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Free CFA-Level-I Exam Braindumps (page: 298)

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PDF with 3963 Questions

Which one of the following is NOT a condition of the binomial distribution?

  1. Independent trials
  2. Only two outcomes
  3. Probability of success remains constant from trial to trial
  4. At least 10 observations
  5. None of these answers

Answer(s): D

Explanation:

There no requirement regarding the number of observations.



Suppose you need $500 in 20 months. How much must you deposit today, if the deposit will earn interest at 8% per year, compounded monthly?

  1. $2,330.48
  2. $437.78
  3. $571.06
  4. $249.93
  5. $107.27

Answer(s): B

Explanation:

On the BAII Plus, press 20 N, 8 divide 12 = I/Y, 0 PMT, 500 FV, CPT PV. On the HP12C, press 20 n, 8 ENTER 12 divide i, 0 PMT, 500 FV, PV. Make sure the BAII Plus has the P/Y value set to 1.



A study of the opinion of designers with respect to the primary color most desirable for us in executive offices showed that:

Primary Color Number of Opinions
Red 92
Orange 86
Yellow 46
Green 91

Blue 37
Indigo 46
Violet 2

What is the probability that a designer does not prefer red?

  1. 0.73
  2. 1.00
  3. 0.77
  4. 0.23
  5. None of these answers

Answer(s): C

Explanation:

There are 400 opinions of which 92 prefer red. The other 308 do not prefer red. Therefore the probability of not preferring red is 308/400 = 0.77.



Events A and B are mutually exclusive. P(A) = 0.45, P(B) = 0.27. The probability of neither A nor B occurring equals ________.

  1. 0.28
  2. 0.88
  3. 0.72
  4. 0.12

Answer(s): A

Explanation:

The probability of neither A nor B occurring equals one minus the probability of either A or B occurring i.e. P (neither A nor B) = 1 - P(A or B). Now,
P(A or B) = P(A) + P(B) - P(A and B).
Also, for mutually exclusive events, P(A and B) = 0 by definition. Therefore, P(A or B) = 0.45 + 0.27 = 0.72. Finally, P(neither A nor B) = 1 - P(A or B) = 1 - 0.72 = 0.28.






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