Reading 7: Statistical Concepts and Market Returns - LOS c

答案和详解如下：

1、Given the following frequency distribution:

What is the relative frequency of the 30 percent up to 40 percent return interval?

A)   33.3%.

B)   3.0%.

C)   10.0%.

D)   100.0%.

The correct answer was C)

Total number of frequencies = 30. 3/30 = 10.0%

2、Given the following frequency distribution:

What is the relative frequency of the 0 percent to 10 percent interval?

A)   33.3%.

B)   10.0%.

C)   40.0%.

D)   23.3%.

The correct answer was D)

Total number of frequencies = 30. 7/30 = 23.3%.

3、How is the relative frequency of an interval computed?

A)   Subtracting the lower limit of the interval by the upper limit.

B)   Dividing the frequency of that interval by the sum of all frequencies.

C)   Multiplying the frequency of the interval by 100.

D)   Dividing the sum of the two interval limits by 2.

The correct answer was B)

The relative frequency is the percentage of total observations falling within each interval. It is found by taking the frequency of the interval and dividing that number by the sum of all frequencies.

4、Consider the following statements about the geometric and arithmetic means as measures of central tendency. Which statement is least accurate?

A)   The geometric mean may be used to estimate the average return over a one-period time horizon because it is the average of one-period returns.

B)   The difference between the geometric mean and the arithmetic mean increases with an increase in variability between period-to-period observations.

C)   The geometric mean calculates the rate of return that would have to be earned each year to match the actual, cumulative investment performance.

D)   The arithmetic mean cannot be used for open-ended data sets.

The correct answer was A)

The arithmetic mean may be used to estimate the average return over a one-period time horizon because it is the average of one-period returns. The other statements are true.