtechnicalindicators,youdivideby:

A) themeanB) thestandarddeviationC) thevalueonday1D) thesumofallvalues

Correctanswer:B

Question214:ConsideraEuropeancalloptionfor100sharesofIBMCorporation,whosestrikepriceis$170pershareandwhichmatures18monthsfromnow.Whatdoesthisoptionentitleyoutodo?

A) Atthematuritydate,thatis18monthsfromnow,youhavetheright,butnottheobligationtopurchase100sharesofIBMCorporationfor$170pershare.

B) Betweennowand18monthsfromnow,youareentitledtomakeaphonecalltotheEuropeanheadquartersofIBMCorporationtoinquireaboutthevalueof100sharesofIBM.

C) Betweennowand18monthsfromnow,youhavetheright,butnottheobligationtopurchase100sharesofIBMCorporationfor$170pershare.

D) Atthematuritydate,thatis18monthsfromnow,youhavetheright,butnottheobligationtosell100sharesofIBMCorporationfor$170pershare.

Correctanswer:A

Question215:WhenmappingtradetoRL,whichoftheseisnotconsideredastate?

A) BollingerValueB) HoldingaStockC) SellingaStockD) DailyReturnfromthestock

Correctanswer:C

Question216:Grinold'sFundamentalLawseekstomathematicallyrelatewhichfacetsofinvesting?

A) PerformanceandSkillB) RiskandDiversificationC) Performance,Skill,andBreadthD) Risk,Returns,andBreadth

Correctanswer:C

Question217:Giventwoactiveinvestorswithtwodifferentinformationratios.InvestorAhasanInformationCoefficientof0.02andexecutes1000independenttradesayear.InvestorBhasanICof0.05andexecutes100tradesayear.WhichinvestorisexpectedtohavethehighestIRbasedontheFundamentalLaw.

A) InvestorAB) InvestorBC) TheyhavethesameD) Wecannottell

Correctanswer:A

Question218:Technicalanalysisconsiderstheintrinsicvalueofacompany:

A) FalseB) True

Correctanswer:A

Question219:Ifgivenachoiceforthefrequencythattime-seriesrewardvaluesareevaluatedbyaQ-Learner,whichwouldresultinthefastestconvergence?

A) RewardsevaluatedattheendofeachdayB) RewardsevaluatedattheendofeachyearC) RewardsevaluatedattheendofeachsecondD) Rewardsevaluatedattheendofthesampleperiod

Correctanswer:C

Question220:AccordingtotheEfficientMarketHypothesis(EMH)astockcandeviatefromitsfairvaluemarketpriceifitisundervaluedorovervalued.PleasemarkTrueorFalse.

A) TrueB) False

Correctanswer:B

Question221:AccordingtotheFundamentalLawofActivePortfolioManagement,theinformationcoefficientisdefinedas:A) thestandarddeviationoftheoreticalreturnsdividedbyactual

returnsB) thenumberoftradingopportunitiespresentedtoaportfolio

managerovertimeC) thecorrelationofportfoliomanager'spredictionaboutasset'sprice

withtheiractualfuturepricesD) theamountofinformationgainedaboutagivenasset

Correctanswer:C

Question222:IntheQ-Learningalgorithmassumeweareintheseconditerationwithanexperiencetuple.ListdownthecorrectsequenceofthebelowgivenstepstobefollowedtomakesurewecorrectlyupdateourQtable1InformationwejustlearnedistakentoimproveQ2Observerewardands'3Statesiscomputed4Qtableissetwithsmallrandomnumbersandthetimeisinitialized5Weconsultourpolicy,orinotherwordsweconsultQtofindthebestactioninthecurrentstate

A) 45321B) 34512C) 43521D) 35421

Correctanswer:C

Question223:T/F:Grinold'sFundamentalLawappliestopassiveportfoliomanagement

A) TrueB) False

Correctanswer:B

Question224:Whentradingstrategyisrepresentedasareinforcementlearningproblem,the"reward"parameterrepresentswhatvalue?

A) Theexponentialweightedaverageoftheprevious21tradingdays.

B) Thereturnonourinvestment.C) Thestandarddeviationofdailyreturnssofar.D) TheSharpeRatio.

Correctanswer:B

Question225:Oneofthevariablesforthefundamentallawistheskillofinvestorinselectingsecurities.Howdoesthisinvestorincreasethisvariable?

A) IncreasehisbreadthofknowledgeB) IncreasehiswidthofknowledgeC) LearnouterbutrelatedmarketsD) Partnerupwithanotherinvestorwithsameknowledge

Correctanswer:A

Question226:Amongfourstrategiesofoptions,whichone’smaximumlossistheoreticallyunlimited?Therefore,weshouldmanagethisstrategyverycarefully.

A) BuyCallB) BuyPutC) WriteCallD) WritePut

Correctanswer:C

Question227:SelecttheFALSEstatementabouttechnicalanalysisbelow:

A) Ascomparedtofundamentalanalysis,technicalanalysisworksbetteronsmallertimescales

B) Anexampleusingtechnicalanalysismaytakeintoaccountstockprice,volume,andbookvalue

C) TechnicalanalysisstrategiesarehighlyutilizedinHedgeFundsD) Sharperatio,pricemomentum,andBollingerBandpositionwould

allbeconsideredindicatorsintechnicalanalysis

Correctanswer:B

Question228:Tombought1optionforAAPLofwhichthestrikepriceis$110.Thepriceofthisoptionis$5.Supposebeforetheexpirationdate,thestockpriceofAAPLwentupto$120andTomdecidedtoexercisehisoptions,andthensellthestocksatthe$120positionimmediately.WhatistheprofitfromthisseriesoftradesmadebyTom?Assumenoextrafeessuchascommissions.

A) $500B) $5C) $1000D) $995

Correctanswer:A

Question229:CurrentstockpriceforIBMis$115/shareandcustomAbuyaoption$110with2.75forDecember10th.IfIBMstockpricedropsto$110/shareonthatday,howmuchwillcustomerAlose?

A) 11500B) 11000C) 775D) 275

Correctanswer:D

Question230:CurrentstockpriceforIBMis$115/shareandcustomAbuyanoption$110with2.75forDecember10th.IfIBMstockpricedropsto$110/shareonthatday,howmuchwillcustomerAlose?

A) 11500B) 11000C) 775D) 275

Correctanswer:D

Question231:Itisbesttoselectaportfolioalongtheefficientfrontierbecause:A) ItresultsinaportfoliowithnegligibleriskforagivenreturnB) ItresultsinaportfoliooptimizedformaximumreturnforagivenriskC) Itresultsinaportfoliothatisblendedandequallyweighsriskand

returnD) Itresultsinaportfoliothatisbuilttobefurtheroptimizedbya

learner

Correctanswer:B

Question232:WhichofthefollowingisNOTacomponentthatdefinesaMarkovDecisionProblem.

A) SetofActionsAB) ProbabilisticFunctionPC) TransitionFunctionTD) SetofStatesS

Correctanswer:B

Question233:WhichoftheseisNOTacorrectwayofrepresentingtheTransitionfunction(T)foraMarkovDecisionProblem(MDP)

A) T(s)B) T(s,𝝅)C) T(s,a)

Correctanswer:B

Question234:YouwriteacallforAPPLatastrikepriceof112dollarsandaLastvalueof1.55.Attheoption'sexpirythepriceofAPPLisvaluedat114.Assumingthattheoptionwasexercised,whatwasyourprofit/loss?

A) -45B) 45C) 200D) -200

Correctanswer:A

Question235:TheweakversionofEfficientMarketHypothesisprohibitsusfromprofitingfromfundamentalanalysisbecauseitsaysthatpricesadjustquicklytonewpublicinformationsuchascompany'squarterlyreports.

A) TrueB) FalseC) InsufficientinformationD) Dependsoncircumstances

Correctanswer:B

Question236:Supposeyouwanttoblend3stocksinyourportfolio.ABC,LMN,XYZarethestocks.ABChasa-0.9covariancewithLMN.LMNhasa+0.9covariancewithXYZ.Whatisthebestblendofthesestockstominimizeportfoliorisk?

A) ABC50%,LMN25%,XYZ25%B) ABC25%,LMN25%,XYX50%C) ABC33%,LMN33%,XYZ33%D) ABC10%,LMN10%,XYZ80%

Correctanswer:A

Question237:WhatarethetwocomponentstotheQfunctioninQ-learning?

A) immediaterewardanddiscountedrewardB) venturedpathandfrontierstatesC) transitionsTandrewardsRD) utilityfunctionandBollingerbands

Correctanswer:A

Question238:Iftheefficientmarketshypothesisistrue,thenstockprices______andreturnsare_______.

A) fluctuaterandomly,evenlydistributedB) fluctuaterandomly,normallydistributedC) donotfluctuate,evenlydistributedD) donotfluctuate,normallydistributed

Correctanswer:B

Question239:1)"AmazingBirds",apetbirdschainwhichprimarilysellsmacaws.2)"RoyalChickenBurgers",aburgerfoodmain,astheirnamesuggests99%oftheremenuhaveonchickenasitsmainingredients.3)"GetProteins"aBroilerchickenchain.arethreehypotheticalcompanies,thestockpriceofallthesecompaniesgoesdownafterthenewsofanoutbreakofAvianflualsoknownasBirdsfluacrosstheglobe,whatkindofinformationisthis?

A) EndogenousB) FundamentalC) InsiderD) Exogenous

Correctanswer:D

Question240:Anemployeeofacompanybuys500sharesofthecompanystockbeforeamajorproductannouncement.Thenthepriceofthestockgoesup.Whichoneofthefollowingassumptionsaretrue?

A) WeakefficientmarkethypothesishasprovedrightB) StrongefficientmarkethypothesishasprovedwrongC) StrongefficientmarkethypothesishasprovedrightD) BothAandB

Correctanswer:B

Question241:Whatiscreditdefaultswap?A) Acreditdefaultswapisafinancialswapagreementthatthesellerof

theCDSwillcompensatethebuyerintheeventofadebtdefaultB) Acreditdefaultswapisafinancialswapagreementthatthebuyerof

theCDSwillcompensatethesellerintheeventofadebtdefault

Correctanswer:A

Question242:WhichofthefollowingstatementsisFALSEwithrespecttotheEMH(EfficientMarketsHypothesis)?

A) Wecanprofitbybuildingaportfoliobasedoffofinsiderinformation.

B) Fundamentalanalysiswillnotaidinbuildingaprofitableportfolio.C) Analysisofhistoricalpricescannotleadtoprofit.D) Pricesadjustrapidlytonewpublicinformation.

Correctanswer:A

Question243:WhichofthefollowinganalyseswouldbecomeunsuccessfuliftheformofEMHswitchfromsemi-strongtostrong?

A) TechnicalB) FundamentalC) InsiderD) Noneoftheabove

Correctanswer:C

Question244:WhenconsideringaReinforcementLearningproblem,ALLofthefollowingTRUE,EXCEPT:

A) 'S'istheseriesofallpreviousstatesthatledtoourcurrentstateB) Ourpolicy,𝝅,takesinastate'S'andoutputsanaction'a'C) Action'a'istakenintheenvironmentandtheenvironmentthen

transitionstoanewstateD) Reward'r'fortakingacertainactionhelpsthelearnerarriveat

theoptimalpolicy

Correctanswer:A

Question245:AccordingtotheFundamentalLawofActivePortfolioManagement,iftheinformationcoefficientismeasuredat0.001,howmanytradesneedtobeexecutedinayearinordertoattain40%performance?

A) 160,000B) 40,000C) 4,000,000D) 1,600,000,000

Correctanswer:A

Question246:WhichofthefollowingisNOTtrueabouttheFundamentalLawofActivePortfolioManagement?

A) Todoubleperformanceatthesamelevelofskill,onemustfindfourtimesasmanyopportunitiestotrade.

B) Breadthisdefinedasthenumberofsharesheldinaportfoliooverthecourseofagivenyear.

C) Theinformationratiomeasuresone'sabilitytogenerateexcessreturnsrelativetoabenchmark.

D) Twowaystoincreasethebreadthofaportfolioaretoholdmoreassetsatonceortoturnthoseequitiesovermorefrequently.

Correctanswer:B

Question247:Whichofthefollowingisanexampleofamodel-freeapproachtoreinforcementlearning?

A) ValueiterationB) PolicyiterationC) Q-learningD) Linearregression

Correctanswer:C

Question248:Whichcomponentisnotinthereinforcementlearning?

A) RewardsB) ActionsC) VelocityD) States

Correctanswer:C

Question249:Whichoffollowingstatementisnottrueabouttheefficientfrontier?

A) Theefficientfrontierrepresentstheoptimalportfoliowithlowestriskgiventhetargetreturn

B) Thereisnopossibleportfoliothatcanneverexceedtheefficientfrontier(havebetterperformance)

C) Theriskmaybehighereventhoughthetargetreturnisreduced.D) Eachtangentlineofefficientfrontierrepresentsthemaximum

sharpratiogiventhetargetreturn

Correctanswer:D

Question250:Aswemovealongtheefficientfrontiertowardstheorigin,isitpossiblethatwegetlowerreturnbuthigherrisk?

A) YesB) No

Correctanswer:B

Question251:Wewantthevalueofoneparticularfuturerewardtobe5after3steps(i=3)insteadofitsimmediaterewardvalueof20attime=0.Whatshouldourdiscountratebe?A) 0.25B) 0.5C) -0.25D) (.25)^1/3

Correctanswer:B

Question252:ThegoalofanReinforcementLearningalgorithmistofindapolicythatmapsapolicystatetoanactionsuchthatthefuturesumoftherewardismaximized

A) ThisstatementistrueB) Thisstatementisfalse

Correctanswer:A

Question253:Infollowingitems,whichoneisNOTatechnicalanalysisindicator?

A) RelativeStrengthIndexB) MoneyFlowIndexC) ReturnonEquityD) PriceRateOfChange

Correctanswer:C

Question254:Whichoneoftheseisnotavalueusedtoevaluateaportfolio?

A) CumulativeReturnB) VolatilityC) AdjustedClosingPriceD) SharpeRatio

Correctanswer:C

Question255:Ifyouhavebuiltalearnerfortradingstocks.ToincreasetheInformationRatio,youwant:

A) AdjustyourInformationCoefficienttoanoptimalvalueB) DecreasethenumberoftradingopportunitiesC) ImprovethepredictionskillsofthelearnerD) Decreasethecorrelationbetweenforecastsandreturns

Correctanswer:C

Question256:WhatisCDO-square?

A) ACDOwithaleverageof2B) ACDObackedprimarilybythetranchesissuedbyotherCDOsC) Atypeofstructuredasset-backedsecurity(ABS)basedonS&P500D) ACDOthatearnsbyshortingotherCDOs

Correctanswer:B

Question257:Whichofthefollowingstatementsabouttechnicalanalysisisnottrue?

A) TechnicalanalysisismostusefulforshortertimeperiodsB) TechnicalanalysisIncludespricedataonlyC) TechnicalanalysisperformsbetterconsideringmultipleindicatorsD) Technicalanalysisisusefulindetectingdeviationofastockfrom

themarket

Correctanswer:B

Question258:WhichofthefollowingstatementaboutQ-Learningistrue?

A) Q-Learningusesmodelsofrewards,stateandactions.B) Q-Learningisguaranteedtoconvergetowardstheoptimal

solutions.C) Q-Learningisamodelfreeapproach.D) Q-Learningcanonlybeappliedtodomainswhereallstatesand

transitionsarefullydefined.

Correctanswer:C

Question259:IfPersonA'sInformationCoefficientis20timeshigherthanPersonB's,thenhowmuchhigherthanPersonAdoesPersonB'sBreadthoftheportfolioneedtobeinordertomatchPersonA'sinvestments?

A) 200timesB) 50timesC) 400timesD) 100times

Correctanswer:C

Question260:Whichoffollowingstatementistruewhenwecomparereinforcementlearningwithsupervisedlearning?

A) Inputisnotavailableinreinforcementlearningwhileitisavailableinsupervisedlearning

B) Outputisavailableinsupervisedlearningwhileitisnotavailableinreinforcementlearning

C) ExploitationorexplorationarepartofsupervisedlearningD) InReinforcementLearning,thegoalistolearnthegeneral

formulafromthegivenexamplesbyanalyzingthegiveninputsandoutputsofafunction

Correctanswer:B

Question261:WhatservesasfeedbackfromtheenvironmentinaRLproblem?A) actionB) rewardC) stateD) policy

Correctanswer:B

Question262:Whatdoes'shortingthebanks'mean?

A) lendinginanarea,suchasthehousingmarket,allwhileexpectingtheborrowerstodefaultontheirloans

B) AnothertermforReinforcementLearningC) lendinginanarea,suchasthehousingmarket,allwhileexpecting

theborrowerstopaytheirloansontimeD) Closingdownbanksthatdonotfollowgovernmentrules

Correctanswer:A

Question263:WhichofthefollowingstatementsabouttheefficientfrontierisNOTtrue?

A) Differentpointsontheefficientfrontierhavedifferentlevelsofriskandreturn.

B) Pointsontheefficientfrontieraretheportfolioallocationwiththelowestriskforagivenreturnvalue.

C) Pointsbelowtheefficientfrontierrepresentsuboptimalportfolioallocations.

D) Investorsshouldtargetportfoliosatorabovetheefficientfrontierbecausetheefficientfrontierrepresentsportfoliosthatprovidetheminimallyadequatereturnforagivenlevelofrisk.

Correctanswer:D

Question264:Ifthestandarddeviationofalphavaluesforaportfolioincreasesbyafactorof4(andthemeanalphaisunchanged),whatwillhappentotheinformationratio(IR)fortheportfolio?

A) Itwillincreaseby4timesB) Itwillincreaseby2timesC) Itwilldecreaseby4timesD) Itwilldecreaseby2times

Correctanswer:C

Question265:Whichoneis/areleastexpensiveenvironmentisusedinDyna?

A) RealenvironmentB) SimulatedenvironmentC) BothrealandsimulatedareequallyexpensiveD) Noneoftheabove

Correctanswer:B

Question266:WhichofthefollowingisNOTacharacteristicofanyversion(weak,semi-strong,strong)oftheEfficientMarketHypothesis?

A) Canmakemoneyoninsiderinformation,asitcanbeleveragedB) Futurepricescannotbepredictedbyanalysisofhistorical/past

pricesC) PublicreportscauseinstantaneouschangesinpriceD) Pricesadjustimmediatelytonewpublicinformation

Correctanswer:A

Question267:Whichofthefollowingbestdescribesthegivenorinitiallyknowninformationinageneralreinforcementlearningapproach?

A) AsetofinputslabeledwithoutputsB) AsetofinputswithoutlabelstooutputsC) Asetofallpossiblestatesandasetofpossibleactionsfromeach

stateD) Asetofallpossiblestates,asetofpossibleactionsfromeach

state,thetransitionfunction,andtherewardfunction

Correctanswer:C

Question268:WhichofthefollowingisalimitationoftheEfficientFrontier?

A) AssetreturnsdonotfollowanormaldistributionB) ItisnotpossibletobalancesecuritiesefficientlyC) ThedegreeofriskistoohighforthemarketD) Assetsdonotfollowaheavy-taileddistribution

Correctanswer:A

Question269:WhichoptionbelowisnotarightdescriptionofthedifferentformofEMH?

A) WeakEMHmeansfuturepricesCANNOTbepredictedbyhistorical(notechnical)

B) Semi-StrongEMHmeanspricesadjustslowly(nofundamentalandtechnical)

C) Semi-StrongEMHmeanspricesadjustrapidly(nofundamentalandtechnical)

D) StrongEMHmeanspricesreflectallinfo(publicandprivate)(noinsider,technical,orfundamental)

Correctanswer:B

Question270:WhatisincorrectaccordingtoEfficientMarketsHypothesis(EMH)?

A) TheweakformoftheEMHsuggeststhatfutureassetpricescannotbepredictedbasedonhistoricalpricedataalone.

B) TechnicalanalysiscanbeusedinweakformofEMHbecausesomemarketinefficienciescanbeexploited

C) Thesemi-strongformoftheEMHsuggeststhatfundamentalandtechnicalanalysisareoflittleusebecauseopportunitieshavebeenarbitragedawayimmediately.

D) ThestrongformoftheEMHsuggeststhatnoknownarbitrageopportunitiesexist.

Correctanswer:B

Question271:StockforJPMis:$200on2010-10-01$400on2010-10-02$400on2010-10-03$100on2010-10-04$700on2010-10-05Calculatethesimplemovingaverageforthestockon2010-10-04withalookbackwindowof3days.Also,assumingthepriceat2010-10-04isalargeenoughexcursionfromtheSMA,wouldyouconsiderthisabuyorsellopportunity?A) -2/3buyB) -2/3sellC) 1/3sellD) 1/3buy

Correctanswer:A

Question272:WheredidMichaelBurrywork?

A) ScionCapitalB) GoldmanSachsC) MorganStanleyD) MerrillLynch

Correctanswer:A

Question273:Whichcomponentsarerequiredtobuildanexperiencetupletobeusedtofindthepolicyinreinforcementlearning?

Correctanswer:A

Question274:SelecttheversionofEMHforwhichthefollowingstatementholdstrue:"Futureassetpricescannotbepredictedusinghistoricalpriceandvolumedata."

A) Semi-strongformB) WeakformC) StrongformD) Noneoftheabove

Correctanswer:B

Question275:Ifastock'spricewas$50.0010daysagoandis$45.00now,whatisthevalueofthe10-daymomentumforthisstock?

A) 0.9B) -0.1C) 1.1D) 0.1

Correctanswer:B

Question276:Giventwotradestrategieswiththesameexpectedreturn(reward),tradestrategyAinvolvesasingletradewithaSharpeRatioof0.15,whiletradestrategyBinvolves144tradesoveraone-yearperiod.WhatistheSharpeRatiooftradestrategyB?

A) 55.8B) 1.8C) 0.06D) 2.87

Correctanswer:B

Question277:WhichofthefollowingstatementisfalseonTheFundamentalLaw?

A) InformationRatio(IR)isameasureofmanager'sperformanceB) InformationCoefficient(IC)iscorrelationbetweenmanager's

predictionofthemarketandactualmarket.C) Breadth(BR)isthenumberoftradingopportunityperdayD) IR=IC*sqrt(BR)

Correctanswer:C

Question278:Thesubprimelendingindustry...

A) attractedsleazypeopleB) wasfragmentedC) wasafast-buckbusinessD) alloftheabove

Correctanswer:D

Question279:Ifyouare1/100assmartasWarrenBuffet,andhetrades100timesperyear,howmanytimesdoyouneedtotradeperyearinordertogetthesameriskadjustedreward?

A) 100B) 100^2C) 100^3D) 100^4

Correctanswer:C

Question280:InvestorAhasanInformationCoefficientof.25andaBreadthof144InvestorBaverages3%returnabovethemarketandthestandarddeviationoftheseexcessreturnsis1%Selectthecorrectstatementcomparingtheinformationratioofthetwoinvestors.

A) IRofinvestorA>IRofinvestorBB) IRofinvestorA<IRofinvestorBC) IRofinvestorA=IRofinvestorBD) Notenoughinformation

Correctanswer:C

Question281:GiventhefollowingclosingpricesforAAPL,whatwastheSMA(simplemovingaverage)forthepreviousfivedaysonNov7?Date ClosingPriceOct29 $5Oct30 $6Oct31 $4Nov1$5Nov2$8Nov5$7Nov6$8Nov7$10Nov8 $11Nov9 $9A) 7.6B) 6C) 6.4D) 9

Correctanswer:C

Question282:JasonboughtanEuropeancalloptionwithexercisepriceof100dollarsforstockA,whenitexpiresthestockpriceis80dollars.

A) Jasoncanmakeprofitbyshortingthestockat100dollarsB) Jasonwilllosemoneyby20dollarpershareC) JasonwillnotloseormakemoneyD) Jasoncancutthelossbyresellingtheoption

Correctanswer:C

Question283:Whatisthewrongstatementaboutthefundamentallaw?

A) HigherexpectedreturngeneratesahighersharperatioB) MoreexecutionopportunitiesprovidesahighersharperatioC) SharperatiogrowsasthesquareofbreadthD) Informationratioisasharperatioofexcessreturn

Correctanswer:C

Question284:WhichIterationmethodinreinforcementlearningstartswithrandompolicy?

A) PolicyIterationB) ValueIterationC) Q-learningD) Botha&b

Correctanswer:A

Question285:ThefilmTheBigShortcoversthefinancialcrisisof2007-2008causedbydefaultsonmortgagebackeddebtsecurities.Whatisthehighestcreditratinggiventodebtsecurities?

A) High-gradeB) AAAC) AA+D) Investment-grade

Correctanswer:B

Question286:WhichofthefollowingstatementsbestdescribesaCDO(CollateralizedDebtObligation)

A) Astructuredfinancialproductthatpoolstogetherassetssuchasloansormortgages,andrepackagesthisassetpoolintosecuritiesthatcanbesoldtoinvestors.

B) Inarestaurant,CDOsisaSeafoodstewthatispreparedusingunsoldoldfish

C) CDOsaremortgagebondsthatareatariskofdefault.D) CDOsareswapsareinsurancepoliciesagainstnonpaymentor

debtdefaults.Thebuyerofsuchswapswillbeentitledtosettlementpaymentspecifiedinthecontractshouldtheissuerdefaultonpayments.

