What is the variable used to predict the value of another called?
Answer(s): E
The dependent variable is the variable Y which is being predicted by the X variable, the independent variable.The regression is written as Y = a + bX. The letter "a" is the Y intercept and b is the slope of the line.
A mortgage holding company has found that 3% of its mortgage holders default on their mortgage and lose the property. Furthermore, 90% of those who default are late on at least two monthly payments over the life of their mortgage as compared to 45% of those who do not default.What is the probability that a mortgagee with two or more late monthly payments will default on the mortgage and lose the property?
Answer(s): B
We have P(def)=0.03. P(not def) = 0.97. P(two late payments/def) = 0.90. P(two late payments/not def) = 0.45.Using Bayes formula: p(def/two late payments) = (0.03*0.9)/(0.03*0.9 + 0.97*0.45) = 0.058.
Which of the following are true regarding correlation?
Answer(s): A
II is true. Because the correlation between two random variables X and Y is Cov(X,Y)/[(sigma_X)*(sigma_Y)], III is true. I is false, because correlation is a number that can take on values between -1 and +1, inclusive. A value of -1 indicates perfectly negative linear correlation.
You are examining a portfolio composed of 10% money-market investments, 30% bonds, and 60% stocks. Last year, the return on the money-market investments was 4%; the return on bonds was 6%, and the return on stocks was 7%. What is the portfolio weighted average return?
Answer(s): C
The portfolio weighted-average mean return is equal to the sum (as i goes from 1 to n) of w_i * X_i, where w_i is the percentage weight in the portfolio of the ith asset, and X_i is the investment return of the ith asset. Here, we get a weighted mean of 0.10 * 0.04 + 0.30 * 0.06 + 0.60 * 0.07 = 6.40%.
If you owe $4,500 today and will repay it with 8 annual payments of $900, beginning next year, what is the interest rate per year, compounded annually, that you are paying?
On the BAII Plus, press 8 N, 4500 PV, 900 +/- PMT, 0 FV, CPT I/Y. On the HP12C, press 8 n, 4500 PV, 900 CHS PMT, 0 FV, i. Note that the PMT must be entered with a sign that is opposite that given the PV. Make sure the BAII Plus has the P/Y value set to 1.
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