PAPAIA Sample Questions

For an MBA to become a VP without running afoul of the SEC or the CFTC and going MIA in Cell Block D he or she needs to do more than sit around sipping VT’s and reading the FT, you need to pass the P.A.P.A.I.A. (that isn’t as dirty as it sounds). That test is harder than DNCn2C*, so keep this on the QT but here are some sample questions I dug up for any BMOC thinking they can knock that thing out EZ:

1. When assets under management for a single client grow greater than $10m, the client should receive:

a. A free toaster
b. An updated copy of IRS form I69
c. A hand job
d. All of the above

2. What does 2 and 20 refer to?

a. 2% management fee, 20% incentive fee
b. The Spitzer Limit: more than 2 hookers and 20 lines of coke is overkill
c. CDO^2 = square your CDO for 20 times the losses
d. 200% management fee, 20% incentive fee

3. A statistical distribution with long tails is characteristic of:

a. Leptokurtosis
b. Platykurtosis
c. Necrokurtosis
d. Kurthawkosis

4. Reporting only years with high returns is an example of:

a. Selection bias
b. Sound marketing
c. Bullshit artist bias
d. All of the above

5. An example of zero-risk investment is:

a. US treasury bonds
b. Inflation-adjusted US treasury bonds
c. Nazi gold in a vault in Zurich
d. A house with no flood insurance (housing prices always go up, right?)

6. When Goldfinger threatened to irradiate all the gold in Fort Knox, this was:

a. A hedge
b. Volatility arbitrage
c. Still less risky than shorting CROX
d. Page 16 of the Bear-Stearns employee handbook

7. Primary risks of the carry trade include:

a. Exchange rate fluctuations
b. Your dumb friend who won’t shut up about the Big Mac Index
c. Yellow Fever mixed with Montezuma’s Revenge
d. Waking up in the middle of the night and realizing you have no tangible assets and you’re counting on sleazy guys in fake Versace shirts paying you enough rubles to keep a bunch of stressed out guys with samurai swords on the wall from going all Katsumoto on your ass

8. A regression with high F-stat and a low p-value (below .05) means:

a. 95% of the chicks you fuck with will only do “everything but”
b. All independent variables are statistically significant
c. There is less than a 5% chance you know what the F-stat option b) means
d. Something about Roman coins

9. Commodities trades in the US are regulated by which agency?

a. The SEC
b. The Commodity Futures Trading Commission
c. The Bureau of Printing and Engraving
d. The FAA (because at the first sign of trouble I’m on the next plane)

10. Making the last person out of a cab pay the fare is known as:

a. Nimbleness incentive fee
b. Leveraging the middle traunch
c. The Canary Wharf Cut and Wun
d. Bitch seat arbitrage

Scoring:  For every question you answered a, b, c, or d, deduct one point, as the correct answer is "OMG who gives a fuck?" In question 10, extra credit for diving out the window before the cab comes to a complete stop.

*-Dubbing Nicholas Cage into Cantonese