Correctanswer:AQuestion287:WhichofthefollowingisNOTtrueaboutreinforcement

learning:

A) Itisconcernedwithgoal-directedlearninganddecision-makingB) Itlearnsfromexperiencebyinteractingwiththeenvironmentbut

notaffectingitC) Itcantradeoffsuboptimalneartermrewardstomaximizealong

termgoalD) Anagentinteractswithenvironmentusingstates,actionsand

rewards

Correctanswer:B

Question288:WhatformoftheEMHsaysfuturepricescannotbepredictedbyanalyzinghistoricalprices?

A) WeakB) Semi-strongC) StrongD) Noneoftheabove

Correctanswer:A

Question289:Whichofthefollowingoptionoperationshasanunlimitedpotentialloss?

A) BUYCALLB) BUYPUTC) WRITECALLD) WRITEPUT

Correctanswer:C

Question290:Whichofthefollowingstatementsaboutthefundamentallawistrue?

A) ICmeasurestheskillofthePortfolioManagerB) IRisthesameasSharpeRatioC) BreadthisirrelevantinaBuyandHoldtradingstrategyD) IRmeasurestheskillofthePortfolioManager

Correctanswer:D

Question291:Accordingtothemovie,“TheBigShort”,andMichaelBurry,whatwouldtriggerthecollapseofthehousingmarket:A) TheriseinvariableinterestratesB) SlowedgrowthinthemortgagebondsectorC) PeoplestartedshortingthehousingmarketD) Worldeconomictensions

Correctanswer:A

Question292:WhichofthefollowingisnotanRLalgorithmwecanusetofindagoodpolicywhenmappingtradingtoReinforcementLearning?

A) QLearningB) ValueIterationC) PolicyIterationD) StockIteration

Correctanswer:D

Question293:Whichexpressionisthepseudocodeformomentum?

A) price[t-n]–price[t]B) (price[t]/price[t-n])–1C) (price[t]/price[t-n:t].mean())–1D) price[n:t].mean–price[t]

Correctanswer:B

Question294:Whichofthefollowingstatementsisfalse?

A) Model-basedreinforcementlearningdevelopsapolicybylookingatthedata.

B) Model-basedreinforcementlearningcanusevalueorpolicyiterationtobuildapolicy.

C) Q-learningismodel-freereinforcementlearning.D) Transitionmodelsandrewardmodelsareusedtobuildapolicyin

model-basedreinforcementlearning.

Correctanswer:A

Question295:Whichstatementbestdescribesamortgagebond?

A) SinglebigloanforaspecificperiodoftimeB) CashcollectedfromapoolofmanyindividualhomemortgagesC) Similartoold-fashionedgovernmentbonds

Correctanswer:B

Question296:AccordingtotheNobleScientistHarryMarkowitz,whoisbestknownforhispioneeringworkinModernPortfolioTheory,whichofthefollowingistrue:(Pleaseselectonebestanswer):

A) BondsarealwayslowestriskassetsB) StocksarealwayslowestriskassetsC) BlendofStocksandBondscouldbelowestriskassetsthaneither

oneofthemindividuallyD) ModernPortfolioTheoryshowsEfficientFrontieronlyforStocks

asBondsareconsideredriskfree

Correctanswer:C

Question297:WhichoftheseinvestmentfactorswasRichardGrinoldNOTtryingtorelatetooneanotherwiththeFundamentalLaw?

A) BreadthB) SkillC) SPYPricesD) Performance

Correctanswer:C

Question298:Whyweren'tJamieandCharliefromCornwallCapitalinitiallyabletomakelargebetsagainstcreditdefaultswaps?

A) Theydidn'thaveanISDA(InternationalSwapsandDerivativesAssociation)masteragreement.

B) TheirofficeswerelocatedoutsideofNewYorkstate.C) TheirportfoliowasconsideredsmallbythelargeWallStreet

banks.D) BothAandC.

Correctanswer:D

Question299:WhydoMichaelBurry'sclientsgetupsetwithhim?

A) BurryboughtseveralstockshisclientsdisagreedwithB) BurrycommittedfraudandstolehisclientsmoneyC) BurryshortsthehousingmarketD) BurryinvestsintheCDOmarketthatcontributestotheinstability

ofthehousingmarket

Correctanswer:C

Question300:Theefficientfrontieris:

A) thesetofoptimalportfoliosthatoffersthehighestexpectedreturnforadefinedlevelofriskorthelowestriskforagivenlevelofexpectedreturn

B) thesetofportfoliosthatwouldguaranteeano-lossbetonthemarket

C) howaportfoliocomprisinga60/40mixofequitiesandbondswouldperformatvariousrisk-freerateofreturnassumptions

D) thesetofportfoliosthatsatisfyarationalinvestor'spreferenceforasafeandrisk-adverseinvestment

Correctanswer:A

Question301:WhichofthefollowingmaybeanargumentagainsttheEfficientMarketHypothesis?A) Lookingatpatternsortrendsinthestockmarketcanprovide

inaccuratesignalstobuy/sellastockB) Astock'svaluecanbeassesseddifferentlybydifferentinvestorsand

astock'spricetypicallytakestimetorespondtothemarketC) Lookingforsituationsinwhichthestock'spriceislowerthanusualto

buycouldbedisadvantageousD) Theindicatorsusedcangreatlyvarytheresultsofourapproachto

buy/sellstocks

Correctanswer:B

Question302:Theefficientfrontieris:

A) thesetofoptimalportfoliosthatoffersthehighestexpectedreturnforadefinedlevelofriskorthelowestriskforagivenlevelofexpectedreturn

B) thesetofportfoliosthatwouldguaranteeano-lossbetonthemarket

C) howaportfoliocomprisinga60/40mixofequitiesandbondswouldperformatvariousrisk-freerateofreturnassumptions

D) thesetofportfoliosthatsatisfyarationalinvestor'spreferenceforasafeandrisk-adverseinvestment

Correctanswer:A

Question303:WhichofthefollowingassumptionsregardingEfficientMarketsHypothesisisFALSE?

A) LargenumberofinvestorsB) NewInformationarrivesrandomlyC) PricesadjustslowlyD) Noneoftheabove

Correctanswer:C

Question304:AandBaretwofriendswhohavethesameInformationRatio.Bhasanalgorithmthatis5000timesbetterthanthatofA,andBtrades100timesayear.HowmanytimesdoesAtradeinayear?

A) 250000000B) 5000000000C) 2500000000D) 500000000

Correctanswer:C

Question305:WhichequationiscorrectaccordingtoGrinold’sFundamentalLaw?

A) InformationRatio=SharpeRatioB) InformationRatio=InformationCoefficient*sqrt(Breadth)C) InformationRatio=InformationCoefficient*sqr(Breadth)D) InformationRatio=InformationCoefficient*Breadth

Correctanswer:B

Question306:Asexplainedinthemovie'TheBigShort',____areinvestmentsthatarerepackagedbysmallregionalbanksasameansoffundingmortgagesbyresellingthemassecuritiesthroughinvestmentmarkets.Fillintheblankfromanoptionbelow:

A) Collateralizeddebtobligations(CDOs)B) Mortgage-backedsecurities(MBS)C) Credit-defaultswapsD) HedgeFund

Correctanswer:B

Question307:Thereare2portfoliomanagers:AandB.Bmakes4timesthenumberoftradesthanthatofAinanyear.IfBhasacorrelationofgreaterthan0.5withtheactualreturnsthenwhatshouldA'scorrelationwithactualreturnsbeinordertooutperformB

A) 1B) 0.5C) 0.9D) AcannotoutperformB

Correctanswer:D

Question308:Stockoptionsaresoldfromonepartytoanother,giventheoptionbuyer____tobuyorsellastockatapre-agreedpricewithinacertainperiodoftime.

A) therightandtheobligationB) therightbutnottheobligationC) nottherightbuttheobligationD) neithertherightnortheobligation

Correctanswer:B

Question309:Thepointatwhichthetangentlinefromoriginhitstheefficientfrontiergivesus____________

A) MaxCumulativeReturnB) MaxSharpeRatioC) MaxAverageDailyreturnD) Riskfreereturn

Correctanswer:B

Question310:TheInformationRatio(IR)isthesamecalculationas_____,butonlyonthe"skill"portionofthereturn.(Fillintheblank)

A) BollingerRatioB) SharpeRatioC) StandardDeviationD) InformationCoefficient

Correctanswer:B

Question311:WhichofthefollowingistrueaccordingtoTheBigShortmovie?A) MarkBaumshortedtheCollateralizedDebtObligationbyborrowing

MortgageBakedSecuritiestoDeutscheBankviaJaredVennet,sellingthemearlyathighprice,buyingthembackafterthemarketcollapsed,andthenreturnedthemtothecounterpartieswithsomeinterests.

B) CharlieGellerandJamieShipleymademoneybybuyingCreditDefaultSwap,practicallyaninsuranceforCollateralizedDebtObligationtheydidnothave.

C) BenRickertmademoremoneythanMichaelBurry,becauseunlikeScionCapital,BrownfieldFundputabetagainstAA'switha200to1payoff.

D) Subprimeadjustablerateloanswerenotascompellingasprimefixrateloanstotheinvestmentbankbecauseprimeloanswerethesafestmortgagesissuedtotheleastriskyborrowerswhilesubprimeloansweretheexactopposite.

Correctanswer:B

Question312:AccordingtotheQfunction,whichstatementsaretrueregardingtheLearningRate,Alpha,andtheDiscountRate,Gamma?

A) TheexpectedvalueoftheLearningRate,Alphais2.0.B) Forvaluinglaterrewardsverysignificantly,weexpectahighvalue

oftheDiscountRate,Gamma.C) Forvaluinglaterrewardsnotsignificantly,weexpectahighvalue

oftheDiscountRate,Gamma.D) TheexpectedvalueoftheDiscountRate,Gammais<0.0.

Correctanswer:B

Question313:WhichofthefollowingisNOToneoftheassumptionsEMHmakes?

A) PricesadjustquicklytonewinformationB) PricesreflectallavailableinformationC) NewinformationarrivesinapredictablewayD) Thereisalargenumberofinvestors

Correctanswer:C

Question314:TheEMHhasthreeforms.Theweakestoneestablishesthatthelevelofinformationbarelyaffectsprices.Whatistrueaboutfuturepricesgiventheabove?

A) Futurepricescannotbepredictedbecauseunpredictableexternaleventsmayinfluencetheprices.

B) Futurepricescanbepredictedbecausehistoricalpricesareusedasanindicator.

C) Futurepricesmaybepossibletopredictbasedoninformationofprice,volumeandexogenousinformation.

D) Futurepricescanbepredicted,howevernotbasedonfundamentals.

Correctanswer:A

Question315:WhichofthefollowingisanassumptionusedintheEfficientMarketHypothesis?

A) pricesadjustquicklyB) numberofinvestorsissmallC) informationcomesfromcompanyinsidersD) newinformationarrivesatregularintervals

Correctanswer:A

Question316:Whichofthefollowingform(s)ofEMHprohibitprofitingfromTechnicalAnalysis?

A) WeakEMHB) Semi-strongEMHC) StrongEMHD) All

Correctanswer:D

Question317:WhichofthefollowingstatementsisNOTanassumptionoftheEfficientMarketHypothesis?

A) Therearealargenumberofinvestorsinthemarket.B) Newinformationarrivesrandomly.C) Pricesadjustslowly.D) Pricesreflectallavailableinformation.

Correctanswer:C

Question318:Whichstrategyexposeriskofunlimitedlose(ifexecutedalone)?

A) BuyCallB) WriteCallC) BuyPutD) WritePut

Correctanswer:B

Question319:WhichofthefollowingcanbeanoptionalelementofaReinforcementLearningSystem?

A) AgentB) EnvironmentC) RewardSignalD) Model

Correctanswer:D

Question320:Ifstockpricehasgoneupfrom99.9to100.1fromyesterdaytotoday.Whatkindofpricemovementisexpectedforcalloptionofstrikeprice100withsameexpirationdate?

A) CalloptionpricetodayishigherthanyesterdayB) CalloptionpricetodayislowerthanyesterdayC) CalloptionpricetodayissameasyesterdayD) It'shardtosay

Correctanswer:D

Question321:Whataretheadvantagesofbuyingsimpleoptionsoverstocks?A) Cannotlosemorethenthepremiumpaidup-front.B) ExpirationsDatesandOwnershipofthestock.C) Leverage.D) BothA)andC)

Correctanswer:D

Question322:WhichofthefollowingisFALSEregardinglearningrate"alpha"inQ-learning?

A) Alowvalueofalphameansthatintheupdaterule,thepreviousvalueforQ[s,a]ismorestronglypreserved.

B) Learningbecomesmorequicklyasalphaincreases.C) Inafullydeterministicenvironment,wecanconsiderusing

constantlearningratealpha=1.D) Inastochasticenvironment,wecanconsiderusingconstant

learningratealpha=0.

Correctanswer:D

Question323:IftheweakformoftheEfficientMarketHypothesisistrue,whichofthefollowingisright?

A) Markethistoryofastockcanbeusedtopredictthestock’sfutureprice

B) ItprohibitstechnicalandfundamentalanalysisC) Theweakversionismorelikelytoapplytothelargest,most

transparentandliquidmarketsD) Insidertradingwillworkfortheweakform

Correctanswer:D

Question324:InReinforcementLearning,whichofthefollowingparametercaneitherbeaSTATEoraREWARD?

A) BollingerValueB) ReturnfromTradeC) DailyReturnsD) HoldingLong

Correctanswer:C

Question325:TheGrinold(1989)“FundamentalLawofActiveManagement”assertsthatthemaximumattainable.Selectallwhicharecorrect

A) InformationRatioisapproximatelytheproductoftheRiskCoefficienttimesthesquarerootofthebreadthofthestrategy

B) InformationRatioisdirectlyproportionaltoInformationCoefficient

C) InformationRatioisinverselyproportionaltobreadthofthestrategy

D) InformationRatioisinverselyproportionaltoriskcoefficient

Correctanswer:B

Question326:Themoviedescribedasyntheticcollaterlizeddebtobligation(syntheticCDO)asavehicleallowing$50millioninsubprimeloansto...

A) becomeperceivedasahigherriskinvestmentduetothehothandfallacy

B) becomeinflatedthroughsidebetstoaround$1billionC) beshorted,allowingtheinvestortobetthemortgagepricewill

decreaseinthefuture.D) Noneoftheabove

Correctanswer:B

Question327:AssumewehavethereturnvsriskgraphofEfficientFrontier,withOptimalCAL(CapitalAllocationLine,alinefromtheorigintothetangenttothefrontier)lineaddedin.Whichofthefollowingistrue?

A) ThepointwhereOptimalCALlinehitstheEfficientFrontierrepresentstheminimumriskportfoliofortheassets.

B) TheEfficientFrontiercurveshowsthat,aswelowerthereturn,theriskwillalwaysgodown.

C) ThepointwhereOptimalCALlinehitstheEfficientFrontierrepresentsthemaximumSharperatioportfoliofortheassets.

D) TheEfficientFrontiercurveonlyrepresentslowestreturnforeachoftherisks.

Correctanswer:C

Question328:Whichamongtheseis/areinconsistentwiththethreeformsofEfficientMarketHypothesis?

A) Portfoliosofstockswithlowprice-earnings(P/E)multipleshavetendedtoprovidehigherreturnsthanportfoliosofstockswithhighP/Eratios.

B) Professionalmoneymanagersdonottypicallyearnhigherreturnsthancomparablepassiveindexstrategies.

C) Marketpricesreflectallpubliclyavailableinformationconcerningpasttradinghistoryaswellasfundamentalaspectsofthefirm.

D) Mosttestsoftechnicalanalysisfindthatitisdifficulttoidentifypricetrendsthatcanbeexploitedtoearnsuperiorrisk-adjustedinvestmentreturns.

Correctanswer:AQuestion329:Considerthefollowingtwostatements:a.Q-learningisa

model-freemethod.b.InQ-learning,tofindthemaximumreward,afixedhorizonisused.Statewhetherthesearetrueorfalse.Thefirstandsecondtruthvaluesintheanswersbelowcorrespondtostatementaandbrespectively.

A) True,TrueB) True,FalseC) False,TrueD) False,False

Correctanswer:B

Question330:WhatmathematicalequationbestdescribesGrinold'sFundamentalLaw?

A) performance=skill*sqrt(breadth)B) performance=skill+breadthC) performance=skill/(breadth^2)D) performance=skill/sqrt(breadth)

Correctanswer:A

Question331:Thefundamentallawisrepresentedas-A) IR=IC*SQRT(BR)B) IR=IC*BRC) IR=IC*BR^2D) IR=IC*BR*SQRT(120)

Correctanswer:A

Question332:Inordertoensurethatassetsvalueincreasesinlow-riskportfolio,assetsshouldbeA:anti-correlatedinshorttermB:positivelycorrelatedinlongterm.

A) AB) BC) BothAandBD) Noneoftheabove

Correctanswer:C

Question333:Thefundamentallawisrepresentedas-

A) IR=IC*SQRT(BR)B) IR=IC*BRC) IR=IC*BR^2D) IR=IC*BR*SQRT(120)

Correctanswer:A

Question334:Whatisthemainadvantageofamodel-freeapproachlikeQ-Learning?

A) Q-Learningdoesnotrequirelook-aheadorcarefulweightingB) Q-Learningcaneasilybeappliedtodomainswhereallstates

and/ortransitionsarenotfullydefinedC) Q-Learningimplementationsaregenerallyfasterthanmodel-

basesapproachesD) Q-Learningisthebestwaytoavoidoverfitting

Correctanswer:B

Question335:Thefundamentallawisrepresentedas-

A) IR=IC*SQRT(BR)B) IR=IC*BRC) IR=IC*BR^2D) IR=IC*BR*SQRT(120)

Correctanswer:A

Question336:IntheQ-Learningalgorithmassumeweareintheseconditerationwithanexperiencetuple.ListdownthecorrectsequenceofthebelowgivenstepstobefollowedtomakesurewecorrectlyupdateourQtable1InformationwejustlearnedistakentoimproveQ2Observerewardands'3Statesiscomputed4Qtableissetwithsmallrandomnumbersandthetimeisinitialized5Weconsultourpolicy,orinotherwordsweconsultQtofindthebestactioninthecurrentstate

A) 45321B) 34512C) 43521D) 35421

Correctanswer:C

Question337:Acalloptionwitha$60strikepriceexpiresintwomonthsandsellsfor$3.Iftheunderlyingstockispricedat$65atexpiration,youwillgeta()

A) $3lossB) $5profitC) $3profitD) $2profit

Correctanswer:D

Question338:InQ-Learning,Q[s,a]=?

A) Behaviourreward+discountedrewardB) Futurereward+immediaterewardC) Immediatereward+discountedrewardD) Futurereward+behaviourreward

Correctanswer:C

Question339:PortfolioOptimizationandtheEfficientFrontierQuestion:Standarddeviationofdailyreturnsisusuallyusedasameasureofrisk.Amongtheoptionsbelow,whichonewouldbethebestalternativewaytomeasurerisk?

A) CumulativereturnB) MomentumC) AlphaD) Beta-orsomethingelselikeSortinoRatio

Correctanswer:D

Question340:WhydidMichaelBurryclosehisfundafterobtainingbigreturns?

A) HecashedinandretiredwithhiswifeB) HebroughtalawsuitagainsttheratingagenciesforfraudC) HewasbummedbyongoinglitigationandauditsD) Hemovedtoinvestingingoldandoilcompanies

Correctanswer:C

Question341:WhatisonemajordifferencebetweenUSstylestockoptionsandEuropeanstylestockoptions?A) USstylestockoptionsrequireyoutoexercisetheoptiononthe

expirationdate,whereasEuropeanallowyoutoexercisetheoptionpriortotheexpirationdate.

B) Europeanoptionsdonotcallitastrikeprice.C) USstylestockoptionsallowyoutoexercisetheoptionuptoand

includingtheexpirationdate,whereasEuropeanoptionsonlyallowyoutoexercisetheoptionontheexpirationdate.

D) Noneoftheabove.

Correctanswer:C

Question342:WhatisthedifferenceinvalueiterationandpolicyiterationmethodsinReinforcementLearning?

A) ValueIteration:Ateachiterationofevaluationofallstatesofyourenvironment,youincrementthevalueofastatedependingonvaluesofneighbourstates,youdothisuntilallyourenvironmentiscovered

B) PolicyIteration:Ateachiterationofevaluationofallstatesofyourenvironment,youincrementthevalueofastatedependingonvaluesofneighbourstates,youdothisuntilallyourenvironmentiscovered

C) ValueIteration:Evaluatetheactionofyourprocessateachiteration,sothatyouimproveyourcontrollaworpolicy.hereyouneedamodel:adiscreteMarkovprocess.

D) botharesimilarmethods

Correctanswer:A

Question343:Supposedthatyouareahedgefundmanagerandyourfundperformsreallywell.YourfundproducessimilarreturnsasWarrenBuffet’s(TheInformationRatioisthesame),butthestrategyyouuseisverydifferentfromWarrenBuffet.WarrenBuffetholdsonly100stocksfortheentireyear,whileyourunamachinelearningalgorithmtotradestocksatarateof10000times/perday.WhichofthefollowingequationscanillustratetherelationshipbetweentheskillofyourmachinelearningstrategyandtheskillofWarrenBuffet?

A) Skill(Yourstrategy)=(100^0.5/(10000*252)^0.5)*Skill(WarrenBuffet)

B) Skill(Yourstrategy)=(100/(10000*252))*Skill(WarrenBuffet)C) Skill(Yourstrategy)=(100/(10000))*Skill(WarrenBuffet)D) Skill(Yourstrategy)=(100^0.5/(10000*365)^0.5)*Skill(Your

Strategy)

Correctanswer:A

Question344:Whichoneofthestatementsbelowiscorrectconsideringmovingaverage?

A) Amovingaveragehelpsremovedailyfluctuationfromanalysis.B) Theshorterthetimeperiodunderconsideration,theeasieritisto

predictlong-termtrends.C) Thelongerthetimeperiodunderconsideration,themore

sensitivethemovingaverageistowardsdailyvolatility.D) Amovingaverageisalwayscomputedusingthesamearithmetic

model.

Correctanswer:A

Question345:Technicalanalysislooksatwhatkindofinformation?1.Volume2.Cumulativereturn3.Stockprice4.Sharperatio

A) 1and2B) 1and3C) 2and3D) 2and4

Correctanswer:B

Question346:FromTheBigShort,whatisthehothandfallacy?

A) Studyingthehousingmarketbygoingtohousesisthebestinsight.

B) Onlywhenbankstookshortpositionsasthehousingmarketcollapsedwouldthosepositionsbevaluedcorrectly.

C) Whenbankscouldn'tsellbadbonds,theygroupedthemintoCDOswhichbecameAAArateddiversifiedinvestments

D) Thesuccessofthehousingmarketindicatedfuturesuccessofthemarket.

Correctanswer:D

Question347:Whichofthefollowingstatementistrue?Thereinforcementlearningcanbemappedtotradingasfollows:

A) S:thestatesofthemarket,A:thebuy,sell,donothingactions,T:thetradescompleted,R:themoneymadeattheendofthetrade

B) S:thefeaturesandindicatorsofthestocks,A:thebuy,sell,donothingactions,T:themarket,R:themoneymadeattheendofthetrade

C) S:theavailablestatesoftherobot,A:theassetscurrentlyinportfolio,T:thetransitionfunctionsusedtodeterminebuyandsellactions,R:therobotusedtomakedecisions

D) Thereinforcementlearningcannotbemappedtotrading.

Correctanswer:B

Question348:WhichofthefollowingisNOTpartofFundamentalAnalysis?

A) DividendsB) CompanyEarningsC) CompanyDebtD) TradingVolumne

Correctanswer:D

Question349:WhichofthefollowingisacorrectwaytodesrcibetheTransitionfunctionT[s,a,s']inMarkovDecisionProblems(MDP)?

A) probabilitythatweareinstates'andwetakeactiona,wegetnewstates

B) probabilitythatweareinstateaandwetakeactions,wegetnewstates'

C) probabilitythatweareinstatesandwetakeactions',wegetnewstatea

D) probabilitythatweareinstatesandwetakeactiona,wegetnewstates'

Correctanswer:D

Question350:ReinforceLearning:Whichisbelowwaytofindpolicydoesn'tbelongtosamegroup?a.Buildmodeloftransitionfunctionwithparameterstate,actionandnextstate.b.Buildmodelofrewardfunctionwithparameterstateandaction.c.Buildmodelofiterationallstateandactiontofindaverage.d.Q-learningwithoutmodel

A) Buildmodeloftransitionfunctionwithparameterstate,actionandnextstate.

B) Buildmodelofrewardfunctionwithparameterstateandaction.C) Buildmodelofiterationallstateandactiontofindaverage.D) Q-learningwithoutmodel

Correctanswer:D

Question351:IfIhaveinsiderinformationthatIamabletousetomakeaprofitoffthroughtrading,whichform(s)oftheEfficientMarketsHypothesis(EMH)couldapply?A) WeakformB) Semi-strongformC) StrongformD) AandB

Correctanswer:D

Question352:WhatisthemaindifferencebetweenUSandEuropeanstylestockoptions?

A) UnderUSstyle,youcan’tchoosetoexerciseyouroptionpriortoexpirationdate,butitisconvenientforEUstyle

B) UnderEUstyle,youcan’tchoosetoexerciseyouroptionpriortoexpirationdate,butitisconvenientforUSstyle

C) USstyleoptiondoesnothaveasetstrikeprice,butEUoptionshave

D) Thereisnodifference

Correctanswer:B

Question353:Baseonthefilmandtherealworld,thecrushofwhichtypeoftheproductinthefollowingwouldgivethemostimpacttothemarket?

