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Free CFA-Level-I Exam Braindumps (page: 203)

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PDF with 3963 Questions

A cumulative frequency distribution on days absent during a calendar year by employees of a manufacturing company is shown below.

Days Absent Cumulative Number of Employees
0 - 260
3 - 531
6 - 814
9 - 116
12 - 142

How many employees were never absent?

  1. None of these answers
  2. 29
  3. Cannot be determined from the given data
  4. 31
  5. 60

Answer(s): C

Explanation:

We were given only the number of employees in the 0-2 group. So we do not know how many were never absent since this group includes those who were absent 1 and 2 days.



Judging from recent experience, 5 percent of the worm gears produced by an automatic, high speed machine are defective. What is the probability that out of six gears selected at random, exactly zero gears will be defective?

  1. 0.500
  2. 0.167
  3. 0.735
  4. 0.001
  5. None of these answers

Answer(s): C

Explanation:

Using Binomial probability with n = 6, p = 0.05 and q = 0.95 and r = 0 we get [6!(0.05^0)(0.95^6)]/0!(6 - 0)! = 0.735.



Armando Delrio, a quantitative analyst with Brown Brothers Brokerage, has been instructed to create a regression analysis comparing the relationship between same store sales figures for a batch of retail stocks and marketing expenses for the same series of stocks. In order to adhere to the traditional seven-step method of hypothesis testing, Armando should begin his analysis by performing which of the following actions? Choose the best answer.

  1. Formulating the hypothesis
  2. Collecting the data
  3. Stating the significance level
  4. None of these answers is correct
  5. Identifying the test statistic
  6. Identifying the probability distribution

Answer(s): A

Explanation:

Hypothesis testing involves a series of seven explicit steps:
Step 1: Formulating and stating the hypothesis
Step 2: Identifying the appropriate test statistic and its probability distribution Step 3: Specifying the significance level
Step 4: Stating the decision rule
Step 5: Collecting the data and performing the necessary calculations Step 6: Making the statistical decision
Step 7: Making the economic/investment decision.
In this example, Armando Delrio, a quantitative analyst, has been instructed to perform a regression analysis in which a hypothesis is tested. The first step in this process is the formulation of the hypothesis.



The sampling distribution of the sampling mean is:

  1. the distribution of the means of all possible samples of a given size from a given population.
  2. the distribution of all possible samples of a given population.
  3. the distribution of all possible means of a given population.
  4. the distribution of the means of all possible samples of a given population.

Answer(s): A

Explanation:

The sampling distribution of the sample means is a probability distribution of all possible sample means of a specific sample size.






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