The probability that a technology stock will fall in price over the next 12 months, given a decline in consumer confidence over the same period, is called:
Answer(s): B
A conditional probability takes the form of P(A|B), the probability that an event (A) will happen, given the occurrence of another event, B. It is conditional because it is conditioned on another event, B.
The sampling method commonly employed when the population is scattered over a large geographic area is known as:
Answer(s): D
Cluster sampling is a modified form of stratified random sampling used to reduce sampling costs when the population is scattered over a large geographic area.
Giorgio offers the person who purchases an 8 ounce bottle of Allure two free gifts, either an umbrella, a 1 ounce bottle of Midnight, a feminine shaving kit, a raincoat or a pair of rain boots. If you purchased Allure what is the probability you selected at random an umbrella and a shaving kit in that order?
There are 5 types of gifts. The probability of choosing an umbrella first is 1/5. Then the probability of choosing a shaving kit from the remaining four gifts is 1/4. So 1/5*1/4 = 1/20 = 0.05.
The quarterly compounded rate is 8% quoted on an annualized basis. The equivalent annually compounded rate is:
To solve such problems, think about investing a dollar for a year. The final amount should be the same under both the quotations. Under annually compounded rate, r, $1 grows to 1+r in 1 year. Under quarterly compounding, it grows to (1+0.08/4)^4 = 1.0824. Since these two should be equal, we get 1+r = 1.0824, giving r = 8.24%. Note that the annually compounded rate must be larger than the quarterly rate, ruling out (d) automatically.
The least squared regression minimizes the:
The least squared regression minimizes the square of the distance between the observed points and the regression line.
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