A) MBS,MortgageBackedSecuritiesB) CDS,CreditDefaultSwapC) CDO,CollateralizedDebtObligationsD) CDO^2,theCDOfromCDO

Correctanswer:D

Question354:Baseonthefilmandtherealworld,thecrushofwhichtypeoftheproductinthefollowingwouldgivethemostimpacttothemarket?

A) MBS,MortgageBackedSecuritiesB) CDS,CreditDefaultSwapC) CDO,CollateralizedDebtObligationsD) CDO^2,theCDOfromCDO

Correctanswer:D

Question355:WhichofthefollowingbestdescribesthefactorstakenintoaccountinTechnicalAnalysis?

A) TechnicalAnalysislooksonlyatHistoricalPriceofthestockB) TechnicalAnalysislooksonlyatHistoricalPriceandVolumeofthe

stockC) TechnicalAnalysislooksatBookValue,CashFlowandDividendsof

thestockD) TechnicalAnalysislooksonlyatVolumeofthestock

Correctanswer:B

Question356:Whatisanexampleofexogenousdataforanairlinestock?

A) ThepriceofoilB) Thecompany'sstockpriceC) Thecompany'squarterlyreportsD) PrivateinformationknownonlytotheCEO

Correctanswer:A

Question357:MeanVarianceOptimization(MVO)usesasetofinputstoreturnasetofassetweightsthatminimizerisk.WhichofthefollowinginputsisNOTusedinthecalculationofMVO?

A) ExpectedReturnB) VolatilityC) SharpeRatioD) Alloftheaboveareusedasinputs

Correctanswer:C

Question358:AccordingtoBlack-ScholesOptionPricingModel,whichoneofthefollowingassumptionsisn'ttrue?

A) Notaxeswouldbeapplied.B) Sharesareinfinitelydivisible.C) Nodividendsarespared.D) Transactionscostswouldbeapplied.

Correctanswer:D

Question359:Whatisrisk?

A) StandarddeviationofhistoricaldailyreturnsB) averagedailyreturnsC) covarianceofdailyreturnsD) meanvarianceoptimization

Correctanswer:A

Question360:Howarethestockreturnsfortwoindependent(non-overlapping)timeperiodsrelatedinanefficientmarket:

A) NocorrelationB) NegativecorrelationC) PositivecorrelationD) Cannotbedetermined

Correctanswer:A

Question361:WhatwasBurry'smoveafterhepredictedthehousingmarketbubble?A) Hecontactedthegovernmenttowarnthemagainstthecoming

collapseofthemarketB) Hecontactedmultiplebankstoconvincethemthatthebondswillfail

andtocreateacreditdefaultswapmarketC) HecontactedVennettandBaumtoconvincethemtojoinforceswith

himtoprofitoffofthemarketcollapseD) HecontactedhismomtolethersellherhouseinMiamibeforethe

pricescrash

Correctanswer:B

Question362:Accordingtoepsilongreedystrategy,whenshouldwesethigherepsilonratesduringthetrainingphase?

A) BeginningofthetrainingB) WhenthetrainingstartstoconvergeC) Whenthetraininghasn'tconvergedD) Attheendofthetraining

Correctanswer:A

Question363:Accordingtothefundamentallaw,whichwaycanamanagerorfundimprovetheirperformance?

A) IncreasethenumberoftradingopportunitiesperyearB) DecreaseskillatmakingpredictionC) DecreasebreadthD) Increasetimeoftrading

Correctanswer:A

Question364:Whenwritingacalloption,howcanyouhedgeagainstinfinitemaximumlosses?

A) OwntheunderlyingassetB) BuyacalloptiononthesameassetC) AandBD) Noneoftheabove

Correctanswer:C

Question365:Whichofthefollowingisamodel-freelearning?

A) RandomforestB) KNNC) Q-learningD) LinearRegression

Correctanswer:C

Question366:TheRelativeStrengthIndexisaleadingindicator.

A) TrueB) FalseC) RelativeStrengthIndexisnotanindicatorD) Noneoftheabove

Correctanswer:A

Question367:WhichofthefollowingstatementaboutoptionsisNOTcorrect?

A) Youwillnotlosemorethanthepremiumyoupaidfortheoption,nomatterhowfaritmovesagainstyou.

B) Optionsdonothaveexpirationdate.C) Withoptions,youdonotownthestock.D) Whenyoubuyoptions,youpaythepremiumimmediatelyto

anotherpersonwhenyouacquiretheoptioncontract.

Correctanswer:B

Question368:Davidisastocktradingexpertandhecanprofitsignificantlywithonly100tradesperyear.Sherrydevelopedahighfrequencytradingalgorithm,andheralgorithmis1/10000assmartasDavid’stradingstrategy.ForSherry,inordertoachieveonehalfofDavid’sInformationRatio,howmanytradesmustsheperformedeachyear?

A) 100,000B) 50,000C) 10,000,000,000D) 2,500,000,000

Correctanswer:D

Question369:WhatdoesalpharepresentintheQlearningupdateformula?Q'[s,a]=(1-α)·Q[s,a]+α·(r+γ·Q[s',argmaxa'(Q[s',a'])])

A) alphaisthelearningrateusedtovarytheweightgiventooldexperiencescomparedwithpastQ-values

B) alphaisthelearningrateusedtovarytheweightgiventooldexperiencescomparedwithfutureQ-values

C) alphaisthelearningrateusedtovarytheweightgiventonewexperiencescomparedwithpastQ-values

D) alphaisthelearningrateusedtovarytheweightgiventonewexperiencescomparedwithfutureQ-values

Correctanswer:C

Question370:Whatfollowingportfoliostatisticswouldnotbeagoodstatetotrainyourq-learningalgorithmon?

A) BollingerBandsB) SMAC) SMA/AdjustedCloseD) CurrentStockHoldings

Correctanswer:B

Question371:Whatisabenfitofreinforcementlearning?A) Wecanclassifyobjectsintodifferentcategories.B) Wecanobserveunknownsandassignrewardstothemtoreacha

goal.C) Wecanfeedittrainingdataandthentestitonadifferentset.D) Noneoftheabove.

Correctanswer:B

Question372:______isanexampleofarewardinaReinforcementLearningtradingproblem.

A) shortsellingB) SMAC) cumulativereturnD) RSI

Correctanswer:C

Question373:Ifastockpricefortodayis$110andanoptionfor$108callwas$300for100shares.Ifyoubuytheoptionandusetheoptiontobuy100sharesafteraweekwhenthestockpriceincreasesinto$120,howmuchwillbeyourbenefitifyouignoretradingfee?

A) 1200B) 1000C) 900D) 300

Correctanswer:C

Question374:Whichoptionsstrategywouldbethebestifyoucouldsuccessfullypredictthemarkettorisesharplyinafutureperiod?

A) Buyastock,writeacalloptionB) BuyacalloptionC) BuyaputoptionD) Butterfly

Correctanswer:B

Question375:Youfindabetthatyoucanpredictaccurately55%ofthetime.Youbet$100dispersedoverxbetsof$0orgreatereach.Thestandarddeviationofthereturnsofmakingthebetthatmanytimesis5.Whatistheriskadjustedrewardofmakingthesebets?

A) 2B) 20C) 500D) Notenoughinformation

Correctanswer:A

Question376:Inthecontextofreinforcementlearning,whatisthedailyreturn?

A) StateB) RewardC) BothAandB

Correctanswer:C

Question377:Youfindabetthatyoucanpredictaccurately55%ofthetime.Youbet$100dispersedoverxbetsof$0orgreatereach.Thestandarddeviationofthereturnsofmakingthebetthatmanytimesis5.Whatistheriskadjustedrewardofmakingthesebets?

A) 2B) 20C) 500D) Notenoughinformation

Correctanswer:A

Question378:WhichofthefollowingisNOTTRUEaboutGrinold&Kahn’sFundamentalLawOfActiveManagement?

A) Theformulaisderivedinabsenceoftransactioncost

B) InformationRatio(IR)isameasureofthevalueaddedperunitofrisk

C) ICcanbeestimatedaprioriwithprecisionD) Atanygivenlevelofrisk,anactiveportfoliomanagercanseekto

improvehisproductivitybyincreasingthenumberofindependentbetshemakes

Correctanswer:C

Question379:WhatfinancialinstrumentdidMichaelBurry(portrayedbyChristianBale)usetoshortthehousingmarket?

A) PutoptionsonRealEstateInvestmentTrustsB) ShortsellingrealestatefirmsC) CreditdefaultswapsD) CDOs(CollateralizedDebtObligations)

Correctanswer:C

Question380:AccordingtoGrinold'ssimplifiedFundamentalLawofActivePortfolioManagement,whichisapossibleexplanationforathree-foldincreaseinperformance?

A) Anine-timesincreaseintheInformationCoefficient.B) Anine-timesincreaseinthenumberoftrades.C) Atwo-timesincreaseintheInformationRatio.D) Athree-timesincreaseinthenumberoftrades.

Correctanswer:B

Question381:WhatdoesQ(state,action)return?A) Nextstateofthesystem.B) Nextactiontobeenacted.C) Expectedfuturerewardofthegivenactionatgivenstate.D) Noneoftheabove.

Correctanswer:C

Question382:WhichofthefollowingEfficientMarketsHypothesisassumptionsisfalse?

A) PricesreflectallavailableinformationB) PricesadjustsquicklyC) NewinformationarrivesrandomlyD) Asmallnumberofinvestors

Correctanswer:D

Question383:Amongthefollowing,whatqualitiesofthetradingdecisionwouldmaketechnicalanalysismorevaluablethanfundamentalanalysisinreachingit?

A) HIGHdecisioncomplexity,LOWdecisiontimeB) HIGHdecisioncomplexity,HIGHdecisiontimeC) LOWdecisioncomplexity,HIGHdecisiontimeD) LOWdecisioncomplexity,LOWdecisiontime

Correctanswer:D

Question384:WhichofthefollowingisevidenceagainstthestrongEfficientMarketsHypothesisbutconsistentwiththesemi-strongEfficientMarketsHypothesis?

A) Stockpricesareentirelyrandomandunpredictable.B) Peopleoftenprofitfrominsidertrading,andassuchitisillegalin

theU.S.C) Traderscanprofitfromanalysisoftechnicalindicatorsonly.D) Noprofitscanbemadefromonlytechnicalanalysis.

Correctanswer:B

Question385:whichoneofthefollowingsisnotanadvantageofbuyingoptions?

A) can'tlosemorethanthepremiumthatyoupaidB) leveragetocontrolmoremoneyC) tiewithlessmoneyD) hasanexpirationdate

Correctanswer:D

Question386:WhichofthefollowingfactorsisnotconsideredbyGrinold'sFundamentalLaw?

A) PerformanceB) ExperienceC) SkillD) Breadth

Correctanswer:B

Question387:Whatisthepurposeofthepi(s)functionwithregardtoReinforcementLearning,wheresisastate?

A) Itisapolicythatdefinestheactionwhichmaximizestherewardinstates

B) ItreturnsarandomactiontotakeforexplorationC) ItreturnsthecurrentrewardinstatesD) Itdeterminesifsisavalidstate

Correctanswer:A

Question388:InMarkovDecisionProblems,thetransitionfunctionhasthreeattributes.Oneoftheattributesisthefuturestate(s').Whatisthesumofallthenextstateswemightendupin?

A) 0B) -1C) 1D) 100

Correctanswer:C

Question389:InthecontextofaMarkovDecisionProblem(MDP)wheneveryexperiencetupleforanenvironmentintheformat,isknown…Iwouldusea___________todetermine_____________.However,ifnoknowledgeoftheenvironmentexiststhen______________isaviableapproachtodevelopthepolicyπ

A) ModelBasedreinforcementlearningapproach,T[s,a,s’]andR[s,a],Q-learning

B) ModelFreereinforcementlearningapproach,T[s,a,s’]andR[s,a],Q-learning

C) Valueiteration,R[s,a],PolicyiterationD) ModelBasedreinforcementlearningapproach,T[s,a,s’],Value

iteration

Correctanswer:A

Question390:WhentouseButterflystrategyinoptionstrading?

A) WhenthemarketisvolatileB) WhenthemarketismovinginacleartrendC) WhenthemarketgoessidewaysD) Noneoftheabove

Correctanswer:C

Question391:WhattypeoftechniqueisQ-Learning?A) supervisedlearningB) unsupervisedlearningC) reinforcementlearningD) regressionbasedlearning

Correctanswer:C

Question392:Mathematically,InformationRatioisequaltoinformationCoefficienttimesthesquarerootofbreadth.Pleaseselectallthatapplies

A) Performanceofthefundisduetotheskillsatmakingpredictiontimesthesquarerootofbreadth

B) Ifyouwanttoimproveyourperformanceyoucaneitherimproveonyourskillsoryourbreadth

C) Itisaloteasiertoincreasedbreadthbyfindingadditionalstocksorcommodities

D) Alloftheabove

Correctanswer:D

Question393:WhytheadjustedcloseisnotagoodstatevariablefortheQ-learningalgorithm?

A) Becauseyouarenotabletogeneralizewelltodifferentpriceranges.

B) Becauseitdoesnothavedirectcorrelationwiththeportfolio'sperformance

C) Becauseitistoovolatile.D) Becauseyouarenotabletodiscretizeit.

Correctanswer:A

Question394:WhichofthefollowingstatementaboutQ-Learningiswrong?

A) Qisalwaysviewedasatable.B) Qisrepresentingnotonlytherewardyougetforactingnow,itis

representingtherewardyougetforactinginthefutureaswell.C) Q-Learningisamodel-freeapproach,thusitissimilartootherRL

learningprocesseswiththetransitionsTandtherewardsR.D) Qcanbeviewdasatable,oritcanalsobeviewedasafunction.

Correctanswer:C

Question395:Alearningrateof1.0means

A) thetable'svalueshaveconvergedB) priceisintersectingwithitsmovingaverageC) thenewq-valueignoresitspriorq-valueD) dataisnormalizedbutnotstandardized

Correctanswer:C

Question396:WhichformofEfficientMarketHypothesis(EMH)sayswecannotmakemoneyinstockmarketbasedoninsiderinformation.

A) StrongB) WeakC) Semi-strongD) NoneoftheAbove

Correctanswer:A

Question397:Whatistheworstcasescenarioofpurchasinganoption?

A) LosingthepremiumB) LosingleverageC) LosingmomentumD) Losingyourself

Correctanswer:A

Question398:1.Technicalanalysisismorevaluablefor:

A) ShortertimeperiodsB) Longertimeperiods

Correctanswer:A

Question399:Riskoftwosecuritieswithdifferentexpectedreturncanbecomparedwith:

A) CoefficientofvariationB) StandarddeviationofsecuritiesC) VarianceofSecuritiesD) Noneoftheabove

Correctanswer:A

Question400:Whatisthestrong-formoftheefficientmarkethypothesis?

A) Pricesalreadyreflectpastpubliclyavailableinformation.B) Pricechangestoinstantlyreflectnewpublicinformation.C) Pricesreflecthiddeninsiderinformation.D) Alloftheabove.

Correctanswer:D

Question401:Letsayyouareusingreinforcementlearningtomakestrades,whichofthefollowingcouldbeconsideredarewardforyourtrades?A) BollingerValueB) HoldingLongC) BuyStockD) DailyReturn

Correctanswer:D

Question402:Whatisthesumofallprobabilitiess'inthetransitionfunction?

A) 100B) sC) 1D) a

Correctanswer:C

Question403:AccordingtotheNobleScientistHarryMarkowitz,whoisbestknownforhispioneeringworkinModernPortfolioTheory:(Pleaseselectthebestanswerfromthefollowingoptions):

A) BondsarelowestriskassetsB) StocksarelowestriskassetsC) BlendofStocksandBondscouldbelowestriskassetsthaneither

oneofthemindividuallyD) ModernPortfolioTheoryshowsEfficientFrontieronlyforStocks

asBondsareconsideredriskfree

Correctanswer:C

Question404:AssumethereisacalloptionforfutureX.IfthepriceoffutureXis80dollars,andthecalloptionallowsbuyingthefutureatpriceof90dollars.What'sthepriceofthiscalloption?

A) 10B) -10C) 0D) Noneofabove

Correctanswer:C

Question405:Overthelastyear,theaveragealpha(fromCAPM)ofyourinvestmentfundwas2.0,andthestandarddeviationofalphawas0.3,whilemaking10,000trades.Rachel,ayoungandaspiringfundmanagerwhograduatedfromGeorgiaTech,wantstojoinyourinvestmentfirm.Overthelastyear,hermeanalphavaluewas0.7,andthestandarddeviationofheralphavaluewas0.4,whilemaking400trades.YouwillsolelyuseInformationCoefficienttocomparetheskillsbetweenyourinvestmentfundandJane.WhatistheInformationCoefficientofyourinvestmentfund,andshouldyouletJanejoinyourfirm??(ThefactthatJaneisfromGeorgiaTechmustnotaffectyourdecision!)

A) 2/15,YESB) 1/15,NOC) 2/15,NOD) 1/15,YES

Correctanswer:D

Question406:Whichactivitybelowwillincreasethebreadthofaportfoliomanagement?

A) Investmoremoneyontheselectedstocks.B) Tradeonestockmorefrequently.C) Improvethestrategytoselectstockstoinvest.D) Applymachinelearningmethodtomaketradingdecisionson

selectedstocks.

Correctanswer:B

Question407:WhichofthefollowingstatementsisNOTTRUEaboutReinforcementLearning?

A) ReinforcementLearningisaMarkovDecisionProblem.B) ThegoalofReinforcementLearningistofindapolicythat

maximizesfuturereward.C) ReinforcementLearningdescribesasolutionforfindingthe

optimaltradingstrategy.D) Q-LearningisamodelfreeReinforcementLearningtechnique.

Correctanswer:C

Question408:WhencandynamicprogrammingmethodsbeusedtosolveaMarkovdecisionprocess?

A) Whentheenvironmentcanbeperfectlymodeledandnodirectinteractionisrequired

B) Whentheagentonlyhasexperiencefrominteractingwiththeenvironment

C) WhentheenvironmentcannotbeperfectlymodeledD) Whenanonlinelearningalgorithmimplementationisdesired

Correctanswer:A

Question409:TheInformationRatio(IR)isdirectlyproportionalto:I. manager’sskillinforecastingpricesII. squarerootofmanager’sskillinforecastingpricesIII. numberofindependenttradingopportunitiesovertimeIV.squarerootofthenumberofindependenttradingopportunitiesovertimeChoosethecorrectstatementsfromabove:

A) IandIIIonlyB) IandIVonlyC) IIandIIIonlyD) IIandIVonly

Correctanswer:B

Question410:WhichofthefollowingisacorrectstatementregardingthestrongformofEfficientMarketHypothesis(EMH)?

A) ItdoesnotsayanythingaboutfundamentalorinsiderinformationB) Itsuggeststhatwhencompanieshavetheirquarterlyreportsthat

containfundamentalinformation,pricesreactimmediatelyC) Itsaysyoucan’tprofitfromtechnical,fundamentalorinsider

analysisD) Itsayspricesadjustimmediatelytonewpublicinformation

Correctanswer:C

Question411:WhatistrueabouttheEfficientFrontier?A) ThepurposeoftheEfficientFrontierisshowtherangeofleastto

mostefficientportfoliosB) Allportfoliosbelowthefrontieraresub-optimalinsomewayC) Inpractice,mostpeopletrytobeasclosetotheEfficientFrontieras

possible.D) TheEfficientFrontiershowsthatreducingReturnalwayslowersRisk

Correctanswer:B

Question412:Supposeyouwriteacalloptionforastockwithapremiumof$3.14pershare.Ifyouwrite100shares,whatisthemaximumlossyoucouldexperience?

A) $3.14B) $314C) $0D) inf

Correctanswer:D

Question413:WhofirstinventedtheFundamentalLawwhereperformanceequalstoskilltimesrootofbreadth?

A) HarryMarkowitzB) WiliamSharpeC) RichardGrinoldD) TuckerBalch

Correctanswer:C

Question414:WhichoptioniscorrectaboutEfficientMarketHypothesis(EMH)?

A) Thesemi-strongversionofEMHpreventsfundamentalanalysisfromworking,butadmittheusageoftechnicalanalysisstrategies

B) EMHassumesthattherearealargenumbersofinvestorsC) TheversionofEMHdon'tthinkwecouldpredictthefutureprice

accordingtothefirm'sbalancesheetcompositionandliabilitiesD) EMHassumesthatnewinformationarrivesconsistently

Correctanswer:B

Question415:TheInformationCoefficientisdefinedas:

A) Thecorrelationofforecaststoreturns.B) Theratioofinvestingskilltothebreadthofinvestments.C) Thealpha(α)meandividedbythealpha(α)stdev.D) Thecoefficientofinvestinginformationtoreturns.

Correctanswer:A

Question416:WhichofthefollowingportfolioswouldperformthebestgivenGrinold'sFundamentalLawofActivePortfolioManagement?

A) 144stocksmanagedbyamanagerskillof5B) 25stocksmanagedbyamanagerskillof5C) 9stocksmanagedbyamanagerskillof10D) 49stocksmanagedbyamanagerskillof10

Correctanswer:D

Question417:Whichofthefollowingistrueaboutthecoinflipcasinolessons?

A) LowerAlphageneratesahigherSharpeRatioB) MoreexecutionopportunitiesprovideahigherSharpeRatioC) SharpeRatiogrowsasthesquarerootofperformanceD) Allofabove

Correctanswer:B

Question418:Accordingtothefundamentallawofmanaginganactiveportfolio,whichmethodisthemosteffectivewaytoincreaseyourperformanceinthemarket?

A) IncreasethenumberoftradeswiththesamealgorithmB) Improveyouralgorithmoftradingwhilekeepingthenumberof

tradesthesameC) Decreasethenumberoftrades.D) Sittightandhopeforthebest!

Correctanswer:B

Question419:WhichoneoftheseisNOTaEfficientMarketsHypothesisform?

A) Semi-strongB) WeakC) StrongD) Semi-weak

Correctanswer:D

Question420:WhichofthefollowingpiecesofinformationisNOTusedbyMarkovdecisionprocessestofindapolicy?

A) S,asetofstatesB) R,arewardfunctionC) A,asetofactionsD) Gamma,aweightoffuturerewardvalues

Correctanswer:D

Question421:Whichofthefollowingdescribetradingstrategiesonewouldexpecttouseinmomentumtrading?A) Buylow,sellhighB) Buyhigh,sellhigherC) Buylow,selllowerD) Sellhigh,buylow

Correctanswer:B

Question422:Whenyoubuyastockandwriteacallofit,whichofthefollowingsituationscanmaximizeyourprofitwithoutmakingyouloseyourstock?

A) ThestockpriceendsupandabovestrikeB) ThestockpriceendsupbutbelowstrikeC) ThestockpriceendsdownD) Thestockpricedoesn’tchange

Correctanswer:B

Question423:Whenyoubuyastockandwriteacallofit,whichofthefollowingsituationscanmaximizeyourprofitwithoutmakingyouloseyourstock?

A) ThestockpriceendsupandabovestrikeB) ThestockpriceendsupbutbelowstrikeC) ThestockpriceendsdownD) Thestockpricedoesn’tchange

Correctanswer:B

Question424:Whatkindofriskisreducedbydiversification?

A) StandarddeviationriskB) SpecificriskC) ShortriskD) Systematicrisk

Correctanswer:B

Question425:ConcerningBlackandScholes’dynamichedgingtechnique,whichofthefollowingservedasthecriticalpieceinsolvingtheproblemofhavingtocontinuouslyrecalculaterisk?

A) ItoCalculusB) Black-Scholes-MertonModelC) LinearAlgebraD) BernieSanders

Correctanswer:A

Question426:Whichofthefollowingfourinvestorsislikelytoperformthebestgiventhefollowinginformationcoefficients(ICs)andnumberofinvestments?Investor1:IC=3N=25Investor2:IC=5N=9Investor3:IC=4N=4Investor4:IC=4N=16

A) Investor1B) Investor2C) Investor3D) Investor4

Correctanswer:D

Question427:WhichfactorisNOTconsideredforMeanVarianceOptimization(MVO)?

A) ExpectedreturnB) VolatilityC) CovarianceD) Sharperatio

Correctanswer:D

Question428:Theportfoliosliealonetheefficientfrontieris:

A) thehighestreturnportfoliosforallsharpratiolevelsB) thehighestsharpratioportfoliosforallreturnlevelsC) thelowestriskportfoliosforallreturnlevelsD) thehighestreturnportfoliosforallrisklevels

Correctanswer:C

Question429:Whenmarketisstrong-formefficient,whichofthefollowingwillnothappen?

A) InsidertradecaughtbyauthoritiesB) SmartbetafundoutperformmarketintheshorttermC) MarkettimingresultsinnegativeprofitD) Momentumstrategyoutperformfor50years

Correctanswer:D

Question430:whichofthefollowingisnotpartofthetechnicalanalysis?

A) calculatebookvalueB) calculate20daymomentumC) calculate250daymovingaverageD) calculateBollingerband

Correctanswer:A

Question431:WhichoneofthefollowingchoicesisNOTTRUEaboutoptions?A) Optionsenablepeopletocontrolmoremoneyusinglessmoney.B) Withoptions,wecannotlosemorethanthepremiumthatwepaid

forthatoptionupfront.C) Optionscanbeboughtandsoldlikestocks.D) Optionscanbeheldonlikestocks.

