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Free CFA-Level-I Exam Braindumps (page: 218)

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Which of the following is not a characteristic of a binomial probability distribution?

  1. Probability of success remains constant from trial to trial
  2. Each outcome results from two trials
  3. Each trial is independent
  4. All of these answers are characteristics of the binomial distribution?
  5. Each outcome is mutually exclusive

Answer(s): B

Explanation:

The binomial distribution does not state that outcomes have to come from a certain number of trials.



The probability that a technology stock will fall in price over the next 12 months, given a decline in consumer confidence over the same period, is called:

  1. an unconditional probability.
  2. a conditional probability.
  3. a joint probability.
  4. a likelihood.

Answer(s): B

Explanation:

A conditional probability takes the form of P(A|B), the probability that an event (A) will happen, given the occurrence of another event, B. It is conditional because it is conditioned on another event, B.



The sampling method commonly employed when the population is scattered over a large geographic area is known as:

  1. systematic random sampling.
  2. simple random sampling.
  3. stratified random sampling.
  4. cluster sampling.

Answer(s): D

Explanation:

Cluster sampling is a modified form of stratified random sampling used to reduce sampling costs when the population is scattered over a large geographic area.



Giorgio offers the person who purchases an 8 ounce bottle of Allure two free gifts, either an umbrella, a 1 ounce bottle of Midnight, a feminine shaving kit, a raincoat or a pair of rain boots. If you purchased Allure what is the probability you selected at random an umbrella and a shaving kit in that order?

  1. None of these answers
  2. 0.00
  3. 0.20
  4. 0.05
  5. 1.00

Answer(s): D

Explanation:

There are 5 types of gifts. The probability of choosing an umbrella first is 1/5. Then the probability of choosing a shaving kit from the remaining four gifts is 1/4. So 1/5*1/4 = 1/20 = 0.05.






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