leiyou

 

5、An analyst is conducting a hypothesis test to determine if the mean time spent on investment research is different from 3 hours per day. The test is performed at the 5 percent level of significance and uses a random sample of 64 portfolio managers, where the mean time spent on research is found to be 2.5 hours. The population standard deviation is 1.5 hours.

The appropriate null hypothesis for the described test is:

A) H0: μ ≠ 3 hours.

B) H0: μ ≤ 3 hours.

C) H0: μ ≥ 3 hours.

D) H0: μ = 3 hours.

leiyou

 

AIM 6: Define, calculate and interpret type I and type II errors.

1、Which of the following is the correct sequence of events for testing a hypothesis?

A) State the hypothesis, formulate the decision rule, select the level of significance, compute the test statistic, and make a decision.

B) State the hypothesis, select the level of significance, compute the test statistic, formulate the decision rule, and make a decision.

C) State the hypothesis, select the level of significance, formulate the decision rule, compute the test statistic, and make a decision.

D) State the hypothesis, formulate the decision rule, compute the test statistic, select the level of significance, and make a decision.

leiyou

 

The correct answer is C

Depending upon the author there can be as many as seven steps in hypothesis testing which are:

Stating the hypotheses.

Identifying the test statistic and its probability distribution.

Specifying the significance level.

Stating the decision rule.

Collecting the data and performing the calculations.

Making the statistical decision.

Making the economic or investment decision.

leiyou

 

2、A goal of an “innocent until proven guilty” justice system is to place a higher priority on:

A) avoiding type I errors. 

B) avoiding type II errors.

C) avoiding type III errors.

D) the null hypothesis.

leiyou

 

The correct answer is A

In an “innocent until proven guilty” justice system, the null hypothesis is that the accused is innocent. The hypothesis can only be rejected by evidence proving guilt beyond a reasonable doubt, favoring the avoidance of type I errors.

leiyou

 

3、If the null hypothesis is innocence, then the statement “It is better that the guilty go free, than the innocent are punished” is an example of preferring a:

A) type I error over a type II error.

B) two tailed test over a one tailed test.

C) type II error over a type I error. 

D) higher level of significance.

leiyou

 

The correct answer is B

 

 

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leiyou

 

14、The mean monthly return for an equity portfolio over 60 months is 1.5%. The standard deviation is 3.0%. The value of the test statistic to test the hypothesis that mean monthly return is equal to zero is closest to:

A) 30.00

B) 3.87.

C) 0.50.

D) 2.19.

leiyou

 

The correct answer is D

The z-statistic is calculated by subtracting the hypothesized parameter from the parameter that has been estimated and dividing the difference by the standard error of the sample statistic. Here, the test statistic = (sample mean ? hypothesized mean) / (population standard deviation / (sample size)1/2 = (X ? μ) / (σ / n1/2) = (7 ? 5) / (2 / 171/2) = (2) / (2 / 4.1231) = 4.12.

leiyou

 

The correct answer is C

The alternative hypothesis is determined by the theory or the belief. The researcher specifies the null as the hypothesis that he wishes to reject (in favor of the alternative). Note that this is a one-sided alternative because of the "less than" belief.