ML4T Final ACTUAL UPDATED QUESTIONS AND CORRECT ANSWERS
Why did it become a good investment to bet against The default rate on the mortgages kept rising. AND Banks were incentivized to
mortgage-backed securities. issue more and more mortgages.
Is Bollinger Bands a leading indicator? No, Bollinger Bands is a lagging indicator
If the Information Coefficient is doubled and the trading The Information Ratio is multiplied by 6
opportunities are multiplied by 9, what happens to the
Information Ratio.
What is the best way an investor who is lacking in skill can Make more trades per day
beat a more skillful investor?
What does CDS stand for? Credit Default Swap
Following statement is true or false: Hedge Funds cannot False
succeed if EMH applies.
Given that EMH is about 3 forms: weak, semi-strong, and Prices will fail eventually to show any type of new information. There will be
strong. What would be the behavior of prices, if, for incentives to trade more
example, the standard investor became one that only
bought and held stocks passively?
In an actively managed portfolio, what strategy may help Finding additional stocks and markets
you improve breadth?
What attribute of Q learning is important in convergence gamma
over infinite horizon?
, Key method to measure the performance of a portfolio Information Ratio
manager is:
If a stock is said to have good relative strength, it means: The ratio of the price of the stock to a given market index has trended upwards
The discount factor allows us to value: short-term reward more than long-term ones
For Grinold's Fundamental Law, what is Information Ratio Sharpe Ratio
(performance) similar to?
What is Information Ratio? Sharpe Ratio of the excess return
You are using Dyna-Q to learn a policy to help with Use a low gamma (discount rate) because you value later rewards less.
trading a new mutual fund. You only have a few days to
trade before you need to cash out for other reasons.
How do you model this time contraint:
Assume beta represents the market return and alpha mean(alpha), std(alpha)
represents the residual return. What are the factors that
Information Ratio is related to?
What is the correct sequence for the cycle describing the Sense, Think, Act
RL problem?
Why is a good idea to create a portfolio that combines To reduce portfolio volatility
assets with negative correlations?
Reinforcement learning algorithm tries to: Find a policy pi that maximizes Reward function.
To assess weights for portfolio that minimizes risk using Expected Return, Volatility, Covariance, Target return
Mean Variance Optimization technique, what are the
inputs required ?
According to Efficient Market Hypothesis, what type of Insider information
analysis/analyses could provide excess returns for the
semi-strong form?
"In the movie ""The Big Short "", hedge fund manager Short sellers borrow shares of stock that they do not own and sell those shares at
Michael Burry discovers that the United States housing the current market price.
market is extremely unstable. Therefore, he decides to
take a short position against the United States housing
market. What is shorting?"
The goal of reinforcement learning is to find the optimal A single action that should be taken next when in a particular state AND A
policy. What are possible outputs of a policy function? probability distribution over a set of actions
Why did it become a good investment to bet against The default rate on the mortgages kept rising. AND Banks were incentivized to
mortgage-backed securities. issue more and more mortgages.
Is Bollinger Bands a leading indicator? No, Bollinger Bands is a lagging indicator
If the Information Coefficient is doubled and the trading The Information Ratio is multiplied by 6
opportunities are multiplied by 9, what happens to the
Information Ratio.
What is the best way an investor who is lacking in skill can Make more trades per day
beat a more skillful investor?
What does CDS stand for? Credit Default Swap
Following statement is true or false: Hedge Funds cannot False
succeed if EMH applies.
Given that EMH is about 3 forms: weak, semi-strong, and Prices will fail eventually to show any type of new information. There will be
strong. What would be the behavior of prices, if, for incentives to trade more
example, the standard investor became one that only
bought and held stocks passively?
In an actively managed portfolio, what strategy may help Finding additional stocks and markets
you improve breadth?
What attribute of Q learning is important in convergence gamma
over infinite horizon?
, Key method to measure the performance of a portfolio Information Ratio
manager is:
If a stock is said to have good relative strength, it means: The ratio of the price of the stock to a given market index has trended upwards
The discount factor allows us to value: short-term reward more than long-term ones
For Grinold's Fundamental Law, what is Information Ratio Sharpe Ratio
(performance) similar to?
What is Information Ratio? Sharpe Ratio of the excess return
You are using Dyna-Q to learn a policy to help with Use a low gamma (discount rate) because you value later rewards less.
trading a new mutual fund. You only have a few days to
trade before you need to cash out for other reasons.
How do you model this time contraint:
Assume beta represents the market return and alpha mean(alpha), std(alpha)
represents the residual return. What are the factors that
Information Ratio is related to?
What is the correct sequence for the cycle describing the Sense, Think, Act
RL problem?
Why is a good idea to create a portfolio that combines To reduce portfolio volatility
assets with negative correlations?
Reinforcement learning algorithm tries to: Find a policy pi that maximizes Reward function.
To assess weights for portfolio that minimizes risk using Expected Return, Volatility, Covariance, Target return
Mean Variance Optimization technique, what are the
inputs required ?
According to Efficient Market Hypothesis, what type of Insider information
analysis/analyses could provide excess returns for the
semi-strong form?
"In the movie ""The Big Short "", hedge fund manager Short sellers borrow shares of stock that they do not own and sell those shares at
Michael Burry discovers that the United States housing the current market price.
market is extremely unstable. Therefore, he decides to
take a short position against the United States housing
market. What is shorting?"
The goal of reinforcement learning is to find the optimal A single action that should be taken next when in a particular state AND A
policy. What are possible outputs of a policy function? probability distribution over a set of actions
