[ 2009 Mock Exam (PM) ] Quantitative Methods .Questions 19-32 face, identified, interest, deposit

bingning

19. A money manager has $1,000,000 to invest for one year. She has identified three alternative one-year certificates of deposit (CD) shown below:

	Compounding frequency	Annual interest rate
CD1 CD2 CD3	Monthly        Quarterly      Continuously	7.82%        8.00%        7.95%

Which CD has the highest effective annual rate (EAR)?

A. CD 1
B. CD 2
C. CD 3

20. A consumer is shopping for a home. His budget will support a monthly payment of $1,300 on a 30-year mortgage with an annual interest rate of 7.2 percent. If the consumer puts a 10 percent down payment on the home, the most he can pay for his new home is closest to:

A. $191,518.
B. $210,840.
C. $212,800.

21. An analyst gathers the following information about a common stock investment:

Date

Amount

桌面.gif (2.12 KB)

下载次数:1

2009-6-30 13:35

4.gif (7.28 KB)

下载次数:0

2009-6-30 13:35

 

相关主题：

. PV of bond's cash flow

. Confusion in Pricing T-Bill

. 求教，L1 2010 Mock Morning Session 第59题

. Reading 64: Understanding Yield Spreads-LOS c 习题精选

. Reading 68: International Asset Pricing-LOS h 习题精选

收藏 分享

bingning

19. A money manager has $1,000,000 to invest for one year. She has identified three alternative one-year certificates of deposit (CD) shown below:

	Compounding frequency	Annual interest rate
CD1 CD2 CD3	Monthly        Quarterly      Continuously	7.82%        8.00%        7.95%

Which CD has the highest effective annual rate (EAR)?

A. CD 1
B. CD 2
C. CD 3

Answer: C
“The Time Value of Money,” Richard A. Defusco, Dennis W. McLeavey, Jerald E. Pinto, and David E. Runkle 2008 Modular Level I, Volume 1, pp. 179-183
Study Session 2-5-c
Calculate and interpret the effective annual rate, given the stated annual interest rate and the frequency of compounding, and solve time value of money problems when compounding periods are other than annual.
Use the EAR (effective annual rate) to compare the investments:



20. A consumer is shopping for a home. His budget will support a monthly payment of $1,300 on a 30-year mortgage with an annual interest rate of 7.2 percent. If the consumer puts a 10 percent down payment on the home, the most he can pay for his new home is closest to:

A. $191,518.
B. $210,840.
C. $212,800.

Answer: C
“The Time Value of Money,” Richard A. Defusco, CFA, Dennis W. McLeavey, CFA, Jerald E. Pinto, CFA, and David E. Runkle, CFA 2009 Modular Level I, Volume 1, pp. 190-208
Study Session 2-5-d, e
Calculate and interpret the future value (FV) and present value (PV) of a single sum of money, an ordinary annuity, an annuity due, a perpetuity (PV only), and a series of unequal cash flows.
Draw a time line, and solve time value of money applications (for example, mortgages and savings for college tuition or retirement).
The consumer’s budget will support a monthly payment of $1,300. Given a 30-year mortgage at 7.2 percent, the loan amount will be $191,517.76 (N = 360, %I = 0.6, PMT = 1,300, solve for PV). If he makes a 10% down payment, then the most he can pay for his new home = $191,517.76 / (1 – 0.10) = $212,797.51 ≈ $212,800.

21. An analyst gathers the following information about a common stock investment:

Date

Amount

bingning

22. An analyst gathers the price-earnings ratios (P/E) for the firms in the S& 500 and then ranks the firms from highest to lowest P/E. She then assigns the number 1 to the group with the lowest P/E ratios, the number 2 to the group with the second lowest P/E ratios, and so on. The measurement scale used by the analyst is best described as:

A. ordinal.
B. interval.
C. nominal.

23. Using Chebyshev’s inequality, what is the minimum proportion of observations from a population of 500 that must lie within two standard deviations of the mean, regardless of the shape of the distribution?

