ML4T Exam 2 Part 5 (661-781) ACTUAL UPDATED QUESTIONS AND CORRECT
ANSWERS
Question 663: Optimal portfolios that comprise the Correct Answer: C
efficient frontier offers:
A) The highest expected return for a defined level of risk.
B) The lowest risk for a given level of expected return.
C) A and B
D) None of the above.
Question 668: With regards to the Fundamental Law, what Correct Answer: C
is summarized in the Information Coefficient?
A) Breadth
B) Beta
C) Skill
D) Performance
Question 670: With Efficient Markets Hypothesis (EMH), Correct Answer: A
which form says that doing fundamental analysis is
acceptable?
A) Weak form
B) Semi-Weak form
C) Semi-Strong form
D) Strong form
, Question 677: Suppose stocks A, B have the same Correct Answer: B
cumulative return but negatively correlated daily returns,
and our current portfolio has been allocated among
these stocks to minimize risk. Compared to stock A, the
portfolio will have
A) higher return, lower or same risk
B) same return, lower or same risk
C) higher return, higher risk
D) same return, higher risk
Question 682: Which one doesn't make reinforcement Correct Answer: A
learning different from other machine learning
paradigms?
A) No labels in dataset
B) Utilize reward signal
C) Agent's actions affect the subsequent data it receives
D) Time really matters
Question 692: Is it possible to construct a portfolio with a Correct Answer: A
higher return and a lower risk that its underlying assets,
using the Efficient Frontier?
A) No, the portfolio's return is upper bound by the
highest return of any individual asset it holds.
B) No, the portfolio's risk is lower bound by the lowest
risk of any individual asset it holds.
C) Yes, if you have the right mix of anti-correlated assets.
D) Yes, this mix is found on the peak of the efficient
frontier.
Question 695: In the Black-Sholes Formula, what does Correct Answer: B
N(d2) mean?
A) probability of S < K
B) probability of S > K
C) probability of S < K
D) It means nothing.
Question 697: If we think price of the stock will go down Correct Answer: B
dramatically, which one of the following 4 actions is
generally the best?
A) Long a Call
B) Long a Put
C) Long a Call and Long a Put
D) Short a Call and Short a Put
Question 698: The fundamental law is IR = IC * Correct Answer: B
root(breadth). Which of the following statements is
correct regarding the fundamental law?
A) Only IC can be improved easily
B) Only Breadth can be improved easily
C) Both IC and Breadth can be improved easily
D) Neither IC or Breadth can be improved easily
ANSWERS
Question 663: Optimal portfolios that comprise the Correct Answer: C
efficient frontier offers:
A) The highest expected return for a defined level of risk.
B) The lowest risk for a given level of expected return.
C) A and B
D) None of the above.
Question 668: With regards to the Fundamental Law, what Correct Answer: C
is summarized in the Information Coefficient?
A) Breadth
B) Beta
C) Skill
D) Performance
Question 670: With Efficient Markets Hypothesis (EMH), Correct Answer: A
which form says that doing fundamental analysis is
acceptable?
A) Weak form
B) Semi-Weak form
C) Semi-Strong form
D) Strong form
, Question 677: Suppose stocks A, B have the same Correct Answer: B
cumulative return but negatively correlated daily returns,
and our current portfolio has been allocated among
these stocks to minimize risk. Compared to stock A, the
portfolio will have
A) higher return, lower or same risk
B) same return, lower or same risk
C) higher return, higher risk
D) same return, higher risk
Question 682: Which one doesn't make reinforcement Correct Answer: A
learning different from other machine learning
paradigms?
A) No labels in dataset
B) Utilize reward signal
C) Agent's actions affect the subsequent data it receives
D) Time really matters
Question 692: Is it possible to construct a portfolio with a Correct Answer: A
higher return and a lower risk that its underlying assets,
using the Efficient Frontier?
A) No, the portfolio's return is upper bound by the
highest return of any individual asset it holds.
B) No, the portfolio's risk is lower bound by the lowest
risk of any individual asset it holds.
C) Yes, if you have the right mix of anti-correlated assets.
D) Yes, this mix is found on the peak of the efficient
frontier.
Question 695: In the Black-Sholes Formula, what does Correct Answer: B
N(d2) mean?
A) probability of S < K
B) probability of S > K
C) probability of S < K
D) It means nothing.
Question 697: If we think price of the stock will go down Correct Answer: B
dramatically, which one of the following 4 actions is
generally the best?
A) Long a Call
B) Long a Put
C) Long a Call and Long a Put
D) Short a Call and Short a Put
Question 698: The fundamental law is IR = IC * Correct Answer: B
root(breadth). Which of the following statements is
correct regarding the fundamental law?
A) Only IC can be improved easily
B) Only Breadth can be improved easily
C) Both IC and Breadth can be improved easily
D) Neither IC or Breadth can be improved easily
