jawz

A summary measure of a characteristic of an entire population is called a:

A) statistic.

B) parameter.

C) census.

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A parameter measures a characteristic of the underlying population.

jawz

Which of the following statements regarding frequency distributions is least accurate? Frequency distributions:

A) summarize data into a relatively small number of intervals.

B) organize data into overlapping groups.

C) work with all types of measurement scales.

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Data in a frequency distribution must belong to only one group or interval. Intervals are mutually exclusive and non-overlapping.

jawz

Which of the following best describes a frequency distribution? A frequency distribution is a grouping of:

A) selected data into intervals (classes) so that the number of observations in each of the non-overlapping intervals (classes) can be seen and tallied.

B) data into intervals (classes) so that the number of observations in each of the non-overlapping intervals (classes) can be seen and tallied.

C) independent intervals (classes) so that they can be seen and tallied.

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A frequency distribution is a tabular presentation of statistical data that aids the analysis of large data sets.

jawz

How is the relative frequency of an interval computed?

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

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

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

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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.

jawz

In a frequency distribution histogram, the frequency of an interval is given by the:

A) height multiplied by the width of the corresponding bar.

B) width of the corresponding bar.

C) height of the corresponding bar.

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In a histogram, intervals are placed on the horizontal axis, and frequencies are placed on the vertical axis. The frequency of a particular interval is given by the value on the vertical axis, or the height of the corresponding bar.

jawz

Which of the following indicates the frequency of an interval in a frequency distribution histogram?

A) Height of the corresponding bar.

B) Horizontal logarithmic scale.

C) Width of the corresponding bar.

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In a histogram, intervals are placed on horizontal axis, and frequencies are placed on the vertical axis. The frequency of the particular interval is given by the value on the vertical axis, or the height of the corresponding bar.

jawz

Which of the following statements about histograms and frequency polygons is least accurate?

A) A frequency polygon is constructed by plotting the midpoint of each interval on the horizontal axis.

B) A histogram connects points with a straight line.

C) A histogram and a frequency polygon both plot the absolute frequency on the vertical axis.

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In constructing a frequency polygon, the midpoint of each interval is plotted on the horizontal axis and the frequency of each interval is plotted on the vertical axis. Points are then connected with straight lines. A histogram is a bar chart of data that has been grouped into a frequency distribution – because it is a bar chart, there are no individual points to connect.

jawz

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.

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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. Both remaining statements are true.

jawz

A stock had the following returns over the last five years: 15%, 2%, 9%, 44%, 23%. What is the respective geometric mean and arithmetic mean for this stock?

A) 17.76%; 23.0%.

B) 0.18%; 18.6%.

C) 17.76%; 18.6%.

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Geometric mean = [(1.15)(1.02)(1.09)(1.44)(1.23)]1/5 − 1 = 1.17760 = 17.76%.
Arithmetic mean = (15 + 2 + 9 + 44 + 23) / 5 = 18.6%.

jawz

Trina Romel, mutual fund manager, is taking over a poor-performing fund from a colleague. Romel wants to calculate the return on the portfolio. Over the last five years, the fund’s annual percentage returns were: 25, 15, 12, -8, and –14. Determine if the geometric return of the fund will be less than or greater than the arithmetic return and calculate the fund’s geometric return:

Geometric Return

Geometric compared to Arithmetic

  

A) 4.96%    greater than

B) 12.86%    greater than

C) 4.96%    less than

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The geometric return is calculated as follows:

[(1 + 0.25)(1 + 0.15)(1 + 0.12)(1 - 0.08)(1 – 0.14)]1/5 – 1,
or [1.25 × 1.15 × 1.12 × 0.92 × 0.86]0.2 – 1 = 0.4960, or 4.96%.

The geometric return will always be less than or equal to the arithmetic return. In this case the arithmetic return was 6%.