Q6. An empirical probability is one that is:

A)   derived from analyzing past data.

B)   supported by formal reasoning.

C)   determined by mathematical principles.

Q7. Which of the following sets of numbers does NOT meet the requirements for a set of probabilities?

A)     (0.10, 0.20, 0.30, 0.40, 0.50).

B)     (0.50, 0.50).

C)     (0.10, 0.20, 0.30, 0.40).

Q8. The probabilities of earning a specified return from a portfolio are shown below:

Probability       Return

0.20              10%

0.20              20%

0.20              22%

0.20              15%

0.20              25%

What are the odds of earning at least 20%?

A)   Two to three.

B)   Three to five.

C)   Three to two.

Q9. Which of the following is an empirical probability?

A)   The probability the Fed will lower interest rates prior to the end of the year.

B)   For a stock, based on prior patterns of up and down days, the probability of the stock having a down day tomorrow.

C)   On a random draw, the probability of choosing a stock of a particular industry from the S& 500 based on the number of firms.

答案和详解如下：

Q6. An empirical probability is one that is:

A)   derived from analyzing past data.

B)   supported by formal reasoning.

C)   determined by mathematical principles.

Correct answer is A)

An empirical probability is one that is derived from analyzing past data. For example, a basketball player has scored at least 22 points in each of the season’s 18 games. Therefore, there is a high probability that he will score 22 points in tonight’s game.

Q7. Which of the following sets of numbers does NOT meet the requirements for a set of probabilities?

A)     (0.10, 0.20, 0.30, 0.40, 0.50).

B)     (0.50, 0.50).

C)     (0.10, 0.20, 0.30, 0.40).

Correct answer is A)

A set of probabilities must sum to one.

Q8. The probabilities of earning a specified return from a portfolio are shown below:

Probability       Return

0.20              10%

0.20              20%

0.20              22%

0.20              15%

0.20              25%

What are the odds of earning at least 20%?

A)   Two to three.

B)   Three to five.

C)   Three to two.

Correct answer is C)

Odds are the number of successful possibilities to the number of unsuccessful possibilities:

P(E)/[1 − P(E)] or 0.6 / 0.4 or 3/2.

Q9. Which of the following is an empirical probability?

A)   The probability the Fed will lower interest rates prior to the end of the year.

B)   For a stock, based on prior patterns of up and down days, the probability of the stock having a down day tomorrow.

C)   On a random draw, the probability of choosing a stock of a particular industry from the S& 500 based on the number of firms.

Correct answer is B)

There are three types of probabilities: a priori, empirical, and subjective. An empirical probability is calculated by analyzing past data.

Thanks