## Test your basic knowledge |

# FRM Foundations Of Risk Management Quantitative Methods

**Instructions:**

- Answer 50 questions in 15 minutes.
- If you are not ready to take this test, you can study here.
- Match each statement with the correct term.
- Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.

**1. T distribution**

**2. GARCH**

**3. Continuously compounded return equation**

**4. Binomial distribution equations for mean variance and std dev**

**5. Confidence ellipse**

**6. Implications of homoscedasticity**

**7. Unconditional vs conditional distributions**

**8. Variance - covariance approach for VaR of a portfolio**

**9. Variance of X+Y**

**10. EWMA**

**11. Covariance**

**12. Standard error for Monte Carlo replications**

**13. Confidence interval for sample mean**

**14. Tractable**

**15. POT**

**16. Variance of aX + bY**

**17. GPD**

**18. Confidence interval (from t)**

**19. Key properties of linear regression**

**20. K - th moment**

**21. Sample mean**

**22. Priori (classical) probability**

**23. GEV**

**24. Extending the HS approach for computing value of a portfolio**

**25. Overall F - statistic**

**26. Beta distribution**

**27. Limitations of R^2 (what an increase doesn't necessarily imply)**

**28. Mean reversion in variance**

**29. Type II Error**

**30. Homoskedastic**

**31. Central Limit Theorem**

**32. Simulating for VaR**

**33. Significance =1**

**34. Multivariate Density Estimation (MDE)**

**35. Shortcomings of implied volatility**

**36. Regime - switching volatility model**

**37. Exponential distribution**

**38. Weibul distribution**

**39. Expected future variance rate (t periods forward)**

**40. Mean reversion**

**41. Two drawbacks of moving average series**

**42. Potential reasons for fat tails in return distributions**

**43. Type I error**

**44. LFHS**

**45. Law of Large Numbers**

**46. Poisson Distribution**

**47. LAD**

**48. Inverse transform method**

**49. Two ways to calculate historical volatility**

**50. Control variates technique**