PRIMA 8006 PRM Certification – Exam I: Finance Theory, Financial Instruments, Financial Markets – 2015 Edition Online Training
PRIMA 8006 Online Training
The questions for 8006 were last updated at Apr 25,2025.
- Exam Code: 8006
- Exam Name: PRM Certification - Exam I: Finance Theory, Financial Instruments, Financial Markets – 2015 Edition
- Certification Provider: PRIMA
- Latest update: Apr 25,2025
A bond with a 5% coupon trades at 95. An increase in interest rates by 10 bps causes its price to decline to $94.50. A decrease in interest rates by 10 bps causes its price to increase to $95.60. Estimate the modified duration of the bond.
- A . 5
- B . 5.79
- C . 5.5
- D . -5
What can the buyer of a 6 x 12 FRA expect to receive (or pay) if the contracted rate is 10% and the settlement rate is 12%? Assume contract notional is $100m.
- A . Pay $1,000,000
- B . Receive $1,000,000
- C . Pay $943,396
- D . Receive $943,396
[According to the PRMIA study guide for Exam 1, Simple Exotics and Convertible Bonds have been excluded from the syllabus. You may choose to ignore this question. It appears here solely because the Handbook continues to have these chapters.]
Which of the following best describes a shout option?
- A . an option in which the holder of the option has the right to reset the strike price to be at-the-money once during the life of the option
- B . an option which kicks in as a plain vanilla option if the underlying hits an agreed threshold
- C . an option in which the buyer of the option has the option to extend the expiry of the option upon the payment of an extra premium
- D . an option whose expiry is automatically extended if it finishes out of the money.
Which of the following statements is false:
- A . Forward contracts are settled at the end of the contract while futures gains and losses are settled daily
- B . Futures are OTC instruments with transparent pricing while forward contracts are not
- C . Forward contracts, unless collateralized, carry credit risks while the exchange practically eliminates the credit risk on a futures contract.
- D . Forward and futures prices differ due to differences in the timing of cash flows
What kind of a risk attitude does a utility function with downward sloping curvature indicate?
- A . risk mitigation
- B . risk averse
- C . risk seeking
- D . risk neutral
A normal yield curve is generally:
- A . Flat
- B . Humped
- C . Downward sloping
- D . Upward sloping
The quote for which of the following methods of physical delivery of a futures contract would be the cheapest?
- A . Free on board
- B . Free alongside ship
- C . In store
- D . Cost, insurance and freight
The greatest risk in energy derivatives trading comes from:
- A . interest rate risks
- B . risk of default by derivatives’ counterparties
- C . hedging risk
- D . price volatility
Which of the following statements is true:
I. The maximum value of the delta of a call option can be infinity
II. The value of theta for a deep out of the money call approaches zero
III. The vega for a put option is negative
IV. For a at the money cash-or-nothing digital option, gamma approaches zero
- A . I and IV
- B . III only
- C . II and III
- D . II only
A bank holding a basket of credit sensitive securities transfers these to a special purpose vehicle (SPV), which sells notes based on these securities to third party investors.
Which of the following terms best describes this arrangement?
- A . n-th to default swap
- B . A credit default swap purchase
- C . A synthetic CDO creation
- D . A collateralized debt obligation issuance
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