A. 75%
B. 89%
C. 99%

24. If a distribution exhibits positive skewness, then the mean most likely is located to the:

A. left of both the median and mode.
B. right of both the median and mode.
C. left of the median and right of the mode.

bingning

22. An analyst gathers the price-earnings ratios (P/E) for the firms in the S& 500 and then ranks the firms from highest to lowest P/E. She then assigns the number 1 to the group with the lowest P/E ratios, the number 2 to the group with the second lowest P/E ratios, and so on. The measurement scale used by the analyst is best described as:

A. ordinal.
B. interval.
C. nominal.

Answer: A
“Statistical Concepts and Market Returns,” Richard A. Defusco, CFA, Dennis W. McLeavey, CFA, Jerald E. Pinto, CFA, and David E. Runkle, CFA 2009 Modular Level I, Volume 1, pp. 242-243
Study Session 2-7-a
Differentiate between descriptive statistics and inferential statistics, between a population and a sample, and among the types of measurement scales.
The analyst is using an ordinal scale which involves sorting data into categories based on some characteristic, such as the firms’ P/E ratios.

23. Using Chebyshev’s inequality, what is the minimum proportion of observations from a population of 500 that must lie within two standard deviations of the mean, regardless of the shape of the distribution?

A. 75%
B. 89%
C. 99%

Answer: A
“Statistical Concepts and Market Returns,” Richard A. Defusco, CFA, Dennis W. McLeavey, CFA, Jerald E. Pinto, CFA, and David E. Runkle, CFA 2009 Modular Level I, Volume 1, pp. 289-291
Study Session 2-7-g
Calculate and interpret the proportion of observations falling within a specified number of standard deviations of the mean, using Chebyshev’s inequality.
Chebyshev’s inequality holds for any distribution, regardless of shape, and states that the minimum proportion of observations located within k standard deviations of the mean is equal to 1 – 1/k2. In this case, k = 2 and 1 – 1/4 = 0.75 or 75%.

24. If a distribution exhibits positive skewness, then the mean most likely is located to the:

A. left of both the median and mode.
B. right of both the median and mode.
C. left of the median and right of the mode.

Answer: B
“Statistical Concepts and Market Returns,” Richard A. Defusco, CFA, Dennis W. McLeavey, CFA, Jerald E. Pinto, CFA, and David E. Runkle, CFA 2009 Modular Level I, Volume 1, pp. 297-302
Study Session 2-7-i
Define and interpret skewness, explain the meaning of a positively or negatively skewed return distribution, and describe the relative locations of the mean, median, and mode for a nonsymmetrical distribution.
A positively skewed distribution has a long tail to the right with a large frequency of observations occurring in the left part of the distribution. For a distribution of returns, this means frequent small losses and a few extreme gains. The result is that the extreme gains pull the mean to the right while the mode resides on the left with the bulk of the observations. The median falls between the mean and the mode.

bingning

25. The manager of a pension fund determines that during the past five years 85 percent of the stocks in the portfolio have paid a dividend and 40 percent of the stocks have announced a stock split. If 95 percent of the stocks have paid a dividend and/or announced a stock split, the joint probability of a stock paying a dividend andannouncing a stock split is closest to:

A. 30%.
B. 45%.
C. 55%.

26. Which of the following statements about a normal distribution is least accurate? A normal distribution:

A. has an excess kurtosis of 3.
B. is completely described by two parameters.
C. can be the linear combination of two or more normal random variables.

27. A portfolio manager gathers the following information about three possible asset allocations:

Allocation	Expected annual return	Standard deviation of return
I   II   III	13%            26%            32%	6%            14%            20%

The manager’s client has stated that her minimum acceptable return is 8 percent.
Based on Roy’s safety-first criterion, the most appropriate allocation is:

A. I.
B. II.
C. III.

bingning

 

25. The manager of a pension fund determines that during the past five years 85 percent of the stocks in the portfolio have paid a dividend and 40 percent of the stocks have announced a stock split. If 95 percent of the stocks have paid a dividend and/or announced a stock split, the joint probability of a stock paying a dividend andannouncing a stock split is closest to:

A. 30%.
B. 45%.
C. 55%.

Answer: A
“Probability Concepts,” Richard A. Defusco, CFA, Dennis W. McLeavey, CFA, Jerald E. Pinto, CFA, and David E. Runkle, CFA 2009 Modular Level I, Volume 1, pp. 327-328
Study Session 2-8-e
Calculate and interpret 1) the joint probability of two events, 2) the probability that at least one of two events will occur, given the probability of each and the joint probability of the two events, and 3) a joint probability of any number of independent events.
The probability that at least one of two events will occur is the sum of the probabilities of the separate events less the joint probability of the two events.
P(A or B) = P(A) + P(B) – P(AB)
95% = 85% + 40% – P(AB); therefore P(AB) = 30%

26. Which of the following statements about a normal distribution is least accurate? A normal distribution:

A. has an excess kurtosis of 3.
B. is completely described by two parameters.
C. can be the linear combination of two or more normal random variables.

