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PRMIA Exam 8006 Topic 1 Question 99 Discussion

Actual exam question for PRMIA's 8006 exam
Question #: 99
Topic #: 1
[All 8006 Questions]

Arrange the following rates in descending order, assuming an upward sloping yield curve:

1. The 10 year zero rate

2. The forward rate from year 9 to 10

3. The yield-to-maturity on a 10 year coupon bearing bond

Show Suggested Answer Hide Answer
Suggested Answer: A

Futures contracts carry no gamma. Only options have gamma. Choice 'a' is the correct answer. Any instrument whose price varies in a linear fashion with respect to the underlying will have gamma equal to zero.


by Ronna at Sep 19, 2024, 12:58 AM

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Rebecka
7 months ago
Parabolic? Sounds like my last attempt at baking a cake. I'm going with B, because who doesn't love a good negative gamma?
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Dominque
7 months ago
Hmm, that's interesting. I'll have to review that concept again.
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Malcom
7 months ago
Gamma? Isn't that the name of my cat? Oh wait, that's Gizmo. Hmm, I'll go with C, just for the fun of it.
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Miesha
6 months ago
I'm going with option C, parabolic, just for fun!
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Aliza
6 months ago
I'm not sure, but I think gamma is dependent upon the convexity.
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Kati
6 months ago
I believe gamma is always negative in a commodity futures contract.
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Dean
6 months ago
I think gamma is related to the convexity of the futures contract.
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Helene
7 months ago
Actually, I believe the gamma can be dependent upon the convexity.
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Rebbecca
7 months ago
Haha, is this a trick question? The answer has to be D. Convexity all the way!
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Evan
6 months ago
I'm going with A. Zero seems like the safest bet.
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Socorro
6 months ago
I'm not sure, but I think it might be C. Parabolic sounds right to me.
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Leota
6 months ago
I think the answer is D too. Convexity is key.
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Dominque
7 months ago
I think the gamma in a commodity futures contract is always negative.
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