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Exam Code: 8006 Vendor: PRMIA Name: Exam I: Finance Theory Financial Instruments Financial Markets - 2015 Edition 287 Q&A with Explanation Last Update: Jun 6, 2026
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Exam Code:
8006
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287 Q&A's
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287 Q&A's

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Exam I: Finance Theory Financial Instruments Financial Markets - 2015 Edition Questions and Answers

Question 1

[According to the PRMIA study guide for Exam 1, Simple Exotics and Convertible Bonds have been excluded from the syllabus. You may choose to ignore this question. It appears here solely because the Handbook continues to have these chapters.]

The profit potential from the conversion of convertible bonds into stock is limited by

Options:

A.

the issuer ' s option to call the security at short notice

B.

conversion premium charged by the issuer

C.

a rise in interest rates

D.

volatility of the stock

Question 2

Which of the following statements are true:

I. An interest rate swap is equivalent to the swap counterparties placing deposits with each other, one carrying a fixed rate of interest and the other a floating rate

II. The parties to a currency swap exchange principals

III. The risky leg in an IRS is the floating rate leg

IV. Swaps do not carry counterparty risks

Options:

A.

I, II and III

B.

I and II

C.

III and IV

D.

I, II, III and IV

Question 3

The two components of risk in a commodities futures portfolio are:

Options:

A.

Changes in the convenience yield and storage costs

B.

Changes in spot prices and carrying costs, also called commodity lease rates

C.

Changes in interest rates and spot prices

D.

The risk from change in basis and interest rates

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