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Free CFA-Level-I Exam Braindumps (page: 124)

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A population consists of all the weights of all defensive tackles on Sociable University's football team. They are:
Johnson, 204 pounds; Patrick, 215 pounds; Junior, 207 pounds; Kendron, 212 pounds; Nicko, 214 pounds; and Cochran, 208 pounds. What is the population standard deviation (in pounds)?

  1. About 4
  2. None of these answers
  3. About 40
  4. About 100
  5. About 16

Answer(s): A

Explanation:

Population variance = (Sum of squared deviation from the mean)/N. The mean is 210. Population variance = (36 + 25 + 9 + 4 + 16 + 4)/6 = 94/6 = 15.67. Population standard deviation is the square root of the population variance = 3.958.
xx-mean(x-mean)^2
204-636
215525
207-39
21224
214416
208-24



Which measure of dispersion disregards the algebraic signs (plus and minus) of each difference between X

and the mean?

  1. Standard deviation
  2. Variance
  3. Mean deviation
  4. Mean
  5. None of these answers

Answer(s): C

Explanation:

The mean deviation is the mean of the absolute values of the deviations from the mean.



Sweetwater & Associates write weekend trip insurance at a very nominal charge. Records show that the probability that a motorist will have an accident during the weekend and file a claim is 0.0005. Suppose they wrote 400 policies for the coming weekend, what is the probability that exactly two claims will be filed?

  1. 0.0164
  2. 0.0001
  3. 0.8187
  4. 0.2500
  5. None of these answers

Answer(s): A

Explanation:

This is a binomial probability. The probability of getting r successes out of n trials where the probability of success each trial is p and probability of failure each trial is q (where q = 1-p) is given by: n!(p^r)[q^(n-r)]/r!(n-r)!.
Here n = 400, r = 2,p = 0.0005 and q = 0.9995. Therefore we have 400!(0.0005^2)(0.9995^398)/2!398! = 0.0164.



The semiannually compounded rate is 10% quoted on an annualized basis. The equivalent annually compounded rate is:

  1. 10.25%
  2. 10.5%
  3. 9.65%
  4. 10.1%

Answer(s): A

Explanation:

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 semiannual compounding, it grows to (1+0.1/2)^2 = 1.1025. Since these two should be equal, we get 1+r = 1.1025, giving r = 10.25%. Note that the annually compounded rate must be larger than the semiannually rate, ruling out 9.65 automatically.






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