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Free CFA-Level-I Exam Braindumps (page: 239)

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PDF with 3963 Questions

The expected value of Y is 9 and the expected value of X is 3. If X and Y are uncorrelated and you run a regression of Y against X, the intercept term will equal ________.

  1. 9
  2. 0
  3. none of these answers
  4. 3

Answer(s): A

Explanation:

Since the correlation is given to be zero, the slope will be zero and hence, R-square will be zero i.e. the variance of the ranking of a trader in one year is not explained to any extent by his ranking in the previous year.
Thus, regardless of his ranking in previous year, he is likely to be either "Great" or "Not- great" in this year. His expected score is then equal to 0.5*1 + 0.5*0 = 0.5. The expected value of the dependent variable is equal to the intercept term when slope equals zero (remember this!!)



Given the following points: (-2, 0), (-1,0), (0,1), (1, 1) and (2, 3) What is the Y intercept of the regression line?

  1. 1.0
  2. None of these answers
  3. 1.5
  4. 0.7
  5. 0.0

Answer(s): A

Explanation:

For this, you need to create tables with columns for X,Y,XY,X^2,Y' and Y-Y'. This will be as follows.
XYXY X^2 Y'Y-Y'
-2004-0.40.4
-10010.3-0.3
010010
11111.7-0.7
23642.40.6
Sum057100
N=5.
The regression equation is Y' = a + bX.
First, find the slope, which is b, use the formula
b = [n(SXY)-(SX)(SY)]/[n(SX^2)-(SX)^2] where S stands for "Sum of." b = [5(0)-(0)(5)]/[5(10)-0]=0.7 The Y intercept is a.
a = [S(Y)/n]-b[SX/n]
a = 5/5 - 0.7[0/5] = 1.



What is the remaining balance on a $100,000 loan after making monthly payments of $733.76 for 10 years, if the interest rate is 8% per year, compounded monthly?

  1. $86,204.11
  2. $11,948.80
  3. $0
  4. $87,725.54
  5. $91,343.92

Answer(s): D

Explanation:

On the BAII Plus, press 120 N, 8 divide 12 = I/Y, 100000 PV, 733.76 +/- PMT, CPT FV. On the HP12C, press 120 n, 8 ENTER 12 divide i, 100000 PV, 733.76 CHS PMT, FV. The remaining balance will be displayed as a negative number. Make sure the BAII Plus has the P/Y value set to 1.



What are the two rejection areas in using a two-tailed test and the 0.01 level of significance?

  1. None of these answers
  2. Above 1.96 and below -1.96
  3. Above 1.645 and below -1.645
  4. Above 1.00 and below -1.00
  5. Above 2.58 and below -2.58

Answer(s): E

Explanation:

0.01 means that we are considering a 99% level of significance. For this, we can find the z-value to be +/- 2.58.






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