SOCIAL SCIENCE ECONOMICS FINANCE UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

SOCIAL SCIENCE ECONOMICS FINANCE UPDATED
ACTUAL QUESTIONS AND CORRECT ANSWERS

Question:
Question 1: Why did it become a good investment to bet against mortgage-backed securities.
Answer:
Correct answer: D

Question:
A) The default rate on the mortgages kept rising.
B) Rating agencies were accurately assigning ratings.
C) Banks were incentivized to issue more and more mortgages.
D) A and C
Answer:

Question:
Question 2: In terms of the fundamental law, when aiming for high performance, you can make up for low
skill with .
Answer:
Correct answer: C

Question:
A) low breadth
B) low sharpe ratio
C) high breadth
D) high volatility
Answer:

Question:
Question 3: Is Bollinger Bands a leading indicator?
Answer:
Correct answer: B

Question:
A) Yes
B) No, Bollinger Bands is a lagging indicator
C) No, Bollinger Bands is not an indicator
D) No, Bollinger bands is neither a leading or a lagging indicator
Answer:

Question:
Question 4: What should you do when the stock hits the bottom Bollinger Band?
Answer:
Correct answer: D

,Question:
A) Hold your position (don't change your position at all)
B) Exit any position you currently have and then hold at 0 shares
C) Short the stock to have negative shares
D) Long the stock to have positive shares
Answer:

Question:
Question 5: Who was the first bank Michael approached to make him the CDSs?
Answer:
Correct answer: B

Question:
A) JP Morgan
B) Goldman Sachs
C) Deutsche Bank
D) Bank of America
Answer:

Question:
Question 6: If the Information Coefficient is doubled and the trading opportunities are multiplied by 9,
what happens to the Information Ratio.
Answer:
Correct answer: C

Question:
A) The Information Ratio is multiplied by 1 (remains unchanged)
B) The Information Ratio is multiplied by 4.5
C) The Information Ratio is multiplied by 6
D) The Information Ratio is multiplied by 18
Answer:

Question:
Question 7: What is the best way an investor who is lacking in skill can beat a more skillful investor?
Answer:
Correct answer: C

Question:
A) Hire skillful people
B) Make smarter trades
C) Make more trades per day
D) Pick better stocks
Answer:

Question:
Question 8: Which statement is true regarding the Fundamental Law of Portfolio Management?

, Answer:
Correct answer: A

Question:
A) IR = IC * sqrt(BR)
B) IC = IR * sqrt(BR)
C) BR = IC * IR
D) IR = IC + sqrt(BR)
Answer:

Question:
Question 9: Which of the following can not improve your performance based on the Fundamental Law?
Answer:
Correct answer: D

Question:
A) Improve your skill
B) Increase the Breadth
C) Increase the IC and BR
D) Decrease breadth but improve the skill
Answer:

Question:
Question 10: What does CDS stand for?
Answer:
Correct answer: B

Question:
A) Collateralized Debt Swap
B) Credit Default Swap
C) Collateralized Debt Security
D) Credit Default Security
Answer:

Question:
Question 11: In the movie "The Big Short", what did Credit Default Swaps do?
Answer:
Correct answer: A

Question:
A) Insured the bonds against failure and the insurer paid the claim if the underlying bonds fail
B) Insured the bonds against failure and the insurer paid the claim if the underlying bonds make money
C) To increase employees
D) As an annual practice
Answer:

Question:
Question 12: Which of the following is not the keys of Grinold's fundamental law?