Correctanswer:D

Question432:WhichisfalseconcerningdifferentpartsoftheQ-learningalgorithm

A) Alearningrateof0weightsnewinformationhighly.B) Lowdiscountfactorsmaketheagentshortsighted.C) Highdiscountfactorsmaketheqvaluesdiverge.D) Alearningrateof1weightsnewinformationhighly.

Correctanswer:A

Question433:ConsideringtheSemi-StrongformofEfficientMarketHypothesis,whichofthefollowingchoicesisincorrect?

A) Thehistoricalpricescanbeusedtopredictfutureprices.B) Pricescannotreflectallthepublicandprivateinformation.C) Insiderinformationisnotconsideredinthisform.D) Technicalanalysisworksmuchbetterthanfundamentalanalysis

inthisform.

Correctanswer:D

Question434:Whatisthereasonthatthemaincharactersin"TheBigShort"decideincreditdefaultswaps?

A) Theyallreadapaperthatpredictedthepossiblestockmarketcrash.

B) TheyallnoticedthatthehousingloanmarketwasinflatedwithhighriskloansbeingstructuredintoloanpackageswithaAAArating(lowriskrating)

C) TheyallnoticedthatthehousingloanmarketwasinflatedwithmediumriskloansbeingstructuredintohighriskloanpackageslikeBBtoCCC

D) TheyallgottippedoffbytheSMAforhousingloanmarketpredictingachangeinthetrend

Correctanswer:B

Question435:Whatisthereasonthatthemaincharactersin"TheBigShort"decideincreditdefaultswaps?

A) Theyallreadapaperthatpredictedthepossiblestockmarketcrash.

B) TheyallnoticedthatthehousingloanmarketwasinflatedwithhighriskloansbeingstructuredintoloanpackageswithaAAArating(lowriskrating)

C) TheyallnoticedthatthehousingloanmarketwasinflatedwithmediumriskloansbeingstructuredintohighriskloanpackageslikeBBtoCCC

D) TheyallgottippedoffbytheSMAforhousingloanmarketpredictingachangeinthetrend

Correctanswer:B

Question436:WhichofthefollowingisNOTanassumptiontakenunderEMH?

A) LargenumberofInvestorsB) PricesadjustquicklyC) PricesreflectallinformationD) NewInformationispredictable

Correctanswer:D

Question437:WhichoftheseisaninvalidallocationofmyportfolioifmyportfolioconsistsofAMZN,MSFT,GOOG,FB?

A) 0.25,0.25,0.25,0.25B) 0.2,0.4,0.6,0C) 0,0,1.0,0D) 0.01,0.01,0.01,0.97

Correctanswer:B

Question438:WhichstepisNOTusedtoBUILDaQ-LearningModel?Pleasecheckallthatapplies

A) Definestates,actions,rewardsB) Choosein-sampletrainingperiodC) IterateQ-tableupdateD) Backtestonlaterdata

Correctanswer:D

Question439:Twoinvestorshaveequalactiveportfolioperformance.Oneinvestorsuccessfullydoubleshisskill.UsingtheLawofActivePortfoliomanagement,howshouldtheotherinvestoradjusthisbreadthtomatchtheperformanceofthefirstinvestor?

A) DecreasebreadthinhalfB) DoublebreadthC) QuadruplebreadthD) Addchangeinskilltobreadth

Correctanswer:C

Question440:WhichoftheseisaninvalidallocationofmyportfolioifitconsistsofAMZN,MSFT,GOOG,FB?

A) 0.25,0.25,0.25,0.25B) 0.2,0.4,0.6,0C) 0,0,1.0,0D) 0.01,0.01,0.01,0.97

Correctanswer:B

Question441:BasedonMeanVarianceOptimization(MVO),oneshouldlookforstocksthathave:A) anti-correlationinshorttermsandpositive-correlationinlongtermsB) anti-correlationinshorttermsandpositive-correlationinshorttermsC) anti-correlationinlongtermsandpositive-correlationinlongtermsD) anti-correlationinlongtermsandpositive-correlationinshortterms

Correctanswer:A

Question442:Whatarethecorrect3formsofthehypothesis

A) weak,super-strong,strongB) weak,semi-strong,strongC) weak,mid-strong,strong

Correctanswer:B

Question443:Whichofthefollowingistrueforaportfoliocreatedfromagroupofassets(Chooseone)?

A) Thereturnoftheportfoliocanbegreaterthanthereturnofeachoftheindividualassets

B) Thestandarddeviationoftheportfoliocanbesmallerthanthestandarddeviationofeachoftheindividualassets

C) Theportfoliocouldhaveabetterrisk-returnprofilethantheonedefinedbytheefficientfrontier

D) Noneoftheabove

Correctanswer:B

Question444:WhoreceivedaNobelPrizefor"EfficientMarketsHypothesis(EMH)"?

A) JulesRegnaultB) EugeneFama

Correctanswer:B

Question445:Bill'sInformationratiois3timesthatofMary's.Theybothhavethesameskill(InformationCoefficient).Howcouldthedifferencebeexplained?

A) Billhas3timesthenumberoftradingopportunities(breadth)asMary.

B) BillwenttoanIvyLeaguetargetschoolwhileMarywenttoanon-target,thushehasmoreinformationaboutfinance.

C) Billhas9timesthenumberoftradingopportunities(breadth)asMary.

D) Billtradesinlargersizeandthushaslargerreturns.

Correctanswer:C

Question446:WeekformoftheEMHpredictsthatyoucan’tpredictfuturepricesbylookingathistoricalprices

A) TrueB) False

Correctanswer:A

Question447:WeekformoftheEMHpredictsthatyoucan’tpredictfuturepricesbylookingathistoricalprices

A) TrueB) False

Correctanswer:A

Question448:Whichofthefollowingstatementistrue?Thereinforcementlearningcanbemappedtotradingasfollows:

A) S:thestatesofthemarket,A:thebuy,sell,donothingactions,T:thetradescompleted,R:themoneymadeattheendofthetrade

B) S:thefeaturesandindicatorsofthestocks,A:thebuy,sell,donothingactions,T:themarket,R:themoneymadeattheendofthetrade

C) S:theavailablestatesoftherobot,A:theassetscurrentlyinportfolio,T:thetransitionfunctionsusedtodeterminebuyandsellactions,R:therobotusedtomakedecisions

D) Thereinforcementlearningcannotbemappedtotrading.

Correctanswer:B

Question449:AMarkovdecisionproblemisNOTdefinedby:

A) thepotentialstatesB) thepotentialactionsC) thepotentialruleD) therewardfunction

Correctanswer:C

Question450:Whichofthefollowingstatementistrue?Thereinforcementlearningcanbemappedtotradingasfollows:

A) S:thestatesofthemarket,A:thebuy,sell,donothingactions,T:thetradescompleted,R:themoneymadeattheendofthetrade

B) S:thefeaturesandindicatorsofthestocks,A:thebuy,sell,donothingactions,T:themarket,R:themoneymadeattheendofthetrade

C) S:theavailablestatesoftherobot,A:theassetscurrentlyinportfolio,T:thetransitionfunctionsusedtodeterminebuyandsellactions,R:therobotusedtomakedecisions

D) Thereinforcementlearningcannotbemappedtotrading.

Correctanswer:B

Question451:Whichstatementisnottrue?A) Youcanhavemuchlowerriskportfolioifyoucombineassetsthat

areanti-correlated.B) Anti-correlationisgoodstrategyforlongterm,anpositive

correlationisgoodforshorttermtomaximizeyourreturn.C) Meanvarianceoptimizationisawayoftakingapotentialsetof

assetsandfiguringouthowtheyshouldbeblendedbylookingattheirco-varianceamongotherthings.

D) Theoutputofmeanvarianceoptimizationisasetofweights,oneweightforeachassetinaportfolio.

Correctanswer:B

Question452:HarryMarkowitzshowedthatifyouwantedthelowestriskreturns,whatshouldyoubuy?

A) StocksB) BondsC) ABlendofStocksandBonds

Correctanswer:C

Question453:WhichofthefollowingactionsisNOTconsideredtechnicalanalysisofastock?

A) StudyingpricehistoryofthestockB) StudyingtradingvolumeofthestockC) StudyingtheS&P500trendsD) Calculatingthebookvalueofthestock

Correctanswer:D

Question454:WhichofthefollowingisnottrueaboutQ-Learning?

A) Q-Learningcannotbeappliedtoproblemdomainswhereallstatesarenotfullydefined.

B) Q-Learningcanbeappliedtoproblemdomainswherealltransitionsarenotfullydefined.

C) Noadditionalstructuresarerequiredtostorerewards–R(s,a).D) Q-valueforanystateactionpairtakesintoaccountfuture

rewards.

Correctanswer:A

Question455:WhatdidCharlieGellerandandJamieShipleyrealizewhenBearStearnsclaimedthatthepriceoftheCDOsthattheywantedtoshortdidnotmove?

A) CharlieGellerandandJamieShipleywerewrong.ThepriceoftheCDOsshouldstaythesame.

B) CharlieGellerandandJamieShipleywerewrong.ThepriceoftheCDOsshouldgoup.

C) CharlieGellerandandJamieShipleywereright.ThepriceoftheCDOsshouldgodownduetosubprimemortgagelosses.

D) CharlieGellerandandJamieShipleywereright.ThepriceoftheCDOsshouldgodownbecausepeoplewerepayingtheirmortgagesontime.

Correctanswer:C

Question456:WhichofthefollowingisnotaTechnicalIndicator?

A) Price/EarningsratioB) Price/VolumeratioC) momentumD) percentchangeinvolume

Correctanswer:A

Question457:Whatistheoutcomeofthepolicyfunctioninreinforcementlearning?A.TheQvalueofthecurrentstateB. TheoptimalactionofthecurrentstateC. TheprobabilitydistributionofnextstatesgivenanactionD. Noneofabove

A) TheQvaluesareusedtodevelopthepolicyfunction.B) CorrectC) Itisimportantinformationindevelopingthepolicyfunction,but

nottheoutcomeD) Notcorrect

Correctanswer:B

Question458:HowdoesthealphaandgammavaluesinQ-learningrelatetotheagentlearning/update?

A) Theagentlearnsmorequicklywithlargeralphavalueandvalueslaterrewardsmorewithsmallergamma

B) Theagentlearnsmorequicklywithlargeralphavalueandvalueslaterrewardsmorewithlargergamma

C) Theagentlearnsmoreslowlywithlargeralphavalueandvalueslaterrewardsmorewithsmallergamma

D) Theagentlearnsmoreslowlywithlargeralphavalueandvalueslaterrewardsmorewithlargergamma

Correctanswer:B

Question459:Forwhatvalueoflambdawithdiscountedrewardoptimization,youwillreach$1millionfaster?

A) 0.75B) 0.5C) 0.25D) 0.1

Correctanswer:A

Question460:InS&Pcreditrating,whichratingmeansthebestrating?

A) AAAAB) AAAC) AAD) A

Correctanswer:B

Question461:WhatarecomponentsofMarKovdecisionProblem?A) Setofactions->Pi(policy),Transitionfunctions,negativeReward

function.B) SetofStatesPrime,Setofactions,SetofStates,Rewardfunction.C) SetofStates,Setofactions,Transitionfunctions,Rewardfunction.D) SharpeRatio,Setofactions,Transitionfunctions,Setofactions.

Correctanswer:C

Question462:WhatmakesDyna-Qsuitableforfinancialtradingapplications?

A) Dyna-Qtakeshistorical&realdatainaccountB) Dyna-Qtakesreal&simulatedexperienceinaccountC) Dyna-QisRLmethodD) Noneofabove

Correctanswer:B

Question463:Inthefundamentallaw,thegivenequationisIR=IC*√BR,theinformationratio,whichisthemeasureofhowtheportfolioexceedsthemarket’sperformance,iscalculatedby:

A) Mean(αp(t))/stddev(αp(t))B) Stddev(αp(t))/mean(αp(t))C) Mean(αp(t))D) NoneoftheAbove

Correctanswer:A

Question464:WhichofthesestatementsisFalseabouttechnicalanalysis?

A) TechnicalanalysisiseffectiveondecidingshorttermstrategyB) Technicalanalysisismoreeffectivewhencombiningmultiple

indicatorsC) TechnicalanalysisconsidersthebookvalueofacompanyD) Technicalanalysisconsidersthehistorialpriceandvolumeofthe

stock

Correctanswer:C

Question465:SupposetwofundmanagersM1andM2haveresidualreturnalpha1andalpha2,andmean(alpha1)=mean(alpha2),stdev(alpha1)>stdev(alpha2).Ifbothmanagershavethesamenumbersoftradesperyear.Whichmanagerdoyouthinkhasbetterskills?

A) M1B) M2C) Theyarethesame.D) Cannottell.

Correctanswer:B

Question466:WhydidCharlieGellerandJamieShipleyofBrownfieldCapitalgetrejectedbyJPMorgantoacquiretheirISDA?

A) BrownfieldCapitaldidn’thaveenoughfundmanagerstobeconsideredlargeenoughforanISDA

B) BrownfieldCapitaldidn’thaveenoughmoneyintheirfundtobeconsideredforanISDA

C) BrownfieldCapitalhadn’tbeenestablishedlongenoughtomeetISDAagerequirements

D) CharlieGellerandJamieShipleydidn’thavethecorrectlicensingtofileforanISDA

Correctanswer:B

Question467:IfwewritetwoXYZcalloptionswithstrikeprice$110,longoneXYZcalloptionwithstrikeprice$100,longoneXYZcalloptionwithstrikeprice$120,andthetotalpremiumforthesepositionsis$-233,thenwhatwouldbethemaximumP/Lthatwecouldget(optionsaretradedinunitof100shares)?

A) 277B) 777C) 233D) 577

Correctanswer:B

Question468:Whichofthefollowingstatementsisnottrue?

A) Systematicriskisthatriskundertakenbyexposuretoanyassetintheassetclass.

B) Diversificationmutessystematicrisk.C) Specificriskistheriskassociatedwithaparticularasset.D) Diversificationbenefitdeceleratesastheportfoliobecomestoo

diverse.

Correctanswer:B

Question469:WhichofthefollowingmakesupaMarkovDecisionProblem?

A) setofactions,transitionfunctionandstatefunctionB) setofstates,setofactions,transitionfunctionandreward

functionC) setofstates,rewardfunctionandactionfunctionD) setofstates,setofactionsandrewardfunction

Correctanswer:B

Question470:ThevalueoftheDiscountedReward(Gamma)is0.95.Howdowevaluethefuturereward?

A) MoreB) LessC) EquallyD) Novalue

Correctanswer:A

Question471:Imagineyouareconsideringinvestinginoneoftwodifferenthedgefunds,BlackorKnight.IfBlackhastwicethemarketskillthatKnighthas,butKnighthasthreetimesthebreadththatBlackhas,whatisthebestchoiceaccordingtotheFundamentalLaw?A) ChooseBlackbecausethehigherbreadthwilllikelyresultinabetter

performanceB) ChooseKnightbecauseaccordingtothefundamentallaw,skillis

moreimportant.C) Thereisn'tenoughinformationtocalculatetheFundamentalLaw

Correctanswer:A

Question472:Whichofthefollowingisnotaninputofthemeanvarianceoptimization(MVO)?

A) VolatilityB) CovarianceC) TargetreturnD) Assetweightsforportfoliothatminimizerisk

Correctanswer:D

Question473:Whatisthenameoftheoptionstrategybelow:Long1callwithastrikepriceof(X−a)Short2callswithastrikepriceofXLong1callwithastrikepriceof(X+a)whereX=thespotprice(i.e.currentmarketpriceofunderlying)anda>0.

A) BearPutSpreadB) ButterflySpreadC) LongStraddleD) BullCallSpread

Correctanswer:B

Question474:The3formsoftheefficientmarkethypothesis,inorderfromweaktostrong,proclaimmarketefficiencywithregardtowhichadditionalsourcesofinformation,respectively?

A) historicalprice/volumedata,public/fundamentalinformation,insiderinformation

B) insiderinformation,public/fundamentalinformation,historicalprice/volumedata

C) public/fundamentalinformation,insiderinformation,historicalprice/volumedata

D) public/fundamentalinformation,historicalprice/volumedata,insiderinformation

Correctanswer:A

Question475:Technicalanalysisuses:

A) historicalpriceandvolume;futuredividendsB) historicalpriceandvolumeC) historicalvolumeandprojectedeconomicindicatorsD) historicalvolume

Correctanswer:B

Question476:Whichofthefollowingdate/pricetimeseriesrepresentthemostprofitablescenariofortheholderofaPUToptionpurchasedon01/01/18,withastrikepriceof$10andanexpiryof01/03/18?

A) 01/01/18/$11,01/02/18/$12,01/03/18/$13,01/04/18/$14B) 01/01/18/$11,01/02/18/$1,01/03/18/$1,01/04/18/$1C) 01/01/18/$11,01/02/18/$10,01/03/18/$2,01/04/18/$0D) 01/01/18/$11,01/02/18/$0,01/03/18/$50,01/04/18/$500

Correctanswer:D

Question477:WhattypeofstrategiesdoestheStrongEfficientMarketHypothesisprohibits?

A) InsiderStrategiesB) FundamentalStrategiesC) TechnicalStrategiesD) Alloftheabove

Correctanswer:D

Question478:ReinforcementlearningalgorithmsfitaproblemsettingknownasMarkovdecisionprocess.IntheMarkovdecisionprocess,theoutcomeofapplyinganyactiontoanystatedependsonwhat?

A) onlyonthisactionandstateB) thisactionandstate,aswellas,precedingactionsorstatesC) T,thetransitionprobabilityD) winningtheSovietlottery

Correctanswer:A

Question479:WhichofthestatementsbelowisFALSE?

A) AhigheralphageneratesahigherSharperatioB) MoreexecutionopportunitiesgeneratesahigherSharperatioC) MorebreadthgeneratesahigherSharperatioD) AhigherSharperatioincreasesexpectedreturn

Correctanswer:D

Question480:In“TheBigShort”,whattermoracronymisintroducedtodescribedafundcomprisedofseveralcollateralizeddebtobligations?

A) SyntheticCDOB) Mortgage-BackedSecurityC) CDOD) CreditDefaultSwap

Correctanswer:A

Question481:Tompurchased100callsofstockXononeday,wheretheduedateoftheoptionis12.16.2018,thestrikepriceis120,andthelastpriceoftheoptionis2.00.IfonthatdaythepriceofXis115andon12.16thepricefirsttimearrivesabove120,whichis125.HowmuchprofitcanTomgainby12.16intheory?(Wedonottaketradingfeeintoconsideration.)A) 1000B) 300C) 500D) 12000

Correctanswer:B

Question482:Canyoucreateaportfoliothathaslowerriskthananyindividualcomponent?

A) Yes.Co-variancebetweenassetsallowsonetomitigateriskB) No.Asportfoliosareweightedsumsofassetswecannotlower

riskbeyondthelowestriskasset.asset.C) Yes.Aswecanswitchbetweenlongandshortpositionsonan

individualasset,wecanlowerriskwithanoptimalstrategyD) No.Riskcannotbeexpressedasanumberthereforethereisno

conceptoflowerrisk.

Correctanswer:A

Question483:Theefficientmarketshypothesisfailedin2008duetothepropagationmisinformationabouttheriskandvalueofmortgagesascollateralforCDO's.Whatmacroeconomicmetricincreasedhigh-riskmortgagelendingpriortothe2008financialcrisisandthereforedistortedthevalueofCDO'sbasedonmortgages?

A) UnemploymentRateB) InterestRateC) GrossDomesticProductD) EconomicGrowthRate

Correctanswer:B

Question484:Whichmarketwasbeingshortedin"TheBigShort"?

A) StudentLoansB) HealthcareC) HousingD) Manufacturing

Correctanswer:C

Question485:Considerhowyouwouldevaluateaassetfordifferenttimehorizons.Youmaybetryingtoevaluateshorthorizons,suchaspricemovementsinthecomingseconds,orlonghorizons,suchasyearsordecadesaway,oranyperiodinbetween.Whattimehorizonsaremostsuitablefortechnicalanalysisandfundamentalanalysis?

A) Shorthorizonsfortechnicalanalysis,shorthorizonsforfundamentalanalysis.

B) Shorthorizonsfortechnicalanalysis,longhorizonsforfundamentalanalysis.

C) Longhorizonsfortechnicalanalysis,shorthorizonsforfundamentalanalysis.

D) Longhorizonsfortechnicalanalysis,longhorizonsforfundamentalanalysis.

Correctanswer:B

Question486:Youareanrunningahedgefund.AccordingtotheFundamentalLawofPortfolioManagement,whichofthefollowinghavethegreatestpositiveimpactonyourportfolio?

A) Doublingthecorrelationofpredictedassetpricestoactualassetprices.

B) Doublingthenumberofpositionstakenintheportfolio.C) Decreasingcommissionsbycuttingthenumberoftradesinhalf.D) AandBarethesame.

Correctanswer:A

Question487:WhichversionoftheEfficientMarketHypothesissaysthatinsidertradingistheonlywaytomakemoney?

A) WeakB) Semi-StrongC) StrongD) Ultra-Strong

Correctanswer:B

Question488:WhyisDynapreferredoverbasicQ-Learning?

A) Dyna-Qcanhandlepositiverewards,whilebasicQ-Learningcannot

B) Dyna-QconvergesfasterthanQ-LearningC) BasicQ-learninghallucinatesextradata,ratherthanusingactual

dataD) Dyna-Qwasdesignedforfinancialsystems

Correctanswer:B

Question489:InGrinold'sFundamentalLawofActivePortfolioManagement,whichofthefollowingrepresentsaperfectlycorrectpredictorforthemanagersInformationCoefficientorIC.

A) 0B) 1C) 1.5D) -1

Correctanswer:B

Question490:Whatisthepurposeoftherandomactionrate(rar)andhowdoesitrelatetotheconceptofexplorationvsexploitation?

A) Randomactionrateistheprocessofrandomlyexploringknownstateswiththehighestrewards.

B) Randomactionrateistheprocessofrandomlypickingthebestknownactionsandasitdecaysitwilloptimizeworldexploration.

C) Randomactionrateistheprocessofrandomlyexploringactionsandasitdecaysitwillleadtotheexploitationofoptimalactions.

D) RandomactionrateisnotusefulforQ-Learningasitdoesnotprovidetheoptimalactions.

Correctanswer:C

Question491:WhichofthefollowingproblemwouldreinforcementlearningbeNOTsuitablefor?A) ControlamobilerobotB) OptimizeoperationsinfactoriesC) PlayboardgamesD) Controlaself-drivingcar

Correctanswer:D

Question492:WhichofthefollowingisNOTaninputtotheMeanVarianceOptimizationfunction?

A) ExpectedreturnB) VolatilityC) MomentumD) Covariance

Correctanswer:C

Question493:WhichoneofthesesourcesareincorrectinEMHinformationsources?

A) FundamentalB) Price/VolumeC) PublicD) Exogenous

Correctanswer:C

Question494:whichoneoffollowingistrueregardingDyna-QandQlearning

A) BecausebothDyna-QandQ-learningchooseoptimalpolicyusingQvaluetablewhichisupdateduponrealworldinteraction,thereforebothDyna-QandQlearningcouldbeconsideredasmodel-freereinforcementlearning

B) thehigherlearningrateusedinDyna-QandQ-learning,theslowerconvergencyoftheoptimalpolicy

C) bothDyna-QandQ-learningrequireexplorationtodiscoveroptimalpolicy,differenceisthatDyna-Qusesimulationontransactionandrewardmodeltotakerandomaction,whileQ-learningneedstodorandomactionintherealworld

D) Q-learningrequiretomaintainandupdatemodeloftransactionfunctionandrewardfunction

Correctanswer:C

Question495:Whencomparingtwoportfoliosthatlieontheefficientfrontier:

A) Theportfoliowiththelowestreturnissuboptimalcomparedtotheportfoliowiththehighestreturn

B) TheportfoliowiththehighestreturnwillhavethehighestSharperatio

C) Theportfolioontheefficientfrontierwiththelowestreturnwillhavethelowestrisk

D) Eachportfoliooffersthelowestlevelofriskforanexpectedreturn

Correctanswer:D

Question496:WhatisthestrongformofEMH?

A) PricesadjusttonewpublicinformationB) FuturepricescannotbepredictedbyjustanalyzinghistoricpricesC) PricesadjusttopublicandprivateinformationD) Noneoftheabove

Correctanswer:C

Question497:IfS=spotprice,E=exerciseprice,thenthevalueofaputoptionis

A) MAX(0,E-S)B) MAX(0,S-E)C) MIN(0,E-S)D) MIN(0,S-E)

Correctanswer:A

Question498:HowtherandomnessofactionsshouldbesetduringtheiterationsofQ-learningProcess?

A) IncreaseduringiterationwithaproperstartvalueB) DecreaseduringiterationwithaproperstartvalueC) StaythesamewithaproperstartvalueD) Norandomnessshouldbeapplied

Correctanswer:B

Question499:RegardingtheEffectiveMarketHypothesis,whichofthefollowingisnottrue

A) InformationcancomefromInsiderknowledgeB) Intheweakform,futurepricescannotbepredictedC) Inthestrongform,pricesreflectalldata,bothpublicandprivateD) Newinformationcomesrandomlyandpricesavailable

information

Correctanswer:B

Question500:Ifyoupredictthefuturestockpricewillmoveupanddowninasmallpricerange,whichoptionstrategyyouwillapply?

