PRMIA 8002 P R M Exam Practice Test Instant Access

Question 1

The Newton-Raphson method

Ais based on finding a middle point between left and right end of the search interval

Bis based on Taylor series and uses the first derivative

Ccan be used for continuous but not differentiable functions

Ddoes provide an error bound along with every iteration

Answer : B

Question 2

Which of the following can be used to evaluate a regression model?

(i) Magnitude of R2

(ii) Magnitude of TSS (total sum of squares)

(iii) Tests for statistical significance

(iv) Sign and magnitude of each regression parameter

A(i) and (iv)

B(i), (ii), and (iii)

C(i), (iii), and (iv)

D(i), (ii), (iii), and (iv)

Answer : C

Question 3

A 95% confidence interval for a parameter estimate can be interpreted as follows:

AThe probability that the real value of the parameter is within this interval is 95%.

BThe probability that the real value of the parameter is outside this interval is 95%.

CThe probability that the estimated value of the parameter is within this interval is 95%.

DThe probability that the estimated value of the parameter is outside this interval is 95%.

Answer : A

Question 4

In statistical hypothesis tests, 'Type I error' refers to the situation in which...

AThe null hypothesis is accepted when in fact it should have been rejected

BThe null hypothesis is rejected when in fact it should have been accepted

CBoth null hypothesis and alternative hypothesis are rejected

DBoth null hypothesis and alternative hypothesis are accepted

Answer : B

Question 5

Which of the following can induce a 'multicollinearity' problem in a regression model?

AA large negative correlation between the dependent variable and one of the explanatory variables

BA high positive correlation between the dependent variable and one of the explanatory variables

CA high positive correlation between two explanatory variables

DThe omission of a relevant explanatory variable

Answer : C

Question 6

Let N(.) denote the cumulative distribution function of the standard normal probability distribution, and N' its derivative. Which of the following is false?

AN(0) = 0.5

BN'(0) 0

CN(x) 0 as x

DN'(x) 0 as x

Answer : C

Question 7

Which of the following is a false statement concerning the probability density function and the cumulative distribution function of a random variable?

Athe PDF is non-negative.

Bthe definite integral of the CDF from minus infinity to plus infinity is undefined.

Cthe CDF approaches 1 as its argument approaches infinity.

Dthe definite integral of the PDF from minus infinity to plus infinity is zero.

Answer : D

PRMIA Mathematical Foundations of Risk Measurement :II P R M Exam Practice Test