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Free CFA-Level-I Exam Braindumps (page: 237)

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PDF with 3963 Questions

Mileage tests were conducted on a randomly selected sample of 100 newly developed automobile tires. The average tread wear was found to be 50,000 miles with a standard deviation of 3,500 miles. What is the best estimate of the average tread life in miles for the entire population of these tires?

  1. None of these answers
  2. (3,500/100)
  3. 3,500
  4. 50,000
  5. (50,000/100)

Answer(s): D

Explanation:

The sample mean is a good estimate of the population mean.



You have a portfolio of two assets, X and Y. X has an expected return of 15% with a variance of 900%%, and Y has an expected return of 9% with a variance of 400%%. Assume the covariance between X and Y is 225%%. For a portfolio composed of 50% X and 50% Y, find the expected return and variance.

  1. 10%, 437.5%%.
  2. 12%, 437.5%%.
  3. 12%, 367.5%%.
  4. 14%, 512.5%%.

Answer(s): B

Explanation:

The expected return is 0.5*15% + 0.5*9% = 7.5% + 4.5% = 12%. The variance will be trickier. The variance will be equal to (w_X)^2 * (sigma_X)^2 + (w_Y)^2 * (sigma_Y)^2 + 2 * w_X * w_Y * cov(X,Y) = (0.5)^2 * 900%% + (0.5)^2 * 400%% + 2 * (0.5) * (0.5) * 225%% = 437.5%%.



How much must you deposit today if you wish to have $20,000 in 10 years, assuming that interest accumulates at 9% per year, compounded annually?

  1. $2,000.00
  2. $9,104.36
  3. $8,448.22
  4. $7,236.99
  5. $7,103.49

Answer(s): C

Explanation:

On the BAII Plus, press 10 N, 9 I/Y, 0 PMT, 20000 FV, CPT PV. On the HP12C, press 10 n, 9 i, 0 PMT, 20000 FV, PV. Note that the answer is displayed as a negative number. Make sure that the BAII Plus has the P/Y value set to 1.



What is another name for the alternate hypothesis?

  1. None of these answers
  2. Rejected hypothesis
  3. Research hypothesis
  4. Null hypothesis

Answer(s): C

Explanation:

The alternate is also referred to as the research hypothesis.






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