aianjie

 

6、A group of investors wants to be sure to always earn at least a 5% rate of return on their investments. They are looking at an investment that has a normally distributed probability distribution with an expected rate of return of 10% and a standard deviation of 5%. The probability of meeting or exceeding the investors' desired return in any given year is closest to:

A) 98%.

B) 34%.

C) 84%.

D) 50%.

aianjie

 

The correct answer is C

The mean is 10% and the standard deviation is 5%. You want to know the probability of a return 5% or better. 10% - 5% = 5% , so 5% is one standard deviation less than the mean. Thirty-four percent of the observations are between the mean and one standard deviation on the down side. Fifty percent of the observations are greater than the mean. So the probability of a return 5% or higher is 34% + 50% = 84%.

aianjie

 

7、A study of hedge fund investors found that their household incomes are normally distributed with a mean of $280,000 and a standard deviation of $40,000.

The percentage of hedge fund investors that have incomes greater than $350,000 is closest to:

A) 5.0%.

B) 25.0%.

C) 3.0%.

D) 4.0%.

aianjie

 

The correct answer is D

z = (350,000 – 280,000)/40,000 = 1.75. Using the z-table, F(1.75) = 0.9599. So, the percentage greater than $350,000 = (1 – 0.9599) = 4.0%.

aianjie

 

The percentage of hedge fund investors with income less than $180,000 is closest to:

A) 1.15%.

B) 0.62%.

C) 2.50%.

D) 6.48%.

aianjie

 

The correct answer is B

z = (180,000 – 280,000)/40,000 = –2.50. Using the z-table, F(–2.50) = (1 – 0.9938) = 0.62%.

aianjie

 

8、Approximately 50 percent of all observations for a normally distributed random variable fall in the interval: fficeffice" />

 

 

A)  [attach]13844[/attach]

 

B)  [attach]13845[/attach]

 

C)  gif,3.gif]UploadFile/2009-6/20096251110733107.gif[/upload]

 

D)  [upload=[attach]13847[/attach]

 

aianjie

 

The correct answer is B

 

 

[attach]13848[/attach]

aianjie

 

9、For a normal distribution, what approximate percentage of the observations falls within ± 2 standard deviations of the mean?

A) 95%.

B) 99%.

C) 92%. 

D) 90%.

aianjie

 

The correct answer is A

For normal distributions, approximately 95 percent of the observations fall within ± 2 standard deviations of the mean.