A) BuyCallB) BuyShortC) CoverCallD) ButterFly

Correctanswer:D

Question501:InQ-Learning,weuseMAXoperatortofindtheoptimalpolicy,whatifweuseMEANoperatorinsteadofMAXintheBellmanEquation.Whichoneofthefollowingdoyouthinkiscorrect?A) ThelearningprocesswillnotconvergeifnotusingMAXoperatorB) Itdependsontheproblem,itmightormightnotconverge.C) Itwillstillconvergetotheoptimalpolicy,withMEANoperatorthe

targetpolicywillbesaferasthisoperatoraveragesoutsomenoiseinthelearningprocess.

D) Itwillconvergetosomepolicy,notnecessarilythesameoptimalpolicyasweobtainusingMAXoperator.

Correctanswer:D

Question502:Frontrunningastock(highspeednetwork)operatesagainst(tryingtobeat)whichEfficientMarketHypothesis(EMH)?

A) TherearealargenumberofinvestorsoperatingintheMarketforProfit

B) NewinformationarrivesrandomlyC) PricesadjustquicklyD) Pricesreflectallavailableinformation

Correctanswer:C

Question503:WhichoneofthefollowingstatementisrightregardingtoCDO?

A) ACDOisatypeofasset-backedsecuritythatrepresentstheamountofinterestinapoolofmortgageloans.

B) ACDOcanbebackedbyanydebtcollateral,includingmortgages,bonds,privateloans.

C) ACDOgenerallyinvestsinCDSs.D) ACDOisafinancialswapagreementthatthesellerwill

compensatethebuyerintheeventofadebtdefault.

Correctanswer:B

Question504:Statement:AsperGrinold'sfundamentalLawPerformanceisdirectlyproportionaltobreadth

A) TheStatementisawaysTrueB) TheStatementisawaysFalseC) TheStatementissometimeTrueD) NoneoftheAbove

Correctanswer:B

Question505:WhichofthefollowingstatementisTRUEintermsofCAPMbeta?

A) Stockthathashigherbetaisbetterthanstockthathaslowerbeta.

B) Ifbetaofastockisgreaterthan1,itimpliesthestockhashighervolatilitythanthemarket.

C) Ifbetaofastockislessthan1,itimpliesthestockhashighervolatilitythanthemarket.

D) Ifbetaofastockisequalto1,itimpliesthestockhasthesamelevelofriskasthestockmarket.

Correctanswer:B

Question506:Whatistheassumptionbehindtechnicalanalysis?

A) Pastmarkettrendscanpredictthefuturebehaviorforthemarketasawholeandforindividualstocks.

B) Futuremarketbehaviourisindependentofpast.C) Futurestockstockpriceisrandomandfollowsnotrend.D) Bothmarkets&stockarerandom,anddifficulttomodelwithhigh

precision.

Correctanswer:A

Question507:Weseethatastockoptionwitha$50strikepriceispricedat$3.01,andthecurrentmarketpriceforthatstockis$60.whatistheactualpricewepayfortheoptionifwewishtobuyit?

A) $3.01B) $50C) $53.01D) $301

Correctanswer:D

Question508:Anefficientmarkethypothesisstatesinwhichallpublicorprivateinformationisreflectedincurrentmarketpricesisclassifiedas

A) marketefficiencyB) semistrongefficiencyC) weakformefficiencyD) strongformefficiency

Correctanswer:D

Question509:Peter,employeeofCompanyAtellsyoubeforehiscompany'searning'scallthatthecompanyisgoingtogiveoutabigdividend.InwhichformofEfficientMarketHypothesisbelowthatyoucanbenefitfromthispieceofinformation?

A) WeakB) Semi-StrongC) StrongD) BothAandB

Correctanswer:D

Question510:What'sthedefaultratethatwillmaketheCDOworthless?

A) 5%B) 6%C) 7%D) 8%

Correctanswer:D

Question511:WhatisanExperienceTupleinReinforcementLearning?A) Thestate,action,alteredstateandrewardfromeachstepusedto

buildpolicyB) ThevalueiterationusedtofindTandRthroughtheuseofevaluating

therewardC) TheinfinitehorizonmaximizingtheexperienceoverallrewardsD) Theactofcuttingdownthemightiesttreeintheforest...WITH...A

HERRING!

Correctanswer:A

Question512:AccordingtotheEMH,whichofthestatementisnotcorrect?

A) Thehighestlevelofmarketefficiencyisstrongformefficiency.B) Ifmarketsaresemi-strongformefficient,thenpassiveportfolio

managementstrategiesaremostlikelytoearnabnormalreturnsC) Anefficientmarketrequirespriceadjustmentsoccurquickly.D) Informationisthecentralissueoftheefficientmarket.

Correctanswer:B

Question513:Whichhasagreaterimpactontheriskadjustedreturn?

A) SkillonpredictingalphaB) HoldingmoreequitiesC) TurningoverassetsmorefrequentlyD) Allhaveequalimpact.

Correctanswer:A

Question514:Basedonthefundamentallaw,whichofthefollowingscanincreasetheinformationratiofrom1to2?

A) Doublethestrategy'sbreadth(BR).B) Doublethemanager'sinformationcoefficient(IC).C) DoubleBRandICsimultaneously.D) Noneofabove.

Correctanswer:B

Question515:Inthefollowingelements,whicharereliedinQLearning

A) TransitionMatrixB) RewardFunctionC) BothD) Noneofthem

Correctanswer:D

Question516:Therangeofalongcallposition'sdeltais

A) [0,1]B) [-1,1]C) [-1,0]D) [0,infinite]

Correctanswer:A

Question517:IfusingBorllingerbandasatechnicalindicator,whenisthegoodtimetobuythestockbasedonthevalueofthetechnicalindicator?

A) whenthevalue>1B) whenthevalue<1C) whenthevaluechangesfrom>1to<1D) whenthevaluechangesfrom-1

Correctanswer:D

Question518:Consideringthefollowingcode,whatisthefinaloutput:importnumpyasnpa=np.arange(6)b=ab.shape=3,2b=b.reshape(2,3)printa

A) [0,1,2,3,4,5]B) [[0,1],[2,3],[4,5]]C) [[0,1,2],[3,4,5]]D) [[0,1,2,3],[4,5]]

Correctanswer:B

Question519:TheEfficientMarketHypothesis(EMH)prohibitsdifferentkindsofanalysisbasedonwhetheritisweak,semi-strong,orstrong.SelecttheanswerthatmatchesthecorrectEMHtotheanalysisthatitprohibits.

A) Semi-strong:TechnicalAnalysis,InsiderAnalysisB) Semi-strong:TechnicalAnalysis,FundamentalAnalysisC) weak:FundamentalAnalysis,TechnicalAnalysis,InsiderAnalysisD) weak:FundamentalAnalysis

Correctanswer:B

Question520:WhichofthefollowingisnotanEMHassumption?

A) TherearealargenumberofinvestorsB) NewinformationarrivesdailyC) PricesadjustquicklyD) Pricesreflectallavailableinformation

Correctanswer:B

Question521:Whichoneisgoodtechnicalanalysisindicator?A) interestratesB) consumersentimentC) momentumofastock'spriceD) inflation

Correctanswer:C

Question522:WhataretheinputstotheMeanVarianceOptimizationalgorithm?

A) Dailyreturns,StandardDeviation,Correlation,ExpectedreturnB) Expectedreturn,SharpeRatio,Correlation,TargetreturnC) Expectedreturn,Weights,StandardDeviation,CumulativereturnD) Expectedreturn,StandardDeviation,Correlation,Targetreturn

Correctanswer:D

Question523:Whichofthefollowingarecharacteristicsoftechnicalanalysisasitrelatestostocktrading?

A) PriceandearningsB) VolumeandbookvalueC) PriceandvolumeD) Bookvalueandcashflow

Correctanswer:C

Question524:Whichisn’tagoodindicatorfortechnicalanalysis?

A) simplemovingaverageB) interestratesC) momentumD) BollingerBands

Correctanswer:B

Question525:Whichbestdistinguishesreinforcementlearningfromsupervisedlearning?

A) Predictingthemid-pointvaluebetweenthehighestaskandthehighestbid.

B) Creatingarule-basedpolicythattakespriceasinputanddecideswhethertobuy,sell,orhold.

C) Usingpositivenetprofitasarewardsignalwhentradingprofitably.

D) BothBandC

Correctanswer:D

Question526:WalmartannouncesthatitisgoingtojoinhandswithGoogletobeatAmazoninthespaceofVoiceenabledShopping.WhichtypeofEMHallowsanyinvestorinWalmart(insideroroutsider)totakeadvantageofthis?

A) WeakEMHonlyB) WeakandSemi-strongEMHC) Semi-strongEMHonlyD) Semi-strongandStrongEMH

Correctanswer:A

Question527:WhichofthefollowingstatementisfalseregardingEfficientMarketsHypothesis(EMH)?

A) Itshouldbeimpossibletooutperformtheoverallmarketthroughexpertstockselection

B) StockscanbenevertradedattheirfairvalueC) Theonlywayforinvestorcanpossiblyobtainhigherreturnsisby

chanceorbypurchasingriskierinvestmentD) Stocksarealwaystradedattheirfairvalue

Correctanswer:B

Question528:AlowerlearningrateenablestheQ-LearningalgorithmtolearnmorequicklybystronglypreservingthepreviousvalueofQ[s,a]overtheimprovedestimate.

A) TrueB) False

Correctanswer:B

Question529:Q-Learningisamodelfreeapproachandcanbeappliedtodomainswhereallstatesand/ortransitionsarenotfullydefined.

A) TrueB) False

Correctanswer:A

Question530:SECregulationsmakeitillegaltouse“insiderinformation”toearnprofits.TheSECmustbelievethatthemarketis:

A) strongformefficient,butnotsemi-strongformefficient.B) semi-strongformefficient,butnotstrongformefficient.C) strongformefficient.D) semi-strongformefficient,butnotweakformefficient.

Correctanswer:B

Question531:InTheBigShort,thebanksbundledhighriskmortgagestogetherintoCDOsandtheratingsagenciesgavethesewhatrating?A) 100B) AAAC) A+D) Verygood

Correctanswer:B

Question532:Atthebeginningofthecrisisbreakout,howcanthevalueofmortgagesubprimebondsnotbeaffectedbythedemiseofthehousingmortgagesubprimeloanswhicharetheverythingthesebondsinsure?

A) TheyareindependentmarketsandarenotalwayscorrelatedsincethosemortgagebondsespeciallymodernonesmadeoflayersoftranchesandthederivativessuchasCDOsareverycomplicatedproducts.

B) Themainstreaminvestmentbanksareselling/unloadingbondstounsuspectingcustomers,andtheywillnotde-valuethemuntiltheygetthemofftheirbooks,whichareinfactcriminalactivities.

Correctanswer:BQuestion533:Whichofthefollowingstatementsisfalse?

A) Q-Learningisonlyguaranteedtoconvergewhensupplemented

bymethodslikeDynaduetotheincreasedcomputationandfurtherexploration.

B) Q-Learningismodelfreeanddoesnotrequireknowledgeabouttherewardsfunctionorstatetransitionmatrix.

C) UsingDynacancauseQ-Learningtotakemorecomputationaltimetoconvergeifhallucinatingisnotsignificantlycheaperthaninteractions.

D) Randomnessinactionscanbeusedtoforceanagenttoexploretheenvironment

Correctanswer:A

Question534:Whichcombinationofinformationratioandbreadthproducesthehighestexcessreturn?

A) IR=1000,B=1000B) IR=100,B=10,000C) IR=10,000,B=100D) IR=5,000,B=5,000

Correctanswer:D

Question535:Usingtheefficientfrontier,whatwouldbetheoptimalportfolioforafundinglookingforthelowestriskpossible?

A) 100%stocksB) 100%bondsC) AmixofstocksandbondsD) 100%outofthemoneyoptions

Correctanswer:C

Question536:WhatisNOTatechnicalanalysischaracteristic?

A) EarningsB) PriceC) VolumeD) BothBandC

Correctanswer:A

Question537:WhatisNOTatechnicalanalysischaracteristic?

A) EarningsB) PriceC) VolumeD) BothBandC

Correctanswer:A

Question538:AssumingyouareabrokerandyoupredictthatAPPLstockwillgosidewaysinthefuture.ThecurrentAPPLstockpriceis$201.Youdecidetouse“butterfly”combinationoptionstomakeprofitfromthemarket.Youbuytwocallingoptions.Oneoption’sstrikepriceis$195andtheoption’spriceis$9.Theotheroption’sstrikepriceis$210andtheoption’spriceis$1.Meanwhile,youwritetwocallingoptionswhosestrikepriceis$200andpriceofthewrittenoptionsis$4.Whatarethemaximumprofitandmaximumlossofthesetradingstrategies?

A) $300,$200.B) $3,$2.C) $200,$300.D) $300,$300.

Correctanswer:AQuestion539:IfwehavetomaptradingproblemtoReinforcementlearning,SharpeRatioiswhatkindofafactor?

A) ItisastateweneedtoconsiderbeforewemakeatradeB) ItisanactionthatwegivetothemarkettocauseatradetooccurC) ItapotentialrewardtoinformouralgorithmhowtotradeD) BothA)andB)

Correctanswer:D

Question540:Considerasystemwith2statesand2actions.Youperformactionsandobserverewardsandtransitionsas:inS1,takea1,receiveR=-10,andlandinS1;inS1,takea2,receiveR=-10,andlandinS2;inS2,takea1,receiveR=+20,andlandinS1.UseQ-learningwithlearningrate0.5anddiscountfactor0.5foreachstep,whatisQ(S2,a1)?AssumeallentriesoftheQ-tableareinitializedtozero.

A) 10B) 8.75C) 0D) 5

Correctanswer:B

Question541:-Considertwotradingfirms,tradingfirmAandtradingfirmB,thathavecomparableperformancewhentrading.WhichtwofactorsdoestradingfirmAneedtohaveovertradingfirmBtohavetwicetheperformance?1.Twicethebreadthoftradesandthesameskill2.Thesamebreadthoftradesandtwicetheskill3.Twicethebreadthoftradesandtwicetheskill4.FourtimesthebreadthoftradesandthesameskillA) I,II,IIIB) II,IVC) ID) I,IV

Correctanswer:B

Question542:WhichofthefollowingistrueaboutReinforcementLearning

A) ItisasupervisedlearningtechniqueB) It'sgoalistominimizesomepredefinedrewardC) Withregardtotrading,DailyReturnsisagoodexampleofa

reward.D) Withregardtotrading,currentposition(long/short)inastockisa

goodexampleofareward.

Correctanswer:C

Question543:AccordingtoGrinold’sFundamentalLaw,theinformationratioiscomputedasaperformancemetricthatmeasures:

A) aportfoliomanager'stradingopportunitiesB) aportfoliomanager'squantitativeskillC) aportfolio'sreturnsthatexceedmarketperformanceD) aportfolio'scorrelationofforecaststoreturns

Correctanswer:C

Question544:HowdoestheweakformoftheEfficientMarketHypothesis(EMH)differfromthestrongformoftheEMH?

A) Inweakform,bothhistoricalandpublicinformationcannotpredictfutureprices;instrongform,onlyprivateinformationcangiveafinancialadvantage.

B) Inweakform,onlyhistoricalinformationcannotpredictfutureprices;instrongform,noinformation(historical,public,orprivate)cangiveafinancialadvantage.

C) Inweakform,allinformation(historical,public,orprivate)canpredictfutureprices;instrongform,onlyhistoricalinformationcangiveafinancialadvantage.

D) Inweakform,noinformation(historical,public,orprivate)canpredictfutureprices;instrongformallinformation(historical,public,orprivate)cangiveafinancialadvantage.

Correctanswer:B

Question545:AccordingtoPortfolioOptimization,whichofthefollowingisanacceptableportfolioweightingtoreduceriskgiventhreestocks,ABC,PQR,XYZ,andthefollowingfacts:1.ABC,PQR,XYZeachhasareturnof12%2.ABCandXYZhaveacorrelationof-0.93.PQRandXYZhaveacorrelationof0.94.Theexpectedportfolioreturnis12%

A) ABC:33.3%;PQR:33.3%;XYZ:33.3%B) ABC:25%;PQR:25%;XYZ:50%C) ABC:25%;PQR:50%;XYZ:25%D) ABC:50%;PQR:25%;XYZ:25%

Correctanswer:D

Question546:Giventhefollowinginformationaboutidenticallyperformingportfolios:1.PortfolioAperformsnotradeswithinthetimeframe2.PortfolioBperforms2tradeswithinthetimeframe3.PortfolioCperforms100tradeswithinthetimeframeWhichportfoliomanagerhasthegreatestskillaccordingtoGrinold’sFundamentalLawofActivePortfolioManagement?

A) AB) BC) CD) Alloftheabove

Correctanswer:A

Question547:Assuminga$0commission,atwhatpricewillthestockneedtobeexercisedandsoldatforthebuyerofthecalloptionof100sharestobreakeven.Thestrikepriceisat$123andtheoptionpriceis$2.00ashare.

A) 125B) 121C) 143D) 127

Correctanswer:A

Question548:WhichofthefollowingstatementsisCORRECTaboutmodel-freereinforcementlearningapproacheslikeQ-learning?

A) Theyrequireallstatesandtransitionstobefullydefined.B) TheyDONOTrequireallstatesandtransitionstobefullydefined.C) Theyrequireadditionaldatastructurestostoretransitionsand

rewards.D) TheyDONOTtakeintoaccountfuturerewards.

Correctanswer:B

Question549:Acollateralizeddebtobligation(CDO)aresecuritiesthatmaybecomposedofadiversesetofassets.Specifically,inTheBigShort,CDOsthatcausedthefinancialcrisiswerecomposedofwhatasset?

A) longtermcarloansB) riskycorporatebondsC) lowratedmortgage-backedsecuritiesD) highinterestcreditcarloans

Correctanswer:C

Question550:WhatmarketdoesMichaelBurrycreatethatallowshimtobetagainstmarket-basedmortgagebackedsecurities?

A) MortgageMarketB) ForeclosureMarketC) CreditDefaultSwapMarketD) CreditCardDebtMarket

Correctanswer:C

Question551:WhichofthefollowingisFALSEaboutReinforcementLearning(RL)?A) RLaimstofindthebestpolicytomaximizeyourreward.B) HoldingLONGorHoldingSHORTareconsideredas“Actions”.C) DailyReturncanbeconsideredeitherasa“Reward”orasa“State”.D) RLdescribesaproblem,notasolution.

Correctanswer:B

Question552:Aninvestor’ssummarymeasureofskillismeasuredby:

A) SQRT(alpha)*STDEV(alpha)B) MEAN(alpha)/STDEV(alpha)C) MEAN(alpha)/(1-STDEV(alpha))D) STDEV(alpha)*SQRT(alpha)

Correctanswer:B

Question553:Considertwoscenariosincoinflipcasinoexperiment:1)1000dollarsonsinglebet.2)10dollarseachon100bets.Scenario1has________return,_______standarddeviation,________sharperatiowhencomparedtoScenario2

A) lower,equal,lowerB) equal,higher,lowerC) higher,equal,higherD) equal,lower,lower

Correctanswer:B

Question554:Whatisthetermforthecorrelationbetweenafundmanager'sforecastedreturnandthefund'sactualreturn?

A) InformationRatioB) InformationCoefficientC) BreadthD) SharpeRatio

Correctanswer:B

Question555:InwhatscenariocanReinforcementlearningNOTbeapplied?

A) learningtocontrolamobilerobotB) learningtoplayboardgamesC) learningtooptimizeoperationsinfactoriesD) learningtoflyanairplane

Correctanswer:D

Question556:GiventheEfficientFrontierofaportfolio,howcanyoufindtheallocationforthemaximumSharpeRatioportfolio?

A) Drawatangentlinefromthemaximumreturnvalueonthecurvetotheyaxis

B) ChoosethepointonthecurvewithlowestriskC) DrawatangentlinefromtheorigintotheefficientfrontierD) Notenoughinformation

Correctanswer:C

Question557:WhichofthefollowingisnotaformoftheEfficientMarketHypothesis?

A) WeakB) Semi-WeakC) StrongD) Semi-Strong

Correctanswer:B

Question558:InvestorAandInvestorBhavethesamelevelofskillwithregardstoinvestinginthemarket.AccordingtoGrinold'sFundamentalLaw,whatisthebestwayforInvestorAtoimprovehis/herperformanceoverthatofInvestorB?

A) Increasetheamountoftimespentresearchingthemarketbeforemakingtrades

B) IncreasethetotalamountofmoneyinvestedintheirportfolioC) IncreasethetotalnumberofpositionsintheirportfolioD) OnlyinvestintheS&P500

Correctanswer:C

Question559:WhichformoftheEfficientMarketsHypothesisimpliesthatsomeformoffundamentalanalysiswillbeabletoreliablyproduceexcessreturns?

A) WeakB) Semi-strongC) StrongD) Both(B)and(C)

Correctanswer:A

Question560:ThekeyinstrumentoftheshortsellinginTheBigShortwascollaterizeddebtobligations.BurryrealizedthatthehousingmarketwasovervaluedbecauseCDOswererated_____despitebeingcomprisedof__________.

A) Triple-A,onlylowriskCDOsB) Triple-A,lowestratedtiersofmortgage-backedsecuritiesC) Double-S,lowestratedtiersofmortgage-backedsecuritiesD) Double-S,onlylowriskCDOs

Correctanswer:B

Question561:______isthatriskundertakenbyexposuretoanyassetintheassetclass.A) SpecificriskB) SystematicriskC) BusinessriskD) Nocorrectanswer

Correctanswer:B

Question562:Whatratioisthebasisforrefutingthesemi-strongEMH?

A) (Earnings/Price)RatioB) (Price/SMA)RatioC) (SMA/Price)RatioD) (Price/Earnings)Ratio

Correctanswer:D

Question563:Whichofthefollowingstatementsviolatethesemi-strongformoftheefficientmarkethypothesis?

A) ACEOofacompanybuysalargenumberofstocksofthecompanyjustbeforeanearningscallofthatcompanyandendsupwithalargeprofit.

B) Janecarefullychoosesaportfolioofstocksandholdstheportfolioforayear.JohnbuysS&P500ETFandholdsitforayear.Atyearend,JanemakesmoreprofitthanJohn.

C) Atradingfirmfiguresoutthatthedailyreturnsofastockmultipliedbytherelativestrengthindexofthatstockgivesanindicationofpricemovementofthatstockwithhighprobability.

D) AhedgefundmanagertalkstoacompanycalledLeaking��I�n�f�o�r�m�a�t�i�o�n�s��I�n�c�.��s��e�x�e�c�u�t�i�v�e��a�t��a��b�a�r�,��a�n�d��l�e�a�r�n�s��t�h�a�t��t�h�e��c�o�m�p�a�n�y��i�s��a�b�o�u�t��t�o��m�a�k�e��a��p�u�b�l�i�c��a�n�n�o�u�n�c�e�m�e�n�t��i�n��t�w�o��d�a�y�s��a�b�o�u�t��a��h�i�g�h�l�y��c�l�a�s�s�i�f�i�e�d��r�e�s�e�a�r�c�h��p�r�o�j�e�c�t��t

Correctanswer:C

Question564:Whichoftheseisthedifferencebetweenmodel-basedandmodel-freereinforcementlearningalgorithms?

A) Model-basedRLisfaster.B) Model-freeRLismoreaccurate.C) Model-basedRLalgorithmstryandestimatethedynamicsmodel

T.D) Model-freealgorithmsonlyworkwithdiscountedrewards.

Correctanswer:C

Question565:Howshouldyoutradeastockwhenitsmovingaveragereachestheupperbollingerband?

A) SellB) BuyC) HoldD) Long

Correctanswer:A

Question566:Reinforcementalgorithmssolvewhichofthefollowingproblem

A) LinearRegressionB) MarkovDecisionProblemC) SupervisedRegressionD) KNN

Correctanswer:B

Question567:WhichoftheassumptionsaretrueforEfficientMarketHypothesis(EMH)?I.Therearelargenumberofinvestors,andnewinformationarrivesrandomly.II.Investorsusuallyreactquicklytonewinformation.III.Accountinginformationaccuratelyportrayacompany'seconomicsituation.IV.Eventsoccurrandomlytoaffectthemarket.

A) I,II,III,IVB) I,II,IIIonlyC) I,II,IVonlyD) I,III,IVonly

Correctanswer:D

Question568:TypeIandTypeIIdifferences1.Type1-FalsePositive2.Type2-FalseNegative3.Type1-FalseNegative4.Type2-FalsePositve

A) 1&2arecorrectB) 1&4arecorrectC) 2&3arecorrectD) 3&4arecorrect

Correctanswer:A

Question569:IstherealimitonthenumberofiterationsoverQlearningtrainingdatawhereperformancestopsimproving?

A) No,continuingtotrainwillyieldbetterperformanceB) Yes,thereisaconvergencepointatwhichperformancewillno

longerimproveC) Yes,thelimitisdeterminedbymachineperformanceD) Notenoughinformationprovidedtodeterminethelimit

Correctanswer:B

Question570:WhichofthefollowingisNOTtrueaboutMBS's(mortgagebackedsecurities)?

A) MBS'sarecommonlyusedtoredirecttheinterestandprincipalpaymentsofmortgagestoshareholders.

B) TheMBSistradedOTC(overthecounter)asinsuranceagainstnon-paymentofdebt.

C) MBS'sconsistofmultiplepoolsofsecurities,knownastranches.D) EachpartoftheMBShasadifferentcreditrating,dependenton

theriskofrepayment.

