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The material covers representative question formats and includes March and June 2018 update notes correcting typos, adjusting assumptions, refining derivations, and improving clarity. Sample problems address confidence intervals for expected asset returns, portfolio return variance and standard deviation using covariance inputs, and multi-asset expected return and volatility calculations with reference to Berk/DeMarzo sections.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":20,"@type":76,"position":81},"https://docshare.wps.com/document/exam/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/society-of-actuaries-exam-ifm-investment-and-financial-markets-exam-ifm-sample-questions-and-solutions-march-2018-update-finance-and-investment/393869/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/society-of-actuaries-exam-ifm-investment-and-financial-markets-exam-ifm-sample-questions-and-solutions-march-2018-update-finance-and-investment/393869.png","ImageObject",300,407,{"name":92,"@type":93},"Cart","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-30","2026-09-26",true,{"@type":102,"interactionType":103,"userInteractionCount":24},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"What is the source basis for these Exam IFM sample questions and solutions?","Question",{"text":112,"@type":113},"The questions and solutions are based on the Corporate Finance textbook by Berk/DeMarzo (Learning Outcomes 1-5) and two study notes, IFM-21-18 and IFM-22-18.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"How are the question numbers distributed between Corporate Finance and the study notes?",{"text":117,"@type":113},"Questions 1-33 come from Corporate Finance, and Questions 34-43 come from the study notes.",{"name":119,"@type":110,"acceptedAnswer":120},"What types of changes are listed in the March 2018 and June 2018 update notes?",{"text":121,"@type":113},"March 2018 updates correct typos and solution or question items, adjust expressions, and refine how correlation is obtained. June 2018 updates revise many questions/solutions to improve clarity and remove ambiguities, and add Question 44.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},393869,1791757556,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":19,"category_name":20,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":24,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":139,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":145,"preview_page_count":4},18829141979164,"https://eur-avatar.wpscdn.com/davatar_6f874abed73319feea01a86fa6f0fab8","SOCIETY OF ACTUARIES  \nEXAM IFM INVESTMENT AND FINANCIAL MARKETS  \nEXAM IFM SAMPLE QUESTIONS AND SOLUTIONS  \nFINANCE AND INVESTMENT  \nThese questions and solutions are based on material from the Corporate Finance textbook by Berk/DeMarzo (Learning Outcomes 1-5 of the Exam IFM syllabus) and two study notes, IFM-21-18 and IFM-22-18. Questions 1-33 are from Corporate Finance and Questions 34–43 are from the study notes.  \nThey are representative of the types of questions that might be asked of candidates sitting for Exam IFM. These questions are intended to represent the depth of understanding required of candidates. The distribution of questions by topic is not intended to represent the distribution of questions on future exams.  \nMarch 2018 update:  \n3: Typo in solution corrected  \n5: Typo in question corrected  \n8: Changed E(X) to E(Rx) in solution  \n11: Deleted correlation input, and now require correlation to be derived from the given table.  \n12: Changed answer C, which could have interpreted as correct  \n40: Arithmetic error in solution corrected  \n41: “Only” deleted from answer choice D  \nJune 2018 update:  \nEdits have been made to questions/solutions 3, 7, 8, 9, 10, 14, 15, 16, 18, 28, 34, 42. These changes improve clarity and remove some possible ambiguities.  \nQuestion 44 has been added.  \nCopyright 2018 by the Society of Actuaries  \nFinance and Investment Questions  \n1) You are given the following information about an asset.  \ni) Using 36 years of data, the average annual asset return is 10% .  \nii) The volatility of the asset’s return, over the same time period, was estimated to be 27% .  \niii) The distributions of each year’s returns are identically distributed and independent from each other year’s returns.  \nCalculate the lower bound of the 95% confidence interval for the asset’s annual expected return, using the approximation formula given in Corporate Finance.  \n(A) 1.0%  \n(B) 2.6%  \n(C) 4.5%  \n(D) 5.5%  \n(E) 8.5%  \nKey: A  \nBecause there are 36 years’ worth of data points and the distributions are IID, the standard error is given by  \nSD 0.27  \nSE =  = ~~   ~~ = 0.045  \n 36  \nBerk/DeMarzo equation 10.9 for the 95% confidence interval is Historical Average Return ± (2×Standard Error) .  \nThus, the lower bound of the 95% confidence interval is 0. 10 − 2 × 0.045 = 0. 10 − 0 .09 = 0.01 = 1% .  \nReference: Berk/DeMarzo, Section 10.3  \n2) You are given the following information about a portfolio with four assets.  \n\n| Asset | Market Value of Asset | Covariance of asset’s return with the portfolio return |\n| --- | --- | --- |\n| I | 40,000 | 0.15 |\n| II | 20,000 | -0.10 |\n| III | 10,000 | 0.20 |\n| IV | 30,000 | -0.05 |\n\nCalculate the standard deviation of the portfolio return.  \n(A) 4.50%  \n(B) 13.2%  \n(C) 20.0%  \n(D) 21.2%  \n(E) 44.7%  \nKey: D  \nSolution: Formula 11.10 in Berk/DeMarzo gives the equation for the variance of a portfolio in terms of assets and covariance with the entire portfolio (where xi is the proportion of the portfolio invested in asset i):  \nVar (RP ) = ∑i xiCov (Ri , RP ) .  \nThe standard deviation is the square root of the variance. Therefore, the standard deviation of the portfolio in the problem is:  \nSD =  \n40, 000 100, 000  \n× (.15) +  \n20, 000 100, 000  \n× (−.10) +  \n10, 000 100, 000  \n× (.20) +  \n30, 000 100, 000  \n× (−.05) = 21.2%  \n.  \nReference: Berk/DeMarzo, Section 11.3  \n3) You are given the following information about the annual returns of two stocks, X and Y:  \ni) The expected returns of X and Y are E[RX] = 10% and E[RY] = 15% .  \nii) The volatilities of the returns are VX = 18% and VY = 20% .  \niii) The correlation coefficient of the returns for these two stocks is 0.25.  \niv) The expected return for a certain portfolio, consisting only of stocks X and Y, is 12% .  \nCalculate the volatility of the portfolio return.  \n(A) 10.88%  \n(B) 12.56%  \n(C) 13.55%  \n(D) 14.96%  \n(E) 16.91%  \nKey: D  \nLet w be the weight of stock X and so 1 – w is the weight of stock Y.  \nThen, the expected re","cbCaitOOxIQjdtWm","https://ap.wps.com/l/cbCaitOOxIQjdtWm","pdf",408921,89,"English","# Finance and Investment Questions\n## Questions 1-33 (Corporate Finance)\n## Questions 34-43 (Study notes)\n## March 2018 update\n## June 2018 update\n## Question 1\n## Question 2\n## Question 3\n## Question 4\n## Question 5","[{\"question\":\"What is the source basis for these Exam IFM sample questions and solutions?\",\"answer\":\"The questions and solutions are based on the Corporate Finance textbook by Berk/DeMarzo (Learning Outcomes 1-5) and two study notes, IFM-21-18 and IFM-22-18.\"},{\"question\":\"How are the question numbers distributed between Corporate Finance and the study notes?\",\"answer\":\"Questions 1-33 come from Corporate Finance, and Questions 34-43 come from the study notes.\"},{\"question\":\"What types of changes are listed in the March 2018 and June 2018 update notes?\",\"answer\":\"March 2018 updates correct typos and solution or question items, adjust expressions, and refine how correlation is obtained. June 2018 updates revise many questions/solutions to improve clarity and remove ambiguities, and add Question 44.\"}]","Society of Actuaries Exam IFM Investment and Financial Markets Exam IFM Sample Questions and Solutions - March 2018 update - Finance and Investment | PDF",1790395135,224]