SOA Exam 6

Section B


by Cynic

  1. What's the difference between short selling and buying on margin? (Investments -- Pages 88-91)

  2. What is the efficient frontier and how is it identified? (Investments -- Pages 224-236)

  3. What are the assumptions used in the CAPM (Capital Asset Pricing Model) (Investments -- Page 264)

  4. What are the 3 forms of the Efficiency Market Hypothesis? (Investments -- Pages 342-343)

  5. What are some market anomalies (that contradict the Efficiency Market Hypothesis)? (Investments -- Pages 359-363)

  6. What are bond features that affect interest rate risk? (HBFIS -- Pages 93-94)

  7. What's the difference between modified duration and effective duration? (HBFIS -- Pages 106-107)

  8. What are the factors that affect risk premium? (HBFIS -- Pages 132-136)

  9. What are the theories that explain the shapes of the yield curve? (HBFIS -- Pages 149-153)

  10. Define spot rate, forward rate, short rate, and YTM (Yield-To-Maturity). (VISFI -- Pages 2-8)

  11. Compare CAPM and APT (Arbitrage Pricing Theory) Model. (Investments -- Chapters 9 & 11)
    Market portfolio (unobservable) Well-diversified portfolio (observable)
    Risk-Return Theory No-Arbitrage Theory
    Requires many investors to make changes in order to affect prices Requires only a small number of investors to affect prices
    Beta-Price relationship holds for all individual securities Beta-Price relationship holds for all but a small number of individual securities

  12. What are the advantages/disadvantages of using index models? (Investments -- Chapter 10)

  13. What are the advantages/disadvantages of international investing? (Investments -- Chapter 25)

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