Correctanswer:B

Question571:Whichofthese3,areessentialcomponentsareinforcementlearningalgorithmrequirestofunction?A) Rewardfunction,action,deeplearningB) Rewardfunction,states,regressionC) Rewardfunction,agent,actionD) States,agent,naturallanguageprocessing

Correctanswer:C

Question572:IfyouweregivenachartwiththepriceofastockandthenaskedtoaddBollingerBands,thecorrectresponsewouldbeto:

A) plotlinestwostandarddeviationsaboveandbelowthesimplemovingaverage

B) plotthesimplemovingaverageforthelast3days,andthesimplemovingaverageforthelast30days

C) plotlinestwostandarddeviationsaboveandbelowthestock'smomentum

D) plotahorizontallinetwostandarddeviationsabovetheaveragepriceforthedurationdisplayedinthechart,andanotherlinetwostandarddeviationsbelow

Correctanswer:A

Question573:Themaincauseof2007housingcrashwasthatbankswereselling____CDO'sconsistingof____subprimeloans

A) large,unstableB) large,expensiveC) unstable,largeD) unstable,expensive

Correctanswer:A

Question574:Accordingtothefundamentallawofactiveportfoliomanagement,whichofthefollowinggeneratesahigherSharperatio:

A) LoweralphaB) HigheralphaC) ConstantalphaD) Swimingnaked

Correctanswer:B

Question575:Ifwecombineseveraltechnicalindicatorstoconstructastrongerpredictivemodel,____________________.

A) ourtradinghorizontendstolongandthemoreindicatorsthelongerthetradinghorizon

B) wewillonlygetaworsepredictivesystem,asdifferentindicatorscangiveoppositetradingsignals

C) thismodelshouldgeneratesbettertradingsignalsthanamodelofonlyonetechnicalindicator

D) ithastobetheweakformoftheEfficientMarketHypothesisforourmodeltowork

Correctanswer:C

Question576:ConsideringtwodifferentstocksAandB.StockAhasaBetaof1.0whileStockBhasaBetaof10.0.BothStocksAandBreturnanAlphaof1%.Basedonpurelytechnicalanalysis,arethetwoequallyattractive?IsoneStockmoreattractivethantheother?

A) Aismoreattractive.B) Bismoreattractive.C) BothareequallyattractiveD) Neitherisattractive.

Correctanswer:A

Question577:WhatistheformulaforInformationRatiointermsofα(alpha)and/orβ(beta)?

A) stdev(α(t))/mean(β(t))B) mean(α(t))/stdev(β(t))C) stdev(α(t))/mean(α(t))D) mean(α(t))/stdev(α(t))

Correctanswer:D

Question578:Whataredecisionvariablesinanportfoliooptimizationproblem?

A) historicalpricedataoftheassetsB) portfoliomin/maxconditionsforeachassetC) totalreturnsandriskD) portionofportfoliodevotedtoeachasset

Correctanswer:D

Question579:Whatisthegoalofportfoliooptimization?

A) todesignthecombinationofassetswithgoalofonlyreducingvolatility

B) todesignthecombinationofassetsthatproducesthelowestriskforaspecifiedtargetreturn

C) todesignthecombinationofassetsthatproducesthelowestriskirrespectiveofreturn

D) todesignthecombinationofassetsthatmaximizesreturns

Correctanswer:B

Question580:Whilerunningatradingcompany,youareconsideringchangingyouroperationstoimprovetheInformationRatio(IR)foryourtrades.WhichoperationschangebelowisthebestoptiontooptimizeIR?

A) Make1/16thasmanytrades,buttrade5timesasskillfully.B) Make16timesasmanytrades,buttrade1/5thasskillfully.C) Make10000timesasmanytrades,buttrade1/1000thas

skillfully.D) Nochange:Makethesamenumberoftradesatthesameskill

level.

Correctanswer:A

Question581:Generally,aportfolioconsistingof2stockswillhavethelowestvolatilityifthecovariancebetweenthe2stocksis:A) PositiveB) ZeroC) NegativeD) Undefined

Correctanswer:C

Question582:Ifthesemi-strongformoftheefficientmarkethypothesisholdstrue,whichofthefollowingscenariosarenotalreadyreflectedinthecurrentstockpriceofXYZCorporation?

A) In2015,anauditofXYZCorporation’saccountingpracticesrevealedfraudulentandintentionallydeceptiveactivity.

B) Onesecondprior,multipleratingsagenciesreversedtheirpreviousdowngradeofXYZCorporation.

C) SusanreviewedinternallabanalysisofXYZCorporation’ssteel,andrealizedthatthreemonthsofproductsaredefective.

D) Noneoftheabove.

Correctanswer:C

Question583:Whichofthefollowingstatementistrueaboutreinforcementlearning.

A) DailyReturnisapotentialrewardthatwewouldusetoinformouralgorithmforlearninghowtotrade.

B) DailyReturnisadescriptionofourstatethatweoughttoconsiderbeforewemakeatrade.

C) HoldingLongisadescriptionofourstatethatweoughttoconsiderbeforewemakeatrade.

D) BothAandB

Correctanswer:D

Question584:Choosethecorrectoptionfrombelow,thatissortedcorrectlyfrommostpublicinformationtoleastpublicinformation.

A) Price/volume,Exogenous,Companyinsiders,FundamentalB) Price/volume,Fundamental,Exogenous,CompanyinsidersC) Exogenous,Price/volume,Companyinsiders,FundamentalD) Companyinsiders,Exogenous,Price/volume,Fundamental

Correctanswer:B

Question585:WhichofthefollowingtermsisNOTaconceptofMarkovdecisionprocess:

A) stateB) rewardC) behaviorD) action

Correctanswer:C

Question586:WhichofthefollowingdidNOThappeninthemovie"TheBigShort"?

A) MarkBauminterruptedalivepresentationintheAmericanSecuritizationForuminLasVegas.

B) MichaelBurrysentane-mailtorestrictinvestors'withdrawalsfromScionCapital.

C) MarkBaumwasconvincedtoinvestintoCDOsafterhispleasantmeetingwiththeCDOmanager.

D) BrownfieldFundcollaboratedwithBenRickerttoshortAAtranches.

Correctanswer:C

Question587:Grinold'sFundamentalLawofactiveportfoliomanagementattemptstodrawametricforafundmanager'sperformancebasedontheskillofthefundmanagerandnumberoftradingopportunities.Accordingtothefundamentallaw,whichofthefollowingtermsisbestusedtodescribetheperformancemetricofafundmanager?

A) InformationCoefficientB) InformationRatioC) SharpeRatioD) BuffettIndex

Correctanswer:B

Question588:Whichhasthegreatesteffectontheinformationratio?

A) DoublinginformationcoefficientB) DoublingbreadthC) HalvinginformationcoefficientD) AandC

Correctanswer:D

Question589:Reinforcementlearningmethodsarecloselyrelatedtowhatothertypeofprogramming?

A) StaticProgrammingB) DynamicProgrammingC) ThermodynamicProgrammingD) FluidProgramming

Correctanswer:C

Question590:Whichoneofthefollowingisnotcorrectregardingawritecalloption?

A) Themaxprofitisthepremium.B) Themaxlossisnotbounded.C) Youwillbreakevenifthespotpriceatexpirationisthestrike

price.D) Itispossibletomakeaprofitifthespotpriceatexpirationis

abovethestrikeprice.

Correctanswer:C

Question591:Ifatraderincreaseshisnumberoftradesfrom100to400,howmuchwillhisInformationRatioincreaseby?A) 1timeB) 2timesC) 4timesD) 8times

Correctanswer:B

Question592:WhichofthefollowingisNOTtrueabouttheEfficientMarketHypothesis?

A) Iftheweakformiscorrect,technicalanalysisandfundamentalanalysiscannotsuccessfullypredictfutureprices.

B) Ifthesemi-strongformiscorrect,technicalanalysisandfundamentalanalysiscannotsuccessfullypredictfutureprices.

C) Ifthestrongformiscorrect,technicalanalysisandfundamentalanalysiscannotsuccessfullypredictfutureprices.

D) Hedgefundfeesmayincentivizebettermarketefficiency.

Correctanswer:A

Question593:Listout1-2outcomeofmarriedput？

A) ifstockgoesup,welosethepossibleprofitfrompremiumB) ifstockgoesdown,thelossduringthedownturnwillbecappedC) ifstockgoesup,thelossduringthedownturnwillbecappedD) ifstockgoesdown,welosethepossibleprofitfrompremiumwe

paid

Correctanswer:A

Question594:WhichoneisNOTaninformationgainapproachtodeterminethebestfeatureinbuildingdecisiontree?

A) EntropyB) SharpeRatioC) CorrelationD) GiniIndex

Correctanswer:B

Question595:Hereisahistoryofthe2mostrecentinteractionsbetweentheenvironmentandanagent.Supposethatpriortoseeinganyhistory,theagenthadarbitrarilyassumedabaselineprobabilityof1/2fortransitioningtostateS’=3fromstateS=5,andaprobabilityof1/2fortransitioningtostateS’=7fromstateS=4.Whatwouldbetheupdated(correct)probabilityfortransitioningtostateS’=7fromstateS=4afterthisnewinformationshownbelowistakenintoaccount?Assumeadiscountfactorof1....Environment:Agentisinstate5.Thereare2possibleactions.Agent:Takesaction2Environment:Agentreceivedareinforcementof+20units.Agentisnowinstate4.Thereis1possibleaction.Agent:Takesaction1Environment:Agentreceivedareinforcementof+100units.Agentisnowinstate7.

A) 1/5B) 1/7C) 1D) 1/2

Correctanswer:C

Question596:Whichofthefollowingstatementsis"False"iftheStrongversionoftheEfficientMarketHypothesisistrue:

A) Itisimpossibletomakemoneybyholdingaportfoliootherthanthemarketportfolio.

B) Pricesreflectallinformationpublicandprivate.C) Investorscanholdaportfolioofstocksthatperformsbetterthan

themarketportfolio.D) Eveninsiderinformationcan’tbeleveragedtoprofitinthe

market.

Correctanswer:C

Question597:TechnicalAnalysislooksatwhichfactors

A) HistoricalPriceandvolumeB) DividendsandearningsC) BookvalueandcashflowD) airspeedvelocityofanunladenswallo

Correctanswer:A

Question598:AssumeBuffet'salgorithmis3timesassmartasSimon'salgorithm,andSimontrades4timesasfrequentlyasBuffetdoes.WhichofthefollowingsentencesiscorrectbasedontheFundamentalLaw?

A) Buffet'sinformationratioisthreequartersofSimon'sB) Simon'sinformationratiois1.5timesofBuffet'sC) IfSimontrades8timesasfrequentlyasBuffetdoes,Simon's

informationratiowillbecomelargerthanBuffet'sD) Buffet'sinformationratiois1.5timesofSimon's

Correctanswer:D

Question599:PleaseselectthestatementthatisNOTTRUEabouttheEfficientMarketsHypothesis.

A) Thereare3formsoftheEMH(discussedinclass):Weak,Semi-Strong,Strong

B) Semi-StrongEMHstatesthatpricesreflectallinformationpublicandprivate

C) StrongEMHstatesthatpricesreflectallinformationpublicandprivate

D) WeakEMHstatesthatyoucannotlearnanynewinformationaboutfuturepricesfromTechnicalAnalysis

Correctanswer:B

Question600:In*TheBigShort*,whenDr.MichaelBurry(ChristianBale)realizesthemortgagebondmarketisfraudulent,whatactiondoeshetake?

A) Herestrictshisinvestors'abilitytowithdrawtheirfundsB) HeconvincesLehmanBrothersandotherbankstofollowhis

strategyC) HedissolvesthefundD) HealertstheSEC

Correctanswer:A

Question601:Thefollowingisthepriceforastock08-07142.0008-08142.0008-09141.0008-10140.0008-11140.5008-12140.5008-13141.0008-14143.0008-15145.0008-16141.00PleasecalculatetheSMAofthestockat08-12withalookbackwindowof4A) 140B) 140.05C) 141D) 141.05

Correctanswer:B

Question602:Usingthesemi-strongversionoftheEfficientMarketHypothesis,whichofthefollowingformsofanalysiscanbesuccessful?

A) FundamentalAnalysisB) TechnicalAnalysisC) AandBD) Noneoftheabove.

Correctanswer:D

Question603:WhichoftheseisareasonthatsupportstheStrongformoftheEfficientMarketHypothesis?

A) MoneymanagerscannotconsistentlyoutperformB) TradingontechnicalindicatorsisnotconsistentlyprofitableC) PricesreacttonewsslowlyD) Pricesdonotreacttonewinformation

Correctanswer:A

Question604:Whichofthefollowingshouldnotbeconsideredaspartofthestatedescriptionwhenmappingtradingdecisionstoareinforcementlearningproblem?

A) SharesHeldB) BollingerValueC) SimpleMovingAverageD) ReturnfromTrade

Correctanswer:D

Question605:YouandDr.Balcharebothstocktraders.Hehas100timeshigherinformationratiothanyouandmakes10,000timesasmanytradesasyou.Whichoneofyouhashigherskill(informationcoefficient)whenitcomestotradingstocks?

A) Dr.Balchhasmoreskill.B) Youhavemoreskill.C) Bothofyourskillsareequal.D) Can’tdeterminewithgiveninformation.

Correctanswer:C

Question606:IfweakformoftheEfficientMarketHypothesisistrue,whichofthebelowpersonmayprofitfromarbitrage?

A) AfundmanagerdoingtechnicalanalysisB) AninvestorwithfundamentalestimatesofintrinsicvalueC) Both

Correctanswer:B

Question607:WhichofthefollowingisnottrueaboutQ-learning?

A) TheQ-valueencodesthebestpossiblevalueofastateB) EitherastateoratransitionfunctionneedstobefullydefinedC) TheQ-valueencodesthebestpossiblepolicyintermsofthe

actionthatshouldbetakenD) Wedonotneedtostorearewardsdatastructure

Correctanswer:B

Question608:ThetacticthatMichaelBurryusedtofreezehisinvestors'moneyinhisfund?

A) Side-PocketingB) FreezeFundingC) StopTransactionD) Option4

Correctanswer:A

Question609:Doesthesemi-strongEHMhypothesisstatesthatthemarketportfolioisoptimal?

A) Yes-Asthepriceadjustquicklytoallpubliclyavailableinformation

B) Yes-Becauseinsiderinformationdon'tgivesanadvantageC) No-AsthepriceadjustquicklytoallpubliclyavailableinformationD) No-Becauseinsiderinformationdon'tgivesanadvantage

Correctanswer:A

Question610:WhichofthefollowingisfalseaboutInformationRatio(IR)

A) Itevaluatesrisk-adjustedrateofreturnoninvestmentportfoliosB) ItmeasurestherateofreturnofaportfolioagainstabenchmarkC) Itprovidesanindicationoftheconsistencyofaportfolio's

performanceD) Itisdirectlyproportionaltotheskillofportfoliomanager

Correctanswer:A

Question611:Fundamentalanalysisonlyconsidershistoricalprice,volume,whiletechnicalanalysisconsidersotherfactorslikeearnings,dividends,cashflow,andbookvalue.A) TrueB) False

Correctanswer:B

Question612:Dr.MichaelBurrydemonstratedthatthemortgage-backedsecuritiesmarketisnotefficient.WhichformoftheEMHdidheinvalidatebyusingfundamentalanalysistobeatthebanks?

A) TheweakformB) Thesemi-strongformC) ThestrongformD) BandC

Correctanswer:D

Question613:WhatistheprimaryadvantageofusingtheDynaarchitecture?

A) SimulatingexperiencesavoidsthediscretizationstepinQ-learning.

B) Simulatingexperiencesallowsustoefficientlyfindtheoptimaldiscountfactor.

C) Simulatingexperiencesislessexpensivethaninteractingwiththerealworld.

D) SimulatingexperienceschangesQ-learningfromamodel-basedapproachtoamodel-freeapproach.

Correctanswer:C

Question614:WhatisthethedefinitionoftheInformationRatiofortheportfolio,whichreturnispresentedasfollowing:r(t)=beta*r_m(t)+alpha(t),wherer_m(t)isamarketreturn.Forsimplicityassumethatthedailyreturnoftheportfolioisdaily_ret(t).

A) IR=mean(alpha(t))/std(alpha(t))B) IR=mean(daily_ret(t))/std(daily_ret(t))C) IR=alpha(t)D) IRisanumberoftradingopportunitiesperyear

Correctanswer:A

Question615:InthecontextofReinforcementlearningasappliedtotrading,whatpartoftheformalMarkovDecisionProblemcorrespondstotheMarket.

A) ThemarketisrepresentedbystateSB) ThemarketisrepresentedbyanactionAC) ThemarketrepresentstherewardfunctionR[s,a]D) ThemarketrepresentsthetransitionfunctionT[s,a,s']

Correctanswer:D

Question616:GivenatechstockandagoldETF,Iwouldexpectthecovariancebetweenthesetobe:

A) positiveB) negativeC) zeroD) efficient

Correctanswer:B

Question617:AssumeSimonandBuffetaretwohedgefundmanagers.Simon'sInformationPerformanceistwicebetterthanBuffet.BasedonGrinold'sFundamentalLaw,ChoosetheonlystatementthatisTRUEbelow:

A) SimonhasanalgorithmruntwicefasterthanBuffetB) SimonhastwiceamountofbreaththanBuffetC) SimonmayhavebetterskillbuttradedlessthanBuffetD) SimonmighttradelessandworseskillthanBuffet

Correctanswer:C

Question618:Forthetransitionfunction,TdefinedasT[s,a,s’]inaMarkovdecisionproblem,whichofthefollowingisnottrue?

A) s’isthestatewewillendupinifwetakeactionaonstatesB) thesumofallprobabilitieswithwhichwecouldendupin

differentstateswouldbeconstantC) sisthestatewewillendupinifwetakeactionaonstates’D) aisthesetofactionsthatcanbetaken

Correctanswer:C

Question619:WhichitemcouldNOTbedescriptionofapossiblestatewhenmappingtradingtothereinforcementlearningmodel?

A) BollingerbandvalueB) HoldingstocklongC) SellingD) ClosingPrice

Correctanswer:C

Question620:In*TheBigShort*,howdidDr.MichaelBurry(ChristianBale)handlethefactthatnofinancialinstrumentsexistedtoshortmortgagebonds?

A) HeignoredthehousingbubbleandwentbacktotradingstocksB) HishedgefundpurchasedrealestateC) Heconvincedbankstomaketheinstruments,thensellthemto

himD) HeinformedtheSECoftheimpendingcrisis

Correctanswer:C

Question621:Grinold'sFundamentalLawstates:A) Performance=Breadthx√SkillB) Performance=SkillxBreadthC) Performance=√(SkillxBreadth)D) Performance=Skillx√Breadth

Correctanswer:D

Question622:AsoftwaredeveloperworkingforahedgefundistaskedwithcreatingatooltopredictfuturestockpricesusingonlyhistoricalP/Eratiodata.Accordingtothesemi-strongformoftheEfficientMarketsHypothesis,thistoolhasagoodchanceofsuccessfullypredictingfuturestockprices.

A) TrueB) False

Correctanswer:B

Question623:InformationRatioisproportionalto___breadth

A) linearB) squarerootC) squaredD) notproportional

Correctanswer:B

Question624:WhichoneofthefollowingisNOTanaction,whenweviewtradingasanRLproblem?

A) BuyB) SellC) HoldinglongD) Hold

Correctanswer:C

Question625:Reinforcementlearningaddressesthequestionofhowanautonomousagentthatsensesandactsinitsenvironmentcanlearntochooseoptimalactionstoachieveitsgoals.

A) TrueB) False

Correctanswer:A

Question626:90%ofallofBerkshireHathaway'sstocksareinhowmanystocks?

A) 3B) 115C) 12D) 2310

Correctanswer:C

Question627:Whatformoftheefficientmarkethypothesisstatesthatitisimpossiblehousefundamentalanalysistochoosestocksthatwillbeatthemarket'sreturns?

A) weakB) semi-strongC) strongD) semi-weak

Correctanswer:B

Question628:InthemovieTheBigShortwhathappensattheendasareactiontothefinancialmeltdown?

A) Hundredsofbankersandratingsagenciesexecutiveswenttojail.B) TheSECwascompletelyoverhauled.C) TheCongressbrokeupbigbanksandthemortgageand

derivativesindustrieswereregulated.D) Onlyoneperson,KareemSerageldinfromCreditSuissewassent

tojail.

Correctanswer:D

Question629:Whichoffollowingisnotreinforcementalgorithm?

A) NeunralNetworkB) Q-learningC) DeepQNetworkD) Sarsa

Correctanswer:A

Question630:Co-varianceofstockST2w.r.tstockST1=0.95Co-varianceofstockST3w.r.tstockST1=-0.95Co-varianceofstockST4w.r.tstockST1=-0.5Portfoliooftwovolatilestockshavingequalweight,resultinginlowestvolatilitywithouthamperingreturnswouldbe

A) ST1andST2B) ST1andST3C) ST1andST4D) Noneoftheabove

Correctanswer:B

Question631:Giventwotradestrategieswiththesameexpectedreturn(reward),tradestrategyAinvolvesasingletradewithaSharpeRatioof0.15,whiletradestrategyBinvolves144tradesoveraone-yearperiod.WhatistheSharpeRatiooftradestrategyB?A) 55.8B) 1.8C) 0.06D) 2.87

Correctanswer:B

Question632:InJaredBennett's(RyanGosling)pitchoftheCreditDefaultSwaptoMarkBaum(SteveCarell)andtheFrontPointpartnersin*TheBigShort*,whatdidthefallingJengatowerrepresent?

A) TheworthlessnessoftheCapitalAssetsPricingModelB) ThecollapseofAmerica'sentirehousingmarketC) AsharpdecreaseinthepriceofCreditDefaultSwapsD) ThesmallsalariesofCDOmanagers

Correctanswer:B

Question633:Inonescene,RyanGoslingpullsblocksfromaJengatower.Whatconcepthe'stryingtoexplain?

A) Increasesininterestrateswilltriggerstockmarketcrisis.B) Theglobaleconomyisontheedgeofcollapse.C) Thetop-ratedsecuritiesatthetopendofthetowercannotstand

whenthelower-ratedsecuritiesfailandareremovedfromitsbase.

D) Theriskofbettingagainsthousingmarketisveryhigh.

Correctanswer:C

Question634:AssumingthattheInformationCoefficientisinverselyrelatedtoBreadth.ThenselectthechoicewhichwillhavethemaximumInformationRatio:

A) InformationCoefficient=4*BreadthB) Breadth=4*InformationCoefficientC) InformationCoefficient=BreadthD) InformationRatiohasnorelationwithInformationCoefficient

and/orBreadth

Correctanswer:A

Question635:AssumethestrongformoftheEfficientMarketHypothesisistrue.Ifinformationthatadrugcompany'smuch-hypedfutureproducthasfailedclinicaltrialsispubliclyannounced,whatwillhappentothestockpriceofthecompany?

A) ThepricewilldropasthepricereflectsthenewinformationB) ThepricewillriseasinvestorsdecidetoshortthestockC) ThepricewilldropasinvestorsdecidetoshortthestockD) Thepricewillstaythesameasthepricealreadyreflectedthat

information

Correctanswer:D

Question636:HowistheshortinTheBigShortdifferentfromhowwehaveappliedshortingintheclass?

A) Thetradingfirmsinthemoviehadmorecashandcouldleveragetheirshortedstockhigherthanindividualinvestors

B) TheshortdidnotinvolveborrowingandsellinganactualsecurityC) Thehedgefundswereabletoshortmorethan1000sharesata

timeD) Theshortwasbasedontechnicalindicatorsacrossmultiplebig

bankstocks

Correctanswer:B

Question637:Twofundmanagers,GordonGekkoandJordanBelfortwanttomanageyourretirementportfolio.BelfortboaststhathehasasystemthatwillgivehimalittleinformationabouteverystockintheRussell3000togetanimpressivereturnoverthemarket.Gekko,ontheotherhand,claimsheonlylooksattheDowJonesIndustrialAverage,with30stocks,tomatchBelfort.Howmuchmoreskill,i.e.informationcoefficientdoesGekkohavecomparedtoBelfort?

A) 1000timesB) SameC) 9timesD) 10times

Correctanswer:D

Question638:WhichofthefollowingisNOToneoftheassumptionsoftheEfficientMarketHypothesis(EMF)?

A) NewinformationarrivesrandomlyB) PricesadjustquicklyC) SmallnumberofinvestorsoperatinginthemarketforprofitD) Pricesreflectallavailableinformation

Correctanswer:C

Question639:WhichofthefollowingstatementsaboutBollingerBands(R)isFALSE?

A) ThebandsaredrawnaboveandbelowthesimplemovingaverageB) Thewidthofthebandsdoesnotdependonthestock'svolatilityC) BollingerBandscanbeusedwhenimplementingameanreversion

tradingstrategyD) Thewidthofthebandsisdeterminedusingstandarddeviation

Correctanswer:B

Question640:AccordingtoGrinold&Kahn’s"FundamentalLawofActiveManagement",Ifthefundmanagertriestoimprovetheperformanceofthefund,whatisthebetterchoicethathe/shecantake?

A) findmorealphasofstocksanddiversifytheportfoliotoincreasethetradingopportunities.

B) increaseitsleverageofthefundC) investmoremoneyonthesameportfolio

Correctanswer:A

Question641:In2007,WarrenBuffettfamouslymadeaonemilliondollarbetagainstahedgefundcompanythatanS&P500indexfundwouldoutperformacollectionoftheiractivelymanagedhedgefundsoverthefollowingdecade.Hewonthisbetin2017andindoingso,showedhowdifficultitcanbeforeventhemostexperiencedinvestorstooutperformmarkets.Whatideadoestheresultofthisbetseemtoledcredenceto?A) Gambler'sfallacyB) EfficientMarketsHypothesis(EMH)C) GameTheoryD) CapitalAssetPricingModel(CAPM)

Correctanswer:B

Question642:Whatisthemeaningofthediscountedrewardinthecontextofreinforcementlearning?

