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Question 31/145
For two variables, which of the following is equal to the average product of the deviations from their respective means?
Correct Answer: D
Covariance is a measure of the degree to which two variables move together. It is calculated as the average product of the deviations of each pair of observations from their respective means. If the covariance is positive, the variables tend to move in the same direction. If it is negative, they move in opposite directions.
- Question List (145q)
- Question 1: Which of the following are the most common methods to increa...
- Question 2: Which one of the four following statements about technology ...
- Question 3: Which one of the following four statements correctly describ...
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- Question 5: When looking at the distribution of portfolio credit losses,...
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- Question 8: Which statements correctly describe the features of using su...
- Question 9: Bank G has a 1-year VaR of USD 20 million at 99% confidence ...
- Question 10: According to Basel II what constitutes Tier 2 capital?...
- Question 11: Which of the following measure describes the symmetry of a s...
- Question 12: A risk associate responsible for the operational risk functi...
- Question 13: Which one of the following four statements about equity indi...
- Question 14: Alpha Bank determined that Delta Industrial Machinery Corpor...
- Question 15: Altman's Z-score incorporates all the following variables th...
- Question 16: Mega Bank holds a $250 million mortgage loan portfolio, whic...
- Question 17: From the bank's point of view, repricing the retail debt por...
- Question 18: What is the role of market risk management function within a...
- Question 19: Which one of the following four statements presents a challe...
- Question 20: The exercise for an American type option prior to expiration...
- Question 21: In additional to the commodity-specific risks, which of the ...
- Question 22: Which of the following statements are reasons for mathematic...
- Question 23: Banks duration match their assets and liabilities to manage ...
- Question 24: In its VaR calculations, JPMorgan Chase uses an expected tai...
- Question 25: Which of the following statements regarding CDO-squared is c...
- Question 26: Which one of the following statements about futures contract...
- Question 27: Which of the following statements about the option gamma is ...
- Question 28: Gamma Bank is active in loan underwriting and securitization...
- Question 29: To manage its credit portfolio, Beta Bank can directly sell ...
- Question 30: To protect the oranges harvest price level, a farmer needs t...
- Question 31: For two variables, which of the following is equal to the av...
- Question 32: Which one of the following four statements regarding commodi...
- Question 33: A credit portfolio manager analyzes a large retail credit po...
- Question 34: Most loans and deposits in the interbank market have a matur...
- Question 35: Which one of the following four statements regarding counter...
- Question 36: To improve the culture and awareness of the operational risk...
- Question 37: Except for the credit quality of the Credit Default Swap pro...
- Question 38: Which one of the following four alternatives correctly ident...
- Question 39: James Johnson has a $1 million long position in ThetaGroup w...
- Question 40: Which one of the following four statements on factors affect...
- Question 41: A risk associate evaluating his current portfolio of assets ...
- Question 42: Which one of the following four statements about the "market...
- Question 43: Which of the following assets on the bank's balance sheet ha...
- Question 44: Securitization is the process by which banks I. Issue bonds ...
- Question 45: What are some of the drawbacks of correlation estimates? Whi...
- Question 46: What are the add-on losses faced by a bank that is going ban...
- Question 47: A key function of treasuries in commercial/retail banks is: ...
- Question 48: A financial analyst is trying to distinguish credit risk fro...
- Question 49: A bank customer expecting to pay its Brazilian supplier BRL ...
- Question 50: Which one of the following four statements correctly defines...
- Question 51: Floating rate bonds typically have ________ duration which m...
- Question 52: DeltaFin wants to develop a control scoring method for its R...
- Question 53: Which one of the following four regulatory drivers for opera...
- Question 54: A credit risk analyst is evaluating factors that quantify cr...
- Question 55: Which one of the following four statements about hedging is ...
- Question 56: A corporate bond was trading with 2%probability of default a...
- Question 57: Bank Zilo has $2 million in cash and $10 million in loans co...
- Question 58: What is the order in which creditors and shareholders get re...
- Question 59: Interest rate swaps are:
- Question 60: A portfolio consists of two floating rate bonds and one fixe...
- Question 61: An associate from the finance group has been identified as a...
- Question 62: Which one of the following four alternatives lists the three...
- Question 63: Gamma Bank has $300 million in loans and $200 million in dep...
- Question 64: If a bank is long £500 million pounds, short £300 million in...
- Question 65: Banks duration match their assets and liabilities to manage ...
- Question 66: Which one of the following four exotic option types has anot...
- Question 67: As Japan ___ its budget deficits and ___ its dependence on d...
- Question 68: In the United States, foreign exchange derivative transactio...
- Question 69: To estimate a partial change in option price, a risk manager...
- Question 70: According to the largest global poll of foreign exchange mar...
- Question 71: Asset and liability management is typically concerned with a...
- Question 72: A credit analyst wants to determine if her bank is taking to...
