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Free CFA-Level-I Exam Braindumps (page: 288)

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PDF with 3963 Questions

What annual interest rate, compounded annually, would cause a series of 20 deposits of $1,000 to accumulate to $40,000, if the first deposit is made one year from today?

  1. 6.77%
  2. 8.03%
  3. 7.23%
  4. 5.09%
  5. 14.98%

Answer(s): A

Explanation:

On the BAII Plus, press 20 N, 0 PV, 1000 PMT, 40000 +/- FV, CPT I/Y. On the HP12C, press 20 n, 0 PV, 1000 PMT, 40000 CHS FV, i. Make sure that the BAII Plus has the P/Y value set to 1.



In a statistical regression estimation, the R-square is found to be 63% and the slope coefficient is 0.6. The correlation coefficient between the dependent and the independent variables is ________.

  1. 0.60
  2. 0.63
  3. 0.24
  4. 0.79

Answer(s): D

Explanation:

In a univariate regression, the correlation coefficient is the square root of the R-square. Hence, correlation coefficient = sqrt(0.63) = 0.79



Which approach to probability is exemplified by the following formula? Prob. of Event happening = No. of times event occurred in the past/Total no. of observations.

  1. A priori approach
  2. None of these answers
  3. Relative frequency approach
  4. Subjective approach

Answer(s): C

Explanation:

When we based the probability on the number of times the events has occurred in the past over the total number of observations, we are using the relative frequency approach.



Richard Eisenberg, a quantitative analyst with Middle Road Brokerage, has been instructed to perform a statistical analysis to determine the relationship between the volatility of smaller-cap stocks and the quarterly performance of a series of smaller-cap mutual funds. Mr. Eisenberg begins his assignment by formulating and stating a hypothesis. Next, he identifies the appropriate test statistic and the probability distribution for the series. Mr. Eisenberg then progresses to specifying the significance level for the hypothesis test. Now that the first three steps of a hypothesis test have been completed, Mr. Eisenberg should proceed to which of the following? Choose the best answer.

  1. Evaluating the goodness of fit
  2. Collecting the data and performing the calculations
  3. Determining the p-value
  4. None of these answers is correct
  5. Stating the decision rule
  6. Testing for multicolinearity

Answer(s): E

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.






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