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Free CFA-Level-I Exam Braindumps (page: 268)

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A 95% confidence interval for a population parameter signifies which of the following?

  1. 95% of similarly constructed intervals will contain the population parameter.
    II. For a given sample size, 95% of the samples will have the sample statistic for the population parameter lie within the specified confidence interval around the actual population parameter.
    III. The confidence interval will correctly estimate the population parameter with a probability of 95%
  2. III only
  3. I, II & III
  4. I only
  5. II only
  6. I & II

Answer(s): E

Explanation:

Note that III is incorrect since the confidence interval is a range estimate and hence, cannot represent a point estimate of the population parameter itself.



The probability that a mutual fund will generate a positive return in the next 12 months is called:

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

Answer(s): B

Explanation:

An unconditional probability takes the form of P(A), the probability that an event (A) will happen. It is unconditional because it is not conditioned on any other event.



For a positively skewed, unimodal distribution, which of the following relationships holds?

  1. mean < mode
  2. mode < median
  3. mean > median
  4. mean < median

Answer(s): C

Explanation:

In a positively skewed distribution, very large values are more common than correspondingly small values. This skews the distribution to the right, moving the mean to the right of the median.



If alpha = .05 for a two-tailed test, how large is the acceptance area?

  1. .975
  2. None of these answers
  3. .950
  4. .025
  5. .050

Answer(s): C

Explanation:

The acceptance region is the area in between the two critical values. In this case it is 1 - 0.05 = 0.95.






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