- Question 73: Which of the following attributes of duration gap model typi...
- Question 74: Gamma Bank provides a $100,000 loan to Big Bath retail store...
- Question 75: To hedge equity exposure without buying or selling shares of...
- Question 76: Which of the following reports have been suggested by the FD...
- Question 77: Returns on two assets show very strong positive linear relat...
- Question 78: What is a common implicit assumption that is made when compu...
- Question 79: Modified duration of a bond measures:...
- Question 80: The operational risk policy should include: I. The firm's de...
- Question 81: To estimate the price of gold forwards, an investment analys...
- Question 82: By lowering the spread on lower credit quality borrowers, th...
- Question 83: Which of the activities represent examples of market manipul...
- Question 84: Which of the following statements regarding bonds is correct...
- Question 85: Which one of the following statements correctly identifies r...
- Question 86: Which of the following statements presents an advantage of u...
- Question 87: A corporate bond gives a yield of 6%. A same maturity govern...
- Question 88: Which among the following are shortfalls of the static liqui...
- Question 89: Which of the following are conclusions that could be drawn f...
- Question 90: Why do regulatory standards impose formulaic capital calcula...
- Question 91: A large energy company has a recurring foreign currency dema...
- Question 92: Beta Insurance Company is only allowed to invest in investme...
- Question 93: Which one of the following four attributes would likely help...
- Question 94: Which one of the following statements is an advantage of usi...
- Question 95: Alpha Bank estimates its 1-month, 95% VaR is 30 million EUR....
- Question 96: Jack Richardson wants to compute the 1-month VaR of a portfo...
- Question 97: Which of the following statements about endogenous and exoge...
- Question 98: Which one of the four following statements about Basis point...
- Question 99: Which one of the four following statements about drawdowns i...
- Question 100: Which one of the following four statements best describes ch...
- Question 101: A bank customer chooses a mortgage with low initial payments...
- Question 102: Which one of the following four statements about regulatory ...
- Question 103: Which one of the following statements describes Macauley's d...
- Question 104: When considering the advantages of operational risk function...
- Question 105: Gamma Bank has a significant number of retail customers and ...
- Question 106: The value of which one of the following four option types is...
- Question 107: An asset and liability manager for a large financial institu...
- Question 108: Which one of the four following activities is NOT a componen...
- Question 109: A bank owns a portfolio of bonds whose composition is shown ...
- Question 110: Which of the following statements about the interest rates a...
- Question 111: Which one of the following four statements correctly defines...
- Question 112: In the United States, during the second quarter of 2009, tra...
- Question 113: Arnold Wu owns a floating rate bond. He is concerned that th...
- Question 114: Bank Milo has $4 million in cash and $5 million in loans com...
- Question 115: To reduce the variability of net interest income, Gamma Bank...
- Question 116: After entering the securitization business, Delta Bank incre...
- Question 117: Bank Alpha is making a decision about lending 10-year loans ...
- Question 118: A bank customer expecting to pay its Brazilian supplier BRL ...
- Question 119: Which one of the following four statements about economic ca...
- Question 120: To estimate the forward price of oil, a commodity trader wou...
- Question 121: ThetaBank has extended substantial financing to two mortgage...
- Question 122: An endowment asset manager with a focus on long/short equity...
- Question 123: In early March, an energy trader takes a long position in na...
- Question 124: US-based BetaBank have accumulated Japanese yen, Japanese go...
- Question 125: Which of the following factors would typically increase the ...
- Question 126: A risk analyst is considering how to reduce the bank's expos...
- Question 127: Which of the following statements explain how securitization...
- Question 128: A customer asks a broker employed by AlphaBank to buy Eureka...
- Question 129: The skewness of ABC company's stock returns equal -1.5. What...
- Question 130: Over a long period of time DeltaBank has amassed a large equ...
- Question 131: Which one of the following is a reason for a bank to keep a ...
- Question 132: Which of the following bank events could stress the bank's l...
- Question 133: A bank has a Var estimate of $100 million. It is considering...
- Question 134: Which one of the four following statements regarding minimum...
- Question 135: Which of the following would a bank resort to as a "lender o...
- Question 136: Which one of the four following statements describes a speci...
- Question 137: To hedge a foreign exchange exposure on behalf of a client, ...
- Question 138: Which of the following are typical properties of a statistic...
- Question 139: To estimate the responsiveness of a particular equity portfo...
- Question 140: Which one of the following four factors typically drives the...
- Question 141: To estimate the interest charges on the loan, an analyst sho...
- Question 142: After entering the securitization business, Delta Bank incre...
- Question 143: Gamma Bank provides a $100,000 loan to Big Bath retail store...
- Question 144: BetaFin has decided to use the hybrid RCSA approach because ...
- Question 145: Which one of the following four models is typically used to ...
