Question 1

Which term best describes a dataset that includes a mix of organized, structured financial data and unstructured text data from customer reviews?

Options :

A : Structured data

B : Unstructured data

C : Semi-structured data

D : Binary data

Answer: C

Question 2

A financial institution finds that the system surrounding its risk model no longer aligns with its IT infrastructure requirements. To align with new standards, which adaptation task should they focus on?

Options :

A : Core adaptation (Ct)

B : Model adaptation (Mt)

C : Process review

D : System adaptation (St)

Answer: D

Question 3

A financial institution is creating a model inventory. Which of the following should be included to ensure comprehensive governance?

Options :

A : Only the model’s purpose and validation report.

B : Model owner, but not developer information, for clarity.

C : A description of model assumptions but not its risk classification.

D : Model owner, purpose, methodology, assumptions, limitations, and risk tier.

Answer: D

Question 4

A portfolio manager is using reinforcement learning to maximize returns over time. To evaluate each policy, he wants to calculate the long-term value of returns using the Bellman equation, considering both immediate rewards and discounted future rewards. Which function does he use to achieve this?

Options :

A : Policy function

B : Reward function

C : Value function V(s)

D : State-action function Q(s,a)

Answer: C

Question 5

In model validation, why is it important to conduct “effective challenge” by independent parties?

Options :

A : To limit validation to just a formality.

B : To ensure validation is solely focused on confirming the model’s accuracy.

C : To critically analyze and identify model assumptions, limitations, and weaknesses.

D : To improve the model without considering weaknesses.

Answer: C

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