QUESTION: 541

Given the following points: (-2, 0), (-1,0), (0,1), (1, 1) and (2, 3) What is the slope of the regression line?

None of these answers
0.6
0.0
0.5
0.7

Answer(s): E

Explanation:

For this, you need to create tables with columns for X,Y,XY,X^2,Y' and Y-Y'. This will be as follows.
XYXY X^2 Y'Y-Y'
-2004-0.40.4
-10010.3-0.3
010010
11111.7-0.7
23642.40.6
Sum057100
N=5.
The regression equation is Y' = a + bX.
Then to find the slope, which is b, use the formula
b = [n(SXY)-(SX)(SY)]/[n(SX^2)-(SX)^2] where here S stands for "Sum of." b = [5(0)-(0)(5)]/[5(10)-0] = 0.7

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QUESTION: 542

Which of the following statements regarding confidence levels and/or tests of significance is/are false? Choose the best answer.

In most hypothesis tests, the significance level is set equal to 0.10, 0.05, or 0.01.
All else equal, the probability of a Type I error decreases as the level of confidence increases.
The probability of a Type I error is denoted by the Greek letter alpha.
The confidence level of a hypothesis test can be found by subtracting the level of significance from the number one.
More than one of these answers is false.
The significance level of a test is equal to the power of a test.

Answer(s): F

Explanation:

Remember that the power of the test is equal to (1 - Type II error probability). This is because in most hypothesis tests, the level of significance, denoted by alpha, is set equal to the probability of a Type I error.
Statisticians are primarily concerned with the probability of a Type I error, and rarely specify the probability of a Type II error. Determining the probability of a Type II error, which is defined as the act of incorrectly failing to reject the null hypothesis, is inherently difficult to determine. The probability of a Type I error, however, can be determined with relative ease. A Type I error is defined as the act of incorrectly rejecting the null hypothesis.
The remaining answers are all correct.

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QUESTION: 543

In an investment environment, an initial outlay of $1 grows to $1.23 in 3 years. If you are expecting a cash inflow of $500 in 3 years, what's the present value of the cash flow to you?

$431.2
$452.25
$406.5
$615

Answer(s): C

Explanation:

The discount factor for 3 years is 1/1.23. Hence, the PV of $500 in 3 years is 500/1.23 = 406.5.

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QUESTION: 544

The median and the mode of the sample: 3, 2, 4, 5, 6, 99, 99, 100 equal:

99, 6
6, 99
5, 99
5.5, 99

Answer(s): D

Explanation:

The mode equals the most common observation; in this case, it is 99.
If the number of observations is even, the median is the mean of the two middle observations. In this dataset, arrange the data in ascending order and select the 4th and 5th observations. These happen to be 5 and 6. The median is then 5.5.

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QUESTION: 543

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