A) Thebelievedvalueofafuturerewardbutinpresenttime.B) Thefuturerewardsvaluewearesuretogainovertime.C) Theimmediaterewardminusaconstantvalue.D) Theimmediaterewardplusaconstantvalue.

Correctanswer:A

Question643:TheFundamentalLawconsistsofthefollowing:

A) PerformanceB) SkillC) BreadthD) Alloftheabove

Correctanswer:D

Question644:AccordingtotheFundamentalLaw,whichofthefollowingisNOTtrue:

A) TheinformationratioisthesharperatioofexcessreturnB) Twoequallyskilledhedgefundscanobtainthesameperformance

withdifferentbreadthsC) ItiseasiertoincreasethebreadthtogetahigherperformanceD) Itisdifficulttoincreasetheskilltogetahigherperformance

Correctanswer:B

Question645:Currently,BobandJanehaveequivalentperformancewhentradingstocks.Janeimprovesherperformancebyincreasingskill2-fold,andincreasingthebreadthofhertrading9-fold.BobwantstomatchJanebyalsoincreasinghisperformancetoequalJane'snewperformance.However,hewantstoonlyfocusonincreasinghisbreadth,notskill.BywhatfactordoesBobneedtoincreasethebreadthofhistradinginordertomatchJane'snewperformance?

A) 6B) 12C) 36D) 72

Correctanswer:C

Question646:Considerarobotmovingacrossagridtryingtooptimizeitstotaldiscountedrewardwhereeachtileinthegridiswortharewardof8.Iflambda=0.5,whatisthetotaldiscountedrewardforapathwheretherobotmovesinastraightlineacross4squares?

A) 12B) 15C) 16D) 32

Correctanswer:B

Question647:WhichtechnicalfactorsdoestheweakversionofEMHprohibit?

A) TechnicalB) FundamentalC) InsiderD) External

Correctanswer:A

Question648:AccordingtoGrinold'ssimplifiedFundamentalLawofActivePortfolioManagement,aninetimesincreaseinbreadth(numberoftrades)shouldresultinwhatchangeinperformance?

A) AthreetimesincreaseB) AthreetimesdecreaseC) ZeroChangeencounteredD) Aninetimeincrease

Correctanswer:A

Question649:Aaronisaskilledtrader;hemakes100tradesayearandgetsareturnof20%.Bobisrelativelynewtotradingandonlyhasabout1/20theskillAaronhas.AccordingtotheFundamentalLaw,howmanytradeswillBobhavetomaketoalsoachieveareturnof20%?

A) 20000B) 40000C) 400D) 2000

Correctanswer:B

Question650:Yourecentlygotastocktipfromyouruncleaboutahotnewstock,HOT.However,becauseofbadtipsthatyourunclehasgivenyouinthepast,youdecidetoinvestinoptionsinsteadofthebasicstock.AssumethatthestockpriceofHOTiscurrently$100andthatthesecontractshavenoexpirationdate.Whichofthefollowingcontractsshouldyoupurchasesothatyouwillnetexactly$100ifyouexercisetheoptionwhenHOTisexactly$110?

A) CALLcontractwithapremiumof$1.00andastrikepriceof$109B) CALLcontractwithapremiumof$1.00andastrikepriceof$108C) PUTcontractwithapremiumof$1.00andastrikepriceof$110D) PUTcontractwithapremiumof$1.00andastrikepriceof$109

Correctanswer:B

Question651:Whichcriterionisusedtoevaluateriskforagivenstock?A) simplemovingaverageB) standarddeviationofhistoricaldailyreturnsC) maximumdeviationfromthesimplemovingaverageD) meanofhistoricaldailyreturns

Correctanswer:B

Question652:WhichanswerLEASTconformstotheEMHassumptions?

A) AstockthatistradedbymanyinvestorsB) AstockthatistradedbyveryfewinvestorsC) Astockthatispartofamajorindex(e.g.S&P500)D) Astockthatistradedonnon-U.S.market(e.g.Nikkei)

Correctanswer:B

Question653:WeakversionofEfficientMarketHypothesissaysthattradingbasedoninsider-informationcan'tbeatthemarket/produceexcessreturns.

A) TrueB) False

Correctanswer:B

Question654:ConsidercompanyXYZandinvestorAWhichofthefollowingwouldbeconsidered'skill'bytheTheFundamentalLawinregardstotheinvestorinvestinginthiscompany?

A) CompanyXYZreportsgoodearningsB) CompanyXYZreleasesanewproductthattheyclaimwillbe

popularamongconsumersC) InvestorApredictsXYZwillhaveanaboveaveragereturnonthe

yearbasedoffananalysisofitsproductsandthecorrespondingmarketfortheseproducts

D) InvestorAspendstimeresearchingcompanyXYZ

Correctanswer:C

Question655:Whichofthefollowingactsasan"insurancepolicy"toinsurethebuyeragainstmortgagedefaults?

A) Mortgage-backedsecurityB) Collateralizeddebtobligation(CDO)C) Creditdefaultswap(CDS)D) Exchange-tradedfund(ETF)

Correctanswer:C

Question656:Selling1000sharesofJPMon01/04/2008isanexampleofwhatelementinreinforcementlearning.

A) AcurrentstatesB) Agoalstates'C) AnactionD) Areward

Correctanswer:C

Question657:WhensolvingMarkovDecisionProblems(MDP)withreinforcementlearning,allofthefollowingarekeycomponentsexcept:

A) Atransitionfunction:T[s,a,s']B) Arewardfunction:R[s,a,s']C) Apolicyfunctionπ(s)D) Arewardfunction:R[s,a]

Correctanswer:B

Question658:InthemovieTheBigShort,whydidnottheratingagenciesdowngradethesubprimebondssincetheunderlyingloansaredefaulting?

A) Theybelievedthereisnocorrelationbetweentheunderlyingloansandthesubprimebonds

B) TheirmodeltoldthemsoC) Theyrefusedtore-ratethesameproductinashortperiodoftimeD) Theywantthebanks'money

Correctanswer:D

Question659:WhichofthefollowingisnotaformoftheEfficientMarketHypothesis?

A) Semi-WeakB) WeakC) Semi-StrongD) Strong

Correctanswer:A

Question660:Optimalportfoliosthatcomprisetheefficientfrontieroffers

A) ThehighestexpectedreturnforadefinedlevelofriskB) Thelowestriskforagivenlevelofexpectedreturn.C) AandBD) Noneoftheabove.

Correctanswer:C

Question661:TheBigShortdescribedthistechniqueassomethingusedbybanksthatwouldallowthemto"bet"ontheoutcomeofanother"bet".Thiscausedsomewhatofaloopasmoreandmore"bets"wereplacedoneachsubsequent"bet"created.Whatwasthetermusedtodescribethisphenomena?A) Mortage-backedsecurity(MBS)B) Subprimemortgagebond(SMB)C) Syntheticcollateralizeddebtobligations(CDO-Squared)D) Creditdefaultswap(CDS)

Correctanswer:C

Question662:AccordingtoGrinold&Kahn’s“FundamentalLawofactiveportfoliomanagement",Ifthefundmanagertriestoimprovetheperformanceofthefund,whatisthebetterchoicethathe/shecantake?

A) findmorealphasofstocksanddiversifytheportfoliotoincreasethetradingopportunities.

B) increaseitsleverageofthefundC) investmoremoney

Correctanswer:A

Question663:Optimalportfoliosthatcomprisetheefficientfrontieroffers:

A) Thehighestexpectedreturnforadefinedlevelofrisk.B) Thelowestriskforagivenlevelofexpectedreturn.C) AandBD) Noneoftheabove.

Correctanswer:C

Question664:Ifyouweretodrawatangentlinefromtheorigintotheefficientfrontier,whatwouldyouexpecttofindattheintersection?

A) TheportfoliowiththehighestvolatilityforalltheassetsB) TheportfoliowiththelowestvolatilityforalltheassetsC) TheportfoliowiththehighestSharperatioforalltheassetsD) Theportfoliowiththehighestreturnforalltheassets

Correctanswer:C

Question665:HarryMarkowitzintroducedwhichofthefollowing:

A) Combiningassetsthatareanti-correlatedcanresultinamuchlowerriskportfolio.

B) theefficientmarketshypothesisC) riskismeasuredasstandarddeviationofdailyreturnsD) noneoftheabove

Correctanswer:A

Question666:Supposeyouhaveatradingreinforcementlearning(RL)agent.WhichofthefollowingcanbesetaseitherastateorarewardfortheRLprocess?

A) HoldingShortB) DailyReturnC) SellD) HoldingLong

Correctanswer:B

Question667:WhatisthecapitalrequirementsforanISDAtodohighstakestrade?

A) 14,070,000,000B) 110,000C) 30,000,000D) 15,100,000,000

Correctanswer:A

Question668:WithregardstotheFundamentalLaw,whatissummarizedintheInformationCoefficient?

A) BreadthB) BetaC) SkillD) Performance

Correctanswer:C

Question669:Whichofthefollowingstatementsistrue?

A) Optimalportfolioalwaysincludesallstockswithaveryhighpositivecorrelation.

B) Agoodstrategywhilebuildingaportfolioistolookforanticorrelationinlongtermandpositivecorrelationinshorttermbetweentheindividualstocksintheportfolio.

C) Toplottheefficientfrontierforaportfolio,theray(linesegmentfromtheorigintoaspecificpointonthefrontier)withthesteepestsloperepresentsthemaximumSharperatio.

D) Theoptimizedriskyportfoliocanbefoundintheefficientfrontierbygettingthepointofthemaximumreturnpointontheefficientfrontier.

Correctanswer:C

Question670:WithEfficientMarketsHypothesis(EMH),whichformsaysthatdoingfundamentalanalysisisacceptable?

A) WeakformB) Semi-WeakformC) Semi-StrongformD) Strongform

Correctanswer:A

Question671:WhataretheformsofinformationavailablethatlaythefoundationfortheEfficientMarketHypothesis?A) PastPricesB) PublicInformationC) AllInformationincludinginsideinformationD) Alloftheabove

Correctanswer:D

Question672:TheinformationratioIRissummarizedby:

A) SkillB) BreadthC) PerformanceD) Alloftheabove

Correctanswer:C

Question673:Yourfriendappearstobetwiceasskilledatpickingstocksthanyouare,buthecanonlyaffordtoinvestin1/15thofthestocksyouhave.However,beingunemployed,hehasthetimetotradethreetimesperdaywhileyouonlyhavetimetotradeonceperday.Who'sthebetterperforminginvestor,ifany?

A) YourfriendB) YouC) EqualmatchD) Notenoughinformation

Correctanswer:B

Question674:AssumethatyousomehowhavethesameICthanBuffet.Buffetisknownforhavingonly120tradingopportunitiesperyearbutyouwanttodoubleBuffet'sIR.Howmanytradingopportunitiesdoyouneedinordertoachieveyourgoal?

A) 480B) 240C) 120000000D) 480000000

Correctanswer:A

Question675:AccordingtoGrinold’sFundamentalLaw,ifaninvestorwantstoincreasetheirperformance,anincreaseofwhichmeasureimpactstheirperformancethemost?

A) AssetsunderManagementB) SkillC) CumulativeReturnoftheirPortfolioD) Breadth

Correctanswer:B

Question676:WhatisNOTareasontoprefertradingoptionsratherthanstocks?

A) Tradingoptionsrequiresyoutopredictthestockinonedirectioninatimelymanner.

B) Tradingoptionsallowsyouto"control"moremoneyusinglessmoney.

C) Youmayloselessmoneybytradingoptionsifthestockgoestotheoppositedirectionaspredicted.

D) Tradingstocksrequiresyoutomakeamorespecificbetinarelativelyshortamountoftime.

Correctanswer:A

Question677:SupposestocksA,Bhavethesamecumulativereturnbutnegativelycorrelateddailyreturns,andourcurrentportfoliohasbeenallocatedamongthesestockstominimizerisk.ComparedtostockA,theportfoliowillhave

A) higherreturn,lowerorsameriskB) samereturn,lowerorsameriskC) higherreturn,higherriskD) samereturn,higherrisk

Correctanswer:B

Question678:WhichofthefollowingaretrueforFundamentalLawofActiveManagement:A:InformationRatioisriskadjustedrewardB:TransactioncostisaccountedinFundamentalLawC:TradingopportunitiesmustbeindependentD:InformationCoefficientisconstantandcanbeeasilycalculated

A) AandCB) BandCC) A,CandDD) Alltheabove

Correctanswer:A

Question679:WhichofthefollowingaretrueforFundamentalLawofActiveManagement:A:InformationRatioisriskadjustedrewardB:TransactioncostisaccountedinFundamentalLawC:TradingopportunitiesmustbeindependentD:InformationCoefficientisconstantandcanbeeasilycalculated

A) AandCB) BandCC) A,CandDD) Alltheabove

Correctanswer:A

Question680:WhywereCollateralizedDebtObligation(orCDOs)offeredbyinvestmentbankstickingtimebombs,asperTheBigShort?

A) CDOswereETFsfollowingthemarket.B) CDOscontainedhighqualitydiverserangeofassetsC) InvestmentbanksstartedcreatingCDOsthatincludedjustthe

lowestratedtiersofmortgage-backedsecuritiesD) InvestmentbanksstartedcreatingCDOsthatincludedbothlower

andhightierofmortgage-backsecurities.

Correctanswer:C

Question681:Whywasthenumberofmortgage-backedbondsincreasingpriortothefinancialcrisis?A) Investorswantedtobuymortgage-backedbondsbecausetheyhad

higherinterestratesthanotherbondsB) PeoplewerebuyingmorehousesthanusualC) TherealestatemarketwasconspiringtodeceivebanksD) Peoplewerenotpayingofftheirhomemortgages

Correctanswer:A

Question682:Whichonedoesn'tmakereinforcementlearningdifferentfromothermachinelearningparadigms?

A) NolabelsindatasetB) UtilizerewardsignalC) Agent'sactionsaffectthesubsequentdataitreceivesD) Timereallymatters

Correctanswer:A

Question683:Howmanysharesoftheunderlyingstockdoesanoptioncontractcontrol?

A) lessthan100B) 100C) morethan100D) 1000

Correctanswer:B

Question684:Whichofthefollowingisnotadisadvantageofbuyingoptions?

A) Itispossiblethatyoumightlosemoremoneythanthepremiumthatyoupaidfortheoption.

B) Thepremiumislostmoney,it’sgoneandyoupayitimmediatelytoanotherpersonwhenyouacquiretheoptioncontractandyoudon’tgetitbacknomatterwhathappenstothestock.

C) Optionshaveexpirationdates.D) Withoptionsyoudon’townthestock.

Correctanswer:A

Question685:HowdidHedgefundmanagerMIchaelBurrypredictedin2005thatUShousingmarketwillcollapseby2007?

A) Hefoundlargenumberofhighrisksubprimeborrowersaremissingtheirpaymentsthatwillcausemortgagemarkettocollapse.

B) HefoundanincreasingpatterninnumberofforeclosuresinUShousingmarket.

C) Heknewthathousingmarketbubblewillburstinacoupleofyears.

D) HefoundthataverylargernumberofmortgagesweresubprimeandahugepercentageofthosesubprimemortgageswasARM(Adjustableratemortgage).

Correctanswer:D

Question686:HowdidHedgefundmanagerMIchaelBurrypredictedin2005thatMortgagebackedsecuritieswillcollapseby2007?

A) Hefoundlargenumberofhighrisksubprimeborrowersaremissingtheirpaymentsthatwillcausemortgagemarkettocollapse.

B) Hefoundanincreasingpatterninnumberofforeclosuresinmortgagemarket.

C) Hewasasmartmanandhadahunch.D) Hefoundthataverylargernumberofmortgagesweresubprime

andahugepercentageofthosesubprimemortgageswasARM(Adjustableratemortgage).

Correctanswer:D

Question687:WhichofthefollowingcomesclosesttohowSalinaGomezexplainswhatasyntheticCDOis,inthemovie"TheBigShort".

A) Asabet,onabet,onabet...butonthesameunderlyingsecurityB) AsafakeCDOcreatedbybankstodefraudinvestors.C) AsCDOsrepresentingtechnologyrelatedsecuritiesD) Noneoftheabove

Correctanswer:A

Question688:WhichstatementisFALSEgiventheformulaforQforanystate-actionpair,givenanexperiencetuple?

A) s'istheresultingnextstate.B) r=R[s,r]isthedelayedrewardfortakingactionainstates.C) α(alpha)isthethelearningrateusedtovarytheweightgivento

newexperiencescomparedwithpastQ-values.D) γ(gamma)isthediscountfactorusedtoprogressivelyreducethe

valueoffuturerewards.

Correctanswer:B

Question689:WhichofthefollowingstatementsisTrue?

A) InQLearning,thelearningrate(alpha)usedtowhatprogressivelyreducethevalueoffeaturerewards.

B) InQLearning,thediscountfactor(gamma)usedtovarytheweightgiventonewexperiencescomparedwithpastQ-values.

C) Highvaluesoflearningratemeansthefuturerewardswerevaluedmore.

D) Noneoftheabove.

Correctanswer:D

Question690:WhichoneofthefollowingisNOTatechnicalindicator?

A) SimpleMovingAverageofpriceB) BollingerBandC) RelativeStrengthIndexD) Dividendyield

Correctanswer:D

Question691:WhichofthefollowingisnotoneoftheMovingAverageindicators?A) SimpleMovingAverage(SMA)B) ExponentialMovingAverage(EMA)C) TrendMovingAverage(TMA)D) WeightedMovingAverage(WMA)

Correctanswer:C

Question692:Isitpossibletoconstructaportfoliowithahigherreturnandalowerriskthatitsunderlyingassets,usingtheEfficientFrontier?

A) No,theportfolio'sreturnisupperboundbythehighestreturnofanyindividualassetitholds.

B) No,theportfolio'sriskislowerboundbythelowestriskofanyindividualassetitholds.

C) Yes,ifyouhavetherightmixofanti-correlatedassets.D) Yes,thismixisfoundonthepeakoftheefficientfrontier.

Correctanswer:A

Question693:Whichofthefollowingstatementsisfalse?

A) HigheralphagenerateshigherSharperatioB) MoreexecutionopportunitiesprovidehigherSharperatioC) SharperatiogrowsasasquarerootofbreadthD) TheInformationCoefficientistheInformationRatiotimesthe

squarerootofbreadth

Correctanswer:D

Question694:InTheBigShort,Dr.BurrycreatedtheCreditDefaultSwap(CDS).WhatisaproperanalogyforthisproductifyouwereDr.Burry?

A) Youarepayinginsuranceforyourwoncar,andUncleSamclaimsthemoneyinthecaseofacrash.

B) YouarepayinginsuranceforUncleSam'scar,andyouclaimthemoneyinthecaseofacrash.

C) Youarepayinginsuranceforyourowncar,andyouclaimthemoneyinthecaseofacrash.

D) YouarepayinginsuranceforUncleSam'scar,andUncleSamclaimsthemoneyinthecaseofacrash.

Correctanswer:B

Question695:IntheBlack-SholesFormula,whatdoesN(d2)mean?

A) probabilityofS<KB) probabilityofS>KC) probabilityofS<KD) Itmeansnothing.

Correctanswer:B

Question696:Ifaninvestorsells100sharesosXYZshortat100andsimultaneouslywritesoneXYZ100putat3.whatisthemaximumgaininthisstrategy?

A) $100/shareB) $103/shareC) $97/shareD) $3/share

Correctanswer:D

Question697:Ifwethinkpriceofthestockwillgodowndramatically,whichoneofthefollowing4actionsisgenerallythebest?

A) LongaCallB) LongaPutC) LongaCallandLongaPutD) ShortaCallandShortaPut

Correctanswer:B

Question698:ThefundamentallawisIR=IC*root(breadth).Whichofthefollowingstatementsiscorrectregardingthefundamentallaw?

A) OnlyICcanbeimprovedeasilyB) OnlyBreadthcanbeimprovedeasilyC) BothICandBreadthcanbeimprovedeasilyD) NeitherICorBreadthcanbeimprovedeasily

Correctanswer:B

Question699:Whatistheproperdefinitionfor"subprimeloan"?

A) Aloanthatoffersaloworsubprimeinterestrate.B) Aloanthatisextendedindurationbutwithincreasedinterest.C) Aloanthatislimitedtoonlyafractionoftheaveragemortgage

loan.D) Aloanthatisprovidedtosubprimeindividualsorthosewithpoor

creditratings(abilitytorepay)

Correctanswer:D

Question700:Whatisthegoalofportfoliooptimization?

A) Todesignacombinationofassetsthatproducesthelowestriskforaspecifiedtargetreturn.

B) TodesignacombinationofassetsthatproducesthelowestoverallSharperatio.

C) Todesignacombinationofassetsthatminimizescumulativereturns.

D) Todesignacombinationofassetsthatmaximizesportfoliovolatilityovertime.

Correctanswer:A

Question701:IftheweakformoftheEfficientMarketHypothesisiscorrect,whichofthefollowingistrue?A) InsideTradersCannotSucceedB) TechnicalAnalysisCannotWorkC) FundamentalAnalysisCannotWorkD) HedgeFundsCannotSucceed

Correctanswer:B

Question702:Whatmakesan"EfficientFrontier"efficient?

A) Ittakestheleastamountoftimetodecidewhethertobuyorsell.B) ItcontainstheportfolioswiththelowestSharperatiosC) Itallocatesasmuchmoneyasaninvestorhasavailabletoinvest.D) Itcontainstheportfolioswiththelowestpossibleriskgivena

particularamountofreturn.

Correctanswer:D

Question703:Considerthefollowing2investmentsstrategies.1.WarrenBuffet,carefullyanalyzesfundamentalofvariousstocks.Andpicksthestocksthatareundervaluedandhashigherchancesofbeatingthemarketinthelongterm.Withthisstrategy,heisconsistentlyabletobeatthemarket.2.AnHFT(High-frequencytrading)firm,usinghigh-speedfibrecableisabletolookattheorderbookofNYSEfewmillisecondsinadvanceoftheothertraders.Byutilizingthisarbitrage,thefirmisabletotradeaccordinglyandconsistentlygeneratetheprofitswhilebeatingthemarket.Whichoftheoptionfromthefollowingistrue?

A) Strategy1violatesthesemi-strongversionofEMHandStrategy2violatestheStrongversionofEMH

B) BothstrategiesviolateSemi-StrongversionofEMH.C) Strategy2violatesthesemi-strongversionofEMHandStrategy1

violatestheweakversionofEMH.D) Strategy1violatesthesemi-strongversionofEMHandStrategy2

violatestheweakversionofEMH

Correctanswer:B

Question704:WhichofthefollowingisnotanEMHassumption:

A) PricesadjustrapidlyB) AllavailableinformationisreflectedbythepricesC) NewinformationarrivesrandomlyD) Thenumberofinvestorsdoesnotmatter

Correctanswer:D

Question705:The______________formoftheefficientmarkethypothesisimpliesthatthereislittleornothingtobegainedfromtechnicalanalysisandfundamentaldata.

A) weakB) semi-weakC) semi-strongD) strong

Correctanswer:C

Question706:Whichchoiceisnotchangedinthereinforcementlearningprocess?

A) StateB) ActionC) RewardD) Policy

Correctanswer:D

Question707:Youareinthe"Coin-FlipCasino",whereyoucanbetonbiasedcoinflipswitha51%chanceofwinningand49%chanceoflosing.Whichofthefollowingisanadvantageofbetting$1on1000coinsversusbetting$1000on1coin?

A) IncreasedexpectedreturnB) DecreasedexpectedreturnC) IncreasedriskD) Decreasedrisk

Correctanswer:D

Question708:ForaMarkovDecisionProblem(MDP),itisassumedthattheAgentknowsthefollowinginadvance:

A) SetofStatesSandSetofActionsAB) TransitionFunctionT[s,a,s’]C) RewardFunctionR[s,a]D) Alloftheabove

Correctanswer:D

Question709:ForQ-learningtoconvergeweneedtocorrectlymanagetheexplorationvsexploitationtradeoff.Whichofthefollowingisthecorrectapproachfortheexplorationstrategy?

A) Everyactionneedstobetriedsufficientlyoftenineverystate.B) Everyactionneedstobetriedasfewtimesaspossibletoavoid

duplication.C) Thenumberoftimesthateveryactionistriedneedstobe

balancedwithhowfrequentlythealgorithmexploitsthataction.D) Noneoftheabove.

Correctanswer:A

Question710:WhatarethecorrectformsoftheEfficientMarketsHypothesis?

A) "Weak",whenthepricesarenotthedeterministicfunctionofthepast

B) "Strong",whenthepricesadjustedtopubliclyavailableinformation

C) "Strongest",whenthepricesreflectallpublicandprivateinformation

D) Alloftheabove

Correctanswer:A

Question711:TodoubleinformationratioinTheFundamentalLawofInvestmentManagement,oneneedsto:A) doubleskillmetricB) doubleinformationcoefficientC) increasenumberofindependentforecastsbythefactorofsqrt(2)D) alloftheabove

Correctanswer:D

Question712:Whichofthefollowingmaybeusedfortechnicalanalysis?

A) Acompany'sbookvalueB) Acompany'sstockpriceC) Acompany'sintangiblevalueD) Acompany'sintrinsicvalue

Correctanswer:B

Question713:Whichsetofdataisagoodcandidateforreinforcementlearningtooutperformothertypesofmachinelearning?

