Reading 7: Statistical Concepts and Market Returns-LOS C习题 2010, frequency, interpret, relative, returns

bmaggie

Session 2: Quantitative Methods: Basic Concepts
Reading 7: Statistical Concepts and Market Returns

LOS c: Calculate and interpret relative frequencies and cumulative relative frequencies, given a frequency distribution.

 

 

 

Monthly returns for a set of small cap stocks are 1.3%, 0.8%, 0.5%, 3.4%, -3.5%, -1.2%, 1.8%, 2.1%, and 1.5%. An analyst constructs a frequency distribution and a frequency polygon using the following intervals: -4.0% to -2.0%, -2.0% to 0.0%, 0.0% to 2.0%, and 2.0% to 4.0%. Which of the following statements about these data presentations is least accurate?

A) A frequency polygon plots the midpoint of each interval on the horizontal axis and the absolute frequency of that interval on the vertical axis.

B) The relative frequency of the interval -2.0% to 0.0% equals the relative frequency of the interval 2.0% to 4.0%.

C) The absolute frequency of the interval 0.0% to 2.0% is 5.

bmaggie

Monthly returns for a set of small cap stocks are 1.3%, 0.8%, 0.5%, 3.4%, -3.5%, -1.2%, 1.8%, 2.1%, and 1.5%. An analyst constructs a frequency distribution and a frequency polygon using the following intervals: -4.0% to -2.0%, -2.0% to 0.0%, 0.0% to 2.0%, and 2.0% to 4.0%. Which of the following statements about these data presentations is least accurate?

A) A frequency polygon plots the midpoint of each interval on the horizontal axis and the absolute frequency of that interval on the vertical axis.

B) The relative frequency of the interval -2.0% to 0.0% equals the relative frequency of the interval 2.0% to 4.0%.

C) The absolute frequency of the interval 0.0% to 2.0% is 5.

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When completed, the frequency distribution table should look as follows:

Frequency Distribution of Monthly Small Cap Stock Returns
Interval	Absolute Frequency	Relative Frequency
-4.0% to -2.0%	1	11.1%
-2.0% to 0.0%	1	11.1%
0.0% to 2.0%	5	55.6%
2.0% to 4.0%	2	22.2%
Total	9	100.0%

The relative frequency of the interval -2.0% to 0.0% does not equal the relative frequency of the interval 2.0% to 4.0%.

bmaggie

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.

bmaggie

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.

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