THROUGH 30 RELATE TO QUANTITATIVE METHODS. (18 MINUTES)AN...

Questions 19 through 30 relate to Quantitative Methods. (18 minutes)

An investor places $5,000 in an account. The stated annual interest rate is 6% compounded monthly. The value of the

account at the end of three years is closestto:

A)

$5,970.

B)

$5,978.

$5,983.

C)

Question #20 of 120 Question ID: 1146046

Compared to a t-distribution with 10 degrees of freedom, and compared to a normal distribution, a t-distribution with 20

degrees of freedom and the same variance has:

Compared to df = 10 Compared to normal

thinner tails fatter tails

fatter tails thinner tails

fatter tails fatter tails

Question #21 of 120 Question ID: 1151633

The initial market value of a portfolio was $100,000. One year later the portfolio was valued at $90,000 and two years later

at $99,000. The geometric mean annual return excluding any dividend income is closest to:

−0.5%.

−0.4%.

0.0%.

Question #22 of 120 Question ID: 1146032

An investor purchases 500 shares of Nevada Industries common stock for $22.00 per share today. At t = 1 year, this

investor receives a $0.42 per share dividend (which is not reinvested) on the 500 shares and purchases an additional 500

shares for $24.75 per share. At t = 2 years, he receives another $0.42 (not reinvested) per share dividend on 1,000

shares and purchases 600 more shares for $31.25 per share. At t = 3 years, he sells 1,000 of the shares for $35.50 per

share and the remaining 600 shares at $36.00 per share, but receives no dividends. Assuming no commissions or taxes,

the money-weighted rate of return received on this investment is closest to:

14.3%.

17.6%.

18.5%.

The "up-move factor" in a binomial tree is best described as:

the probability that the variable increases in any period.

one minus the “down-move factor” for the binomial tree.

one plus the percentage change in the variable when it

increases.

Question #24 of 120 Question ID: 1146033

Jane Acompora is calculating equivalent annualized yields based on the 1.3% holding period yield of a 90-day loan. The

correct ordering of the annual money market yield (MMY), effective yield (EAY), and bond equivalent yield (BEY) is:

MMY < EAY < BEY.

MMY < BEY < EAY.

BEY < EAY < MMY.

Question #25 of 120 Question ID: 1146036

An analyst develops the following probability distribution for the states of the economy and market returns.

Unconditional Probability P(A) Conditional Probability P(B | A)

Bull market 50%

Normal market 30%

Good economy 60%

Bear market 20%

Bull market 20%

Poor economy 40%

Bear market 50%

Which of the following statements about this probability distribution is least accurate?

The unconditional probability of a normal market is 0.30.

The joint probability of having a good economy and a

bear market is 0.20.

Given that the economy is poor, the probability of a

normal or a bull market is 0.50.

Question #26 of 120 Question ID: 1151634

An analyst estimates a stock has a 40% probability of earning a 10% return, a 40% probability of earning a 12.5% return,

and a 20% probability of earning a 30% return. The stock's standard deviation of returns based on this returns model

is closest to:

3.74%.

5.75%.

7.58%.

Question #27 of 120 Question ID: 1146040

An investment manager has a pool of five security analysts he can choose from to cover three different industries. In how

many different ways can the manager assign one analyst to each industry?

10.

60.

125.

Question #28 of 120 Question ID: 1146203

Shortfall risk is best described as the probability:

of a credit rating downgrade due to possible earnings

shortfalls.

of failing to make a contractually promised payment.

that portfolio value will fall below some minimum level at

a future date.

Question #29 of 120 Question ID: 1146048

If a two-tailed hypothesis test has a 5% probability of rejecting the null hypothesis when the null is true, it is most

likely that:

the power of the test is 95%.

the confidence level of the test is 95%.

the probability of a Type I error is 2.5%.

Question #30 of 120 Question ID: 1146049

Which of the following statements about hypothesis testing is most accurate?

Rejecting a true null hypothesis is a Type I error.

The power of a test is the probability of failing to reject

the null hypothesis when it is false.

For a one-tailed test involving X, the null hypothesis

would be H : X = 0, and the alternative hypothesis would

be H : X ≠ 0.