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1. What is the primary purpose of using quantitative models in finance?
 A) To predict stock prices
 B) To assess risk
 C) To guarantee profits
 D) To visualize data
 Answer: B) To assess risk
 Rationale: Quantitative models are primarily used to assess and manage
risk, rather than to predict specific stock prices or guarantee profits.
2. Which of the following is a common assumption in quantitative
modeling?
 A) Markets are always efficient
 B) Risk preferences are irrelevant
 C) All variables are independent
 D) Historical data is always indicative of future trends
 Answer: A) Markets are always efficient
 Rationale: The Efficient Market Hypothesis is a common assumption in
many models, which posits that markets reflect all available information.
3. In the context of quantitative modeling, what does 'Monte Carlo
Simulation' refer to?
 A) A gambling strategy
 B) A risk assessment technique
 C) A type of regression analysis
 D) A portfolio optimization method
 Answer: B) A risk assessment technique
 Rationale: Monte Carlo Simulations are used to assess risk by
simulating a model's outcomes under various scenarios.
4. What is meant by 'model calibration'?
 A) Adjusting model parameters to fit historical data
 B) Testing the model with real market data
 C) Simplifying the model for easier computation
 D) Ensuring the model complies with regulatory standards
 Answer: A) Adjusting model parameters to fit historical data
 Rationale: Model calibration involves adjusting parameters so that the
model's outputs align with known data.
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