CSI CSC2 Exam Dumps

Standard deviation measures the dispersion or variability of returns around the mean of a portfolio or security's historical performance. It is a widely used statistical metric in finance to assess risk, as it captures the degree to which returns can deviate from their expected value. A high standard deviation indicates higher risk, reflecting greater volatility in returns, while a low standard deviation suggests more stable performance.

Beta measures market risk relative to a benchmark, correlation measures the relationship between securities, and alpha represents excess return above a benchmark. However, standard deviation is the most common measure of total risk applicable to portfolios and individual securities.

CSC Volume 2, Chapter 15: Introduction to the Portfolio Approach -- Measuring Risk.

CSC Volume 2, Chapter 16: The Portfolio Management Process -- Risk Metrics.

The buy-side portfolio manager is responsible for managing investments on behalf of institutional or retail clients. A critical responsibility is to provide the buy-side trader with pertinent market information and analysis of risks to ensure that trades are executed effectively and aligned with the investment strategy.

Explanation of Options:

A . Maintain Liquidity: Incorrect. This is more relevant to market makers or sell-side dealers who provide liquidity in the market.

B . Contact with Dealers: Incorrect. While buy-side managers interact with dealers, their primary role is to strategize, not to maintain constant contact.

C . Informing Traders: Correct. Buy-side managers analyze risks and market conditions and pass this information to traders for execution.

D . Provide Information to Department Heads: Incorrect. This is not a core responsibility of buy-side portfolio managers.

CSC Volume 2, Chapter 27: Responsibilities of buy-side portfolio managers and their interactions with traders.

The exchange that lists and trades the futures contract sets the minimum initial margin rate. This margin is required as collateral to ensure performance under the contract. The exchange determines this rate based on the volatility and risk of the underlying asset, and it is subject to adjustment depending on market conditions.

Other options:

Investment dealer: Acts as a facilitator but does not set the margin rates.

Buyer/Seller: Must meet the margin requirements but do not set them.

Volume 1, Chapter 10: Derivatives, section on 'Futures Contracts' describes the role of exchanges in setting margin requirements.