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8002 – PRM Certification - Exam II: Mathematical Foundations of Risk Measurement

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Showing 4–6 of 10 questions

Question 4

The bisection method can be used for solving f(x)=0 for a unique solution of x, when

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    The function f(x) is continuous and monotonic
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    The function f(x) is differentiable
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    The function f(x) is differentiable and we have an explicit expression for the derivative
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    The function f(x) is continuous
Question 5

The first derivative of a function f(x) is zero at some point, the second derivative is also zero at this point. This means that:

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    f has necessarily a minimum at this point
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    f has necessarily a maximum at this point
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    f has necessarily neither a minimum nor a maximum at this point
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    f might have either a minimum or a maximum or neither of them at this point
Question 6

An asset price S is lognormally distributed if:

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    the change in price (dS) is normally distributed
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    1/S is normally distributed
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    ln(dS/S) is normally distributed
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    ln(1+dS/S) is normally distributed