Free CFA-Level-I Exam Braindumps (page: 144)

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A survey of 144 retail stores revealed that a particular brand and model of a VCR retails for $375 with a standard deviation of $20.

If 95% and 98% confidence intervals are developed to estimate the true cost of the VCR, what difference would they have?

  1. Interval widths
  2. Z-variates
  3. None of these answers
  4. Both interval widths and z-variates
  5. Standard errors

Answer(s): D

Explanation:

The interval widths and the z variates differ according to the rule chosen. The standard error is the same regardless.



What is a Type II error?

  1. Rejecting a false alternative hypothesis
  2. Accepting a false null hypothesis
  3. None of these answers
  4. Accepting a false alternative hypothesis
  5. Rejecting a false null hypothesis

Answer(s): B

Explanation:

The type II error is accepting the null hypothesis when it is actually false.



Which of the following statements regarding hypothesis testing is false?

  1. If the population standard deviation is known, then the standard deviation of the sample is found by dividing the population standard deviation by the square root of "n."
  2. The test statistic is also known as the "critical value."
  3. A Type II error is defined as the act of incorrectly failing to reject the null hypothesis.
  4. The level of significance is denoted by the Greek letter alpha.
  5. Despite the different ways to formulate a hypothesis, the null hypothesis is always tested at the point of equality.
  6. More than one of these answers is incorrect.

Answer(s): B

Explanation:

The test statistic is measured AGAINST the critical value. The test statistic is defined as "...a quantity, calculated on the basis of sample, whose value is the basis for deciding whether to reject or not reject the null hypothesis." The critical value is found by referencing the probability distribution for the series (z-distribution, t- distribution, Chi-squared distribution, F-distribution, etc.).
The remaining answers are correct.



What is the Net Present Value of this series of annual cash flows using an interest rate of 20% per year: Year
0: <$6,000>, Year 1: $4,000, Year 2: $3,000, Year 3: $2,000, Year 4: $1,000? (Note that the <> are used to indicate a negative number).

  1. $1,077.49
  2. $1,056.33
  3. $589.11
  4. $1,134.39
  5. $981.21

Answer(s): B

Explanation:

On the BAII Plus, press CF 2nd CLRWork 6000 +/- ENTER DownArrow 4000 ENTER DownArrow DownArrow 3000 ENTER DownArrow DownArrow 2000 ENTER DownArrow DownArrow 1000 ENTER DownArrow DownArrow 2nd Quit. Then press NPV 20 ENTER DownArrow CPT. On the HP12C, press these keys: 6000 CHS BlueShift CFo 4000 BlueShift CFj 3000 BlueShift CFj 2000 BlueShift CFj 1000 BlueShift CFj. Then press 20 i, YellowShift NPV. The "DownArrow" represents the downward-pointing arrow on the top row of the BAII Plus keyboard. Make sure that the BAII Plus has the P/Y value set to 1.






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