Answer: A
“Common Probability Distributions,” Richard A. Defusco, CFA, Dennis W. McLeavey, CFA, Jerald E. Pinto, CFA, and David E. Runkle, CFA 2009 Modular Level I, Volume 1, pp. 391-392
Study Session 3-9-f
Explain the key properties of the normal distribution, distinguish between a univariate and a multivariate distribution, and explain the role of correlation in the multivariate normal distribution.
A normal distribution has a kurtosis of 3. Its excess kurtosis (kurtosis – 3.0) equals zero.

27. A portfolio manager gathers the following information about three possible asset allocations:

Allocation	Expected annual return	Standard deviation of return
I   II   III	13%            26%            32%	6%            14%            20%

The manager’s client has stated that her minimum acceptable return is 8 percent.
Based on Roy’s safety-first criterion, the most appropriate allocation is:

A. I.
B. II.
C. III.

Answer: B
“Common Probability Distributions,” Richard A. Defusco, CFA, Dennis W. McLeavey, CFA, Jerald E. Pinto, CFA, and David E. Runkle, CFA 2009 Modular Level I, Volume 1, pp. 397-399
Study Session 3-9-i
Define shortfall risk, calculate the safety-first ratio, and select an optimal portfolio using Roy’s safety-first criterion.
Roy’s safety-first ratio = [E(RP) – RL] / σP with the optimal portfolio having the highest ratio. The safety-first ratios for the three allocations are:

Allocation	Safety-first ratio
I   II   III	0.83    1.29    1.20

bingning

28. An analyst gathers the following information about a sample:

Mean	12
Number of observations	50
Variance	32

The standard error of the sample mean is closest to:

A. 0.47.
B. 0.64.
C. 0.80.

29. Compared to the normal distribution, the Student’s t-distribution most likely:

A. has fatter tails.
B. is more peaked.
C. has greater degrees of freedom.

30. Which of the following steps in hypothesis testing most likely follows collecting the data and calculating the test statistic?

A. Stating the decision rule.
B. Making the statistical decision.
C. Specifying the significance level.

bingning

28. An analyst gathers the following information about a sample:

Mean	12
Number of observations	50
Variance	32

The standard error of the sample mean is closest to:

A. 0.47.
B. 0.64.
C. 0.80.

Answer: C
“Sampling and Estimation,” Richard A. Defusco, CFA, Dennis W. McLeavey, CFA, Jerald E. Pinto, CFA, and David E. Runkle, CFA 2009 Modular Level I, Volume 1, pp. 428-429
Study Session 3-10-e
Calculate and interpret the standard error of the sample mean.
The standard error of the sample mean is the sample standard deviation (or the population standard deviation if known) divided by the square root of the sample size.
In this case, the standard error of the sample mean = 320.5 / 500.5 = 0.80.

29. Compared to the normal distribution, the Student’s t-distribution most likely:

A. has fatter tails.
B. is more peaked.
C. has greater degrees of freedom.

Answer: A
“Sampling and Estimation,” Richard A. Defusco, CFA, Dennis W. McLeavey, CFA, Jerald E. Pinto, CFA, and David E. Runkle, CFA 2009 Modular Level I, Volume 1, pp. 436-438
Study Session 3-10-i
Describe the properties of Student’s t-distribution, and calculate and interpret its degrees of freedom.
The Student’s t-distribution has fatter tails and is less peeked compared to the normal distribution.

30. Which of the following steps in hypothesis testing most likely follows collecting the data and calculating the test statistic?

A. Stating the decision rule.
B. Making the statistical decision.
C. Specifying the significance level.

Answer: B
“Hypothesis Testing,” Richard A. Defusco, CFA, Dennis W. McLeavey, CFA, Jerald E. Pinto, CFA, and David E. Runkle, CFA, 2009 Modular Level I, Volume 1, pp. 456-466
Study Session 3-11-a
Define a hypothesis, describe the steps of hypothesis testing, interpret and discuss the choice of the null hypothesis and alternative hypothesis, and distinguish between onetailed and two-tailed tests of hypotheses.
The seven steps in hypothesis testing are:
1) Stating the hypothesis.
2) Identifying the appropriate test statistic and its probability distribution.
3) Specifying the significance level.
4) Stating the decision rule.
5) Collecting the data and calculating the test statistic.
6) Making the statistical decision.
7) Making the economic or investment decision.

viss

thx

zippo1986

tx