A) Arecorddrivingactionsfrom100tripsinacar.B) Patienttreatmentrecords,fordosagerecommendationwithin

onehour.C) Marsrovercontrollogsfrompreviousmission.D) Charactermovementdatafrom1000000gamesofPac-man.

Correctanswer:D

Question714:WhatgamedidJaredVennett(RyanGosling'scharacter)usewhenhefirstpitchedcreditdefaultswapstoMarkBaum(SteveCarellcharacter)andhisteam?

A) JengaB) HangmanC) BattleshipD) Chess

Correctanswer:A

Question715:FortheStrongformoftheEfficientMarketHypothesis,whichistrue?

A) Futurepricescanbepredictedbyanalyzinghistoricalprices(technicalanalysis)

B) Futurepricescanbepredictedusinginsiderinformation.C) Futurepricescanbepredictedusingpublicinformation

(fundamentalanalysis).D) Futurepricescannotefficientlybepredictedusingtechnical

analysis,fundamentalanalysis,orinsiderinformation.

Correctanswer:D

Question716:ReinforcementLearningDiscountFactor

A) isspecifiedintheinterval[-1,0]B) isusedtoaccountforuncertaintiesaboutfuturerewardsC) developslinearlywithtimeD) choosesfarsightednessovershortsightedness

Correctanswer:B

Question717:Ifyouweretobuyastockusingbollingerbandsasanindicator,whenwouldbeagoodtimetobuythestock?

A) Whenthestockis2standarddeviationsbelowthenormalpriceB) Whenthestockis2standarddeviationsabovethenormalpriceC) Whenthestockis1standarddeviationbelowthenormalpriceD) Whentheprofessorsaysit'sagoodidea

Correctanswer:A

Question718:Whichformoftheefficientmarkethypothesisclaimsthatonlyinformationthatisnotreadilyavailabletothepubliccanhelpinvestorsincreasetheirreturnsabovethatofthegeneralmarket?

A) WeakFormB) Semi-strongFormC) StrongFormD) VeryStrongForm

Correctanswer:B

Question719:Allofthefollowingcouldbeconsidered"state"inareinforcementlearningsystem:

A) Dailyreturns,Bollingervalue,simplemovingaverage,sellingshortB) Dailyreturns,Bollingervalue,buyorderC) Returnfromasingletrade,dailyreturns,BollingervalueD) Buyorder,sellorder

Correctanswer:A

Question720:IfyoubelievethatthestrongformoftheEfficientMarketHypothesisistrue,whichinvestingstrategywouldyoubemostlikelytochoose?

A) ConsiderfundamentalfactorssuchP/Eratio,assets,andliabilities,andtradestocksbasedonhowyouthinktheywilldointhefuture.

B) Analyzetechnicalfactorssuchashistoricalpriceandvolumeusingmachinelearningandtradestocksbasedonyourmodel'spredictionsoffutureprices.

C) Buyandholdapassively-managedindexfundthatmirrorstheperformanceoftheoverallmarket,suchasSPY.

D) Obtainprivateinformationknownonlytocompanyexecutivesandtradebasedonhowyouthinkthepricewillmovewhentheinformationismadepublic.

Correctanswer:C

Question721:WhichofthefollowingformsoftheEfficientMarketsHypothesisclaimthateveninsidertradingwillnotyieldexcessivereturns?A) WeakB) Semi-StrongC) StrongD) Noneoftheabove

Correctanswer:C

Question722:WhichofthefollowingisnotconsideredintheFundamentalLaw?

A) PerformanceB) RewardsC) SkillD) Breadth

Correctanswer:B

Question723:YouareindiscussionwithafriendwhohasusedMachineLearningtobuildseveraltradingmodels.Heexplainsthathecanprovethatthemarketsarestrongformefficient(accordingtotheEfficientMarketHypothesis)becauseheisabletousepricedatatogeneratepositivealpha.Youagree/disagreewiththisstatementbecause:

A) AgreebecausethestrongformEMHdoesnotconsidertheuseofMachineLearningTechniqueswhichareproventogenerateAlpha

B) DisagreebecauseinthestrongformEMHitisimpossibletogeneratepositivealpharegardlessofthemethodused

C) AgreebecauseinthestrongformEMHyoucanusepricedatatogeneratepositivealphaandMachinelearningusesonlypricedatatodiscoverPatterns

D) DisagreebecauseStrongFormspecificallystatesthatthemarketsareNOTefficient

Correctanswer:B

Question724:WhichofthefollowingiscorrectaboutBollingerbands

A) MorevolatilestocksneedbandsnearertothemeanB) MorevolatilestocksneedbandsfartherawayfromthemeanC) Thecommondistanceofthebandsfromthemeanis20standard

deviationD) Bollingerbandsareperfect

Correctanswer:B

Question725:Increasingtheinformationcoefficientisproportionaltoincreasingtheinformationratio,whereasincreasingthebreathaffectstheinformationratioonlyasasquareroot.Whichlawisthisanexampleof?

A) Murphy’sLawB) FoundationLawC) Buffett’sLawD) FundamentalLaw

Correctanswer:D

Question726:Howisasimplemovingaveragecalculated?

A) Thechangeinpricebetweenastartandenddateiscalculatedandthendividedbythenumberofdaysbetweenthetwodates,includingthestartdatebutexcludingtheenddate.

B) Recentclosingpricesareaddedandthendividedbythenumberoftimeperiodsinthecalculationaverage.

C) Averagegainofupperiodsduringthespecifiedtimeframeisdividedbytheaveragelossofdownperiodsduringthespecifiedtimeframe.

D) Blue!Nooooo!!!

Correctanswer:B

Question727:Whatistheequationformomentum?

A) momentum[t]=price[t]/price[t-n]-1B) momentum[t]=price[t]/price[t-n:t].mean()-1C) momentum[t]=price[t].mean()D) momentum[t]=price[t]-SMA[t]/2*stdev[t]

Correctanswer:A

Question728:Pleaseselectalltruestatementsregardingreinforcementlearning.

A) AlwaysrequirespolicytoconductlearningB) usesadecisiontreetogofromobservationsaboutanitemto

conclusionsabouttheitem'stargetvalueC) isanareaofmachinelearningconcernedwithhowagentsought

totakeactionsinanenvironmentsoastomaximizecumulativereward.

D) Requiresapre-definedmodel

Correctanswer:C

Question729:WhichpairrepresentstwoassumptionsthatEMH(EfficientMarketHypothesis)makes.

A) CurrentPricereflectsallavailableinformation,Informationarrivesrandomly

B) Fewinvestorsseekingprofit,PricesadjustquicklyC) Informationarrivesrandomly,CurrentPricereflectsonlysome

informationD) Fewinvestorsseekingprofit,Informationdoesnotarrive

randomly

Correctanswer:A

Question730:WhatisanISDAAgreement?

A) Itrepresentsanagreementthatletsaninvestorsitatthebigboytableandmakehigh-leveltradesnotavailabletostupidamateurs.

B) Itisalegaldocumentwhichregulatescreditsupport(collateral)forderivativetransactions.

C) AcollateralizeddebtobligationisnamedforthepooledassetsD) AnagreementwhichallowsafirmtodobusinesswithUS

governmentdirectly

Correctanswer:A

Question731:Whichofthefollowingisnotconsideredatechnicalindicator?A) RelativeStrengthIndex(RSI)B) P/ERatioC) 20-DayMovingAverageD) BollingerBand®

Correctanswer:B

Question732:Acreditdefaultswapismostsimilarto

A) AninsurancepolicyB) AshortsaleC) AhedgefundD) Abundleofmortgages

Correctanswer:A

Question733:WhichisnotacorrectassumptionofEfficientMarketHypothesis(EMH)?

A) LargenumberofinvestorsB) NewinformationarrivesrandomlyC) PricesadjustslowlyD) Pricesreflectallavailableinformation

Correctanswer:C

Question734:AccordingtotheFundamentalLaw,coulditbelikelyforaninexperiencedfrequencytradertoyieldsimilarreturnscomparedtoatradersuchasWarrenBuffet?

A) Yes,becauseasthevolumeoftradesincreases,therewardopportunityincreasesbyapowerof2.

B) Yes,becausethesheernumberoftransactionscouldoffsetalackofskill.

C) No,becauseWarrenBuffetistheWorld'smostprolificfrequencytrader.

D) No,becausethemoretransactionsthatoccur,themorelikelyitistosufferlosses.

Correctanswer:B

Question735:WhatistheformulaforGrinold'sFundamentalLaw?

A) Performance=Skill*sqrt(Breadth)B) Skill=Performance*sqrt(Breadth)C) Breadth=Skill*sqrt(Performance)D) Performance=Breadth*sqrt(Skill)

Correctanswer:A

Question736:Whichofthefollowingscenariosmightbeanindicationthatitisagoodtimetobuyacertainstock?

A) Stockpricecrossesthesimplemovingaverage.B) StockPriceisatthetopBollingerBandandmomentumis

negative.C) StockPriceisatthebottomBollingerBandandmomentumis

positive.D) Noneoftheabove.

Correctanswer:C

Question737:Simplemovingaveragecanbecalculatedovermultiplewindowsizes.IfSMAwithawindowsizeof20crosseshigherthantheSMAwithawindowsizeof50,whatconclusioncanyoudrawaboutthecurrentstockprice?

A) ItistrendingupwardsB) ItistrendingdownwardsC) Cannotdrawanyconclusions

Correctanswer:A

Question738:Youareahedgefundmanager,andyouwanttoimproveyourperformance.Yourbestfriend,aformerML4Tstudent,saysthatyoushouldconsidertheTheFundamentalLawofactiveportfoliomanagementwhenmakingyourdecision.Whatpossiblethingscanyoudotoimproveyourfund'sperformance?

A) Decreasethebreadthofyourportfolio,andinvestinafew,safestocks.

B) Investinthesameamountofstocks,butpickhigh-riskhigh-returnstocks.

C) Increasethebreadthofyourportfolio,andinvestinawidervarietyofstocks.

D) Decreasethebreadthofyourportfolio,andpickhigh-riskhigh-returnstocks.

Correctanswer:C

Question739:TheS&P500isupmorethan200%sinceMarch2009.IfyouhadboughtsharesofthecompaniesthatweremembersoftheS&P500inMarch2009inproportiontotheirrepresentationintheindexinMarch2009,WhatwouldbeyourreturnsinceMarch2009tilltoday?

A) Morethan200%becausethatishowmuchtheS&P500roseB) Lessthan200%C) CannotsaybecauseofSurvivorshipbiasD) Exactly200%

Correctanswer:C

Question740:Averyefficientmarketwithnoinsiderinformationwouldbenefitaninvestormostwho:

A) Uses"strongform"ofEMHandtriestogetinsiderinformation.B) Uses"strongform"ofEMHandtriestobefriendjournaliststo

takeadvantageofpublicinformationC) Uses"weakform"ofEMHandutilizesindustrialknowledgeof

productsegmentstoidentifycompanieswithundervaluedintrinsicvalue

D) Uses"weakform"ofEMHtodotechnicalandfundamentalanalysis

Correctanswer:C

Question741:Whichoptionwouldprovidethemosteffectiveformoftechnicalanalysisinatradingstrategy:A) ExponentialMovingAverage(EMA)withaspanof10daysB) AcombinationofBollingerBandsandMomentumwithawindowof

10daysC) AcombinationofBollingerBandsandMomentumwithawindowof

252daysD) Acombinationofacompany'smarketvalueandbookvalue

Correctanswer:B

Question742:Whencomparingastock'spricetoBollingerBands,whenthepriceofastockgoesabovetheupperband,thencomesbackdown,thisisatechnicalindicatortodowhat?

A) BuythestockB) DonothingC) SellthestockD) It'simpossibleforthepricetogoabovetheupperband

Correctanswer:C

Question743:Acompany'scurrentstockpriceis50dollarpershare.Currentlong-termcorporatebondyieldis5%.Thedividendyieldhasbeen10%for10years.Anexecutivejustsoldhersharesfor49dollarspershare.Supposethemarketisstrong-formefficient,whatwouldbethedividendthisyear?

A) 2.5B) 5C) 4.9D) 2.45

Correctanswer:C

Question744:WeakEMHprohibitswhichofthefollowingindicators?

A) TechnicalB) FundamentalC) InsiderD) Noneoftheabove

Correctanswer:A

Question745:Considerthefollowingstatements:Stockpricesadjustimmediatelytonewpublicinformation,soinvestorscanuseneitherfundamentalnortechnicalanalysistomakeprofitsonthemarket.However,insiderinformationmayhelpinvestors.Whichofthefollowingbestdescribesthesestatements?

A) WeakformofEfficientMarketHypothesisB) Semi-weakformofEfficientMarketHypothesisC) StrongformofEfficientMarketHypothesisD) Super-strongformofEfficientMarketHypothesis

Correctanswer:B

Question746:Whatformoftheefficientmarketshypothesisimpliesthatbookvalueisnotavailabletopredictmarketperformance?

A) WeakB) Weakly-StrongC) StrongD) Alltheabove

Correctanswer:C

Question747:Whatformoftheefficientmarketshypothesisimpliesthatbookvalueisnotavailabletopredictmarketperformance?

A) WeakB) Weakly-StrongC) StrongD) Alltheabove

Correctanswer:C

Question748:WhattechnicalindicatorisusedtocomputeBollingerBands?

A) MomentumB) Simplemovingaverage(SMA)C) PriceoverSMAD) MACD

Correctanswer:B

Question749:Whatwouldbethebestreasontouseema(exponentialmovingaverage)comparedtosma(simplemovingaverage)?

A) Performance:emaisfastertocomputethansmaB) Clarity:theexponentialcreatemorerangebetweenvaluesthan

smaC) Weight:emaprioritizerecentpriceinitsaverageD) Accuracy:emagivesbetterresultthansma

Correctanswer:C

Question750:Whichoneofthefollowingversionsoftheefficientmarkethypothesisstatesthateveninsiderknowledgecannotgiveanytradeadvantage?

A) WeakB) Semi-StrongC) StrongD) Super-Strong

Correctanswer:C

Question751:WhichofthefollowingistrueaboutInformationRatio?A) InformationRatioisameasureofmanagerperformanceovertime.B) InformationRatioisratioofexcessreturnstostandarddeviationof

excessreturns.C) InformationRatioisratioofreturnstostandarddeviationofreturns.D) BothAandB

Correctanswer:D

Question752:WhenyouenterTuckerBalch'sCoinTossCasino,whatisthebetterstrategy?Betadollarat1000boothsorbet1000atonesinglebooth?

A) Itdoesn'tmatterbecausebothstrategieshavethesameexpectedreturn

B) Bettingadollarat1000boothsbecauseyoulowerriskC) Betting1000atasingleboothbecauseitishigherreward

Correctanswer:B

Question753:SimpleMovingAverageandStandardDeviationofastock'spricearetechnicalindicatorsofwhat,respectively:

A) Volatility,andMomentumB) Momentum,andVolatilityC) BothareindicatorsofVolatilityD) Bothareindicatorsofmomentum

Correctanswer:B

Question754:WhichstatementisFalse?

A) Reinforcementlearningcanbeunderstoodusingtheconceptsofagents,environments,states,actionsandrewards

B) Reinforcementlearningsolvesthedifficultproblemofcorrelatingimmediateactionswiththedelayedreturnstheyproduce.

C) ReinforcementlearningassumesknowledgeofanexactmathematicalmodeloftheMDPunlikeclassicaldynamicprogrammingmethods.

D) Reinforcementlearninginsystemswithunknownenvironmentwheretheagentmusttradeoffefficientlybetweenexploration(long-termoptimization)andexploitation(short-termoptimization)

Correctanswer:C

Question755:Weakformmarketefficiency

A) iscompatiblewithtechnicalanalysisB) impliesthattheexpectedreturnonanysecurityiszeroC) involvespriceandvolumeinformationD) incorporatessemi-strongformefficiency

Correctanswer:C

Question756:Considerthefollowingthefollowingenvironment:{[+2][+0][-1][START][-1][-1][+1][+3]}whereaplayerbeginningat“START”canmoveoneposition(leftorright)perunittimeandreceivetheawardorpenaltyatthatposition.Whatisthemaximumrewardthatcanbeachievedunderthefollowingconditions:-finitetimehorizonof3-finitetimehorizonof4-aninfinitetimehorizon

A) +2,+3,+2B) +1,+2,infiniteC) +2,+3,+3D) infinite,infinite,infinite

Correctanswer:B

Question757:WhichofthefollowingstatementsdoesNOTsupportSemi-StrongFormEMH?

A) Themarketquicklyadjustspricesinresponsetonewpublicinformation.

B) Futurestockpricescannotbepredictedusinghistoricprices.C) Exogenousinformationcanbeusedtopredictstockprices.D) Privateinformationonacompanycanhelpaninvestorprofitin

themarket.

Correctanswer:C

Question758:Whichofthefollowingwillincreasetheperformancethemost

A) Increasetheinformationcoeffientby4timesB) Increasethebreadthby4timesC) Decreasetheinformationcoeffientto1/4D) Decreasethebreadthto1/4

Correctanswer:A

Question759:Belowisalistcontainingthedailypricesofastockovertendays.Assumingthatwedenotethefirstdayasday0,atwhichofthedaysbelowisthemomentumatit'smaximum?Consider3dayswhencalculatingmomentum.[8.0,10.0,9.5,10.0,10.0,8.0,7.0,7.5,8.0,10.0]

A) 3B) 4C) 8D) 9

Correctanswer:D

Question760:Whatdoyoucallanoptionwhichhasnointrinsicvalueandwillbeworthlessifexpired?

A) At-the-moneyoptionB) In-the-moneyoptionC) Out-of-the-moneyoptionD) Putoption

Correctanswer:C

Question761:Whatisacoveredcallstrategy?A) writeastock&writeacallB) buyastock&buyacallC) buyastock&writeacallD) writeastock&buyacall

Correctanswer:C

Question762:Whichofthefollowingisnottrueoftheweakformoftheefficientmarkethypothesis?

A) FuturepricescannotbepredictedbyanalysisofhistoricalpricesB) SilentonfundamentalorinsiderinformationC) Essentiallyimpossibletomakemoneybyholdingaportfolioother

thanthemarketportfolioD) Cannotprofitbylookingathistoricalprice

Correctanswer:C

Question763:WhichofthefollowingisnotakeyassumptionoftheEfficientMarketsHypothesis?

A) Therearealargenumberofinvestorsactinginthemarketforprofit.

B) Newinformationarriveslinearly.C) Pricesadjustquickly.D) Currentpricesreflectallavailableinformation.

Correctanswer:B

Question764:Ifyoubuyanoptioncontract(CallOption)at$100pershareandpayapremiumof$2.00pershare,attheexpirationday,thestockpriceis$90,howmuchhaveyougain?

A) -$300B) $100C) -$200D) -$100

Correctanswer:C

Question765:Whatistrueaboutthemortgageinthemortgage-backedsecurity(MBS)?

A) Themortgagesaresoldtoagroupofindividualsthatpackages,theloanstogetherintoasecuritythatinvestorscanbuy.

B) Themortgagesaresoldtoonlysingleindividualthatpackages,theloanstogetherintoasecuritythatinvestorscanbuy.

C) Themortgagesaresoldtoinvestorsandeachoneissoldindependently.

D) Alloftheabovearecorrectly.

Correctanswer:A

Question766:Reinforcementlearningissuitableforwhatscenariobelow?

A) ClusteringunlabeledplantsbysizeandheightB) ClassifyinghealthyvsunhealthycellsC) OptimizinginventoryspaceinwarehouseD) Drawingaregressionlinebetweentwodatasets

Correctanswer:C

Question767:In“TheBigShort”,whichofthefollowingisNOTdiscussedascontributingtothehousingmarketcollapse?

A) LandlordsraisingrentfortheirtenantsB) BondsbuiltoutofmortgageloansC) HomeownersnotpayingtheirmortgagesontimeD) Fallinghouseprices

Correctanswer:A

Question768:TheFundamentalLaw:Supposetherearetwoinformationsources.TheICforeachsourceis0.01andthecorrelationbetweentwosourcesis1.whatistheskilllevelofthecombinedsources?

A) 0.02B) 0.01C) 0.015D) 0

Correctanswer:B

Question769:IfIhaveanoptioncontractfor200sharesofAAPLwithastrikepriceof$200andthecurrentpriceofAAPLis$180,whatshouldIdo?

A) Buy200sharesofAAPLnow!B) Sell200sharesofAAPLnow!C) WaitandseeifthepriceofAAPLgoesupbeforeyourcontract

runsouttodecidewhattodoD) WaitandseeifthepriceofAAPLgoesdownbeforeyourcontract

runsouttodecidewhattodo

Correctanswer:C

Question770:BasedontheFundamentalLaw,anequalincreaseinperformanceandininvestmentskillsignifiesthat:

A) Thenumberoftradingopportunitiesincreasesbythesquarerootoftheperformanceincrease.

B) Thenumberoftradingopportunitiesstaysconstant.C) Thenumberoftradingopportunitiesdecreasesbythesquareroot

oftheperformanceincrease.D) Thenumberoftradingopportunitiesincreasesbythesquareof

theinvestmentskill.

Correctanswer:B

Question771:WhatistheFundamentalLawofActiveManagementbyGrinoldandKahn?A) InformationRatio=InformationCoefficient*squareroot(Numberof

tradingopportunitiesperyear)B) InformationRatio=InformationCoefficient/Numberoftrading

opportunitiesperyearC) InformationRatio=InformationCoefficient*Numberoftrading

opportunitiesperyearD) InformationRatio=squareroot(InformationCoefficient)*Numberof

tradingopportunitiesperyear

Correctanswer:A

Question772:You'reconsideringseveralportfolioallocations,including:portfolioA,whichyieldsa25%returnwithaSharperatioof2.0,Bwhichyieldsa50%returnwithaSRof1.0,Cwhichyieldsa25%returnwithaSRof1.0andDwhichyieldsa10%returnwithaSRof2.0.Youplotthepotentialportfolios'riskandreturnandtheresultingefficientfrontier.WherewouldportfolioClie?

A) Above/totheleftoftheefficientfrontierB) OntheefficientfrontierC) Below/totherightoftheefficientfrontierD) Notenoughinformationtoknowforsure

Correctanswer:C

Question773:Supposetwoportfolioshavethesameaveragereturn,thesamestandarddeviationofreturnbutportfolioAhasahigherbetathanportfolioB.AccordingtotheSharperatio,portfolioA’sperformanceis:

A) betterthanBB) poorerthanBC) sameasBD) notenoughinformation

Correctanswer:C

Question774:Ahedgefundengagingintechnicalanalysisdothinkthat

A) EMHWeakformiscorrectbutSemi-strongisnotB) EMHSemi-strongformiscorrectbutstrongformisnotC) EMHstrongformiscorrectD) EMHisincorrectregardlessofwhichform

Correctanswer:D

Question775:Whichofthefollowingstatementisincorrect?

A) Thefundamentallawisdesignedtogiveusinsightintoactivemanagement.

B) Thefundamentallawisdesignedtogiveusinsightintopassivemanagement.

C) Thefundamentallawconnectsbreadthandskilltotheinformationratio

D) Alloftheabovearecorrect.

Correctanswer:B

Question776:Whichofthefollowingistruewhencomparingreinforcementlearningandlinearregression?

A) Reinforcementlearningtellsuswhentosellourstock,whilelinearregressiondoesnot

B) Reinforcementlearningtellsuswhichstockwillyieldthebiggestreturnoveracertainperiod,whilelinearregressiondoesnot

C) Reinforcementlearningtellsustheuncertaintyofthepricechange,andsodoeslinearregression

D) Reinforcementlearningisafastermodeltotrainwhencomparedtolinearregression

Correctanswer:A

Question777:RRlabs'stockpriceonSept10,2018,was$200.OnSept11,2018,RRLabsannouncedthattheyinventedadrugthatcouldcurestage3cancer.OnSept12,2018,thestockpriceofRRlabswas$200.Whatdoyouinferabouttheinformationalefficiencyofthemarkets?

A) WeakformB) Semi-StrongFormC) StrongFormD) BothAandB

Correctanswer:A

Question778:Whatisreinforcementlearning?

A) Systemisgivennodataandlearnsbasedonoutcomesfrominteractionswithitsenvironment

B) Systemisgivenadatasetalongwithcorrectoutputandmustfindarelationshipinthedataset

C) Systemisgivenajustadatasetandmustfindarelationshipinthedataset

D) Systemgeneratesrandomnumbersinanendlessloop

Correctanswer:A

Question779:Totripletheinformationratioofourhedgefundwecan...

A) IncreaseourBreadthby3timesB) DecreaseourInformationCoefficientby3timesC) DecreaseourBreadthby3timesD) IncreaseourBreadthby9times

Correctanswer:D

Question780:BasedonMeanVarianceOptimization,youshouldlookforstockswith:

A) anti-correlationinshorttermsandpositive-correlationinlongterms

B) anti-correlationinshorttermsandpositive-correlationinshortterms

C) anti-correlationinlongtermsandpositive-correlationinlongterms

D) anti-correlationinlongtermsandpositive-correlationinshortterms

Correctanswer:A

Question781:WhichofthefollowingisNOTanassumptionoftheEfficientMarketsHypothesis?A) SmallnumberofinvestorsoperatinginthemarketforprofitB) NewinformationarrivesrandomlyC) PricesadjustquicklyD) Pricesreflectallavailableinformation

Correctanswer:A

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