# Thread: FRM and general information

1. 5. Which of the following comes under Operational Risk

A. Model Risk and People Risk
B. Model Risk and Legal Risk
C. People Risk and Legal Risk
D. All of the above
E. None of the above  Reply With Quote

2. 6. Calculate Sharpe Measure, Treynor Measure with the following information

Portfolio Expected Return = 20%
Standard Deviation = 30%
Risk Free Rate = 3%

A. Both Sharpe Measure and Treynor Measure cannot be calculated with the above information
B. Sharpe Measure = 0.57 , Treynor Measure cannot be calculated with the above information
C. Sharpe Measure cannot be calculated with the above information, Treynor Measure = 0.57
D. Sharpe Measure = 0.57, Treynor Measure = 0.17  Reply With Quote

3. 7. Calculate the Risk Premium of an asset with the following info:
Quantity of Risk = 1.5
Expected Return of Portfolio = 20%
Risk Free Rate = 3%
Expected Return of Market = 15%

A. 0.255
B. -0.255
C. 0.18
D. -0.18
E. 0.08  Reply With Quote

4. 8. Calculate the Information Ratio with the following information

Tracking Error = 4%
Expected Return of Market = 15%
Expected Benchmark Return = 6%

A. 2.25
B. 0.0036
C. -2.25
D. -0.0036
E. Cannot be determined with the above information  Reply With Quote

5. Originally Posted by financetutelage 6. Calculate Sharpe Measure, Treynor Measure with the following information

Portfolio Expected Return = 20%
Standard Deviation = 30%
Risk Free Rate = 3%

A. Both Sharpe Measure and Treynor Measure cannot be calculated with the above information
B. Sharpe Measure = 0.57 , Treynor Measure cannot be calculated with the above information
C. Sharpe Measure cannot be calculated with the above information, Treynor Measure = 0.57
D. Sharpe Measure = 0.57, Treynor Measure = 0.17
Sharpe ratio = (r - rf)/std dev = 0.57

Treynor ratio = (Average Return of the Portfolio - Average Return of the Risk-Free Rate) / Beta of the Portfolio

As beta is not provided, Treynor ratio cannot be calculated.

Ans: B  Reply With Quote

6. Originally Posted by financetutelage 8. Calculate the Information Ratio with the following information

Tracking Error = 4%
Expected Return of Market = 15%
Expected Benchmark Return = 6%

A. 2.25
B. 0.0036
C. -2.25
D. -0.0036
E. Cannot be determined with the above information
Not sure...seems E   Reply With Quote

7. The answer is D  Reply With Quote

8. The answer for question No.5 is D
The answer for question No.6 is B
The answer for question No.7 is C
The answer for question No.8 is E

Explanations in coming Post  Reply With Quote

9. 9. Positively Skewed distributions has

A. Has many outliers in the left tail of distribution
B. Has many outliers in the right tail of distribution
C. Has many outliers in both right and left tail of distribution
D. Has outliers in center of the distribution
E. Has no outliers at all  Reply With Quote

10. Originally Posted by financetutelage 9. Positively Skewed distributions has

A. Has many outliers in the left tail of distribution
B. Has many outliers in the right tail of distribution
C. Has many outliers in both right and left tail of distribution
D. Has outliers in center of the distribution
E. Has no outliers at all
Ans. B

Outliers should be in the right side  Reply With Quote

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