bmaggie

The owner of a company has recently decided to raise the salary of one employee, who was already making the highest salary in the company, by 40%. Which of the following value(s) is (are) expected to be affected by this raise?

A) mean only.

B) mean and median only.

C) median only.

bmaggie

The owner of a company has recently decided to raise the salary of one employee, who was already making the highest salary in the company, by 40%. Which of the following value(s) is (are) expected to be affected by this raise?

A) mean only.

B) mean and median only.

C) median only.

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Mean is affected because it is the sum of all values / number of observations.  Median is not affected as it the midpoint between the top half of values and the bottom half of values.

bmaggie

An investor has a portfolio with 10% cash, 30% bonds, and 60% stock. Last year, the cash returns was 2.0%, the bonds’ return was 9.5%, and the stocks’ return was –32.5%. What was the return on the investor’s portfolio?

A) –16.45%.

B) –33.33%.

C) –7.00%.

bmaggie

An investor has a portfolio with 10% cash, 30% bonds, and 60% stock. Last year, the cash returns was 2.0%, the bonds’ return was 9.5%, and the stocks’ return was –32.5%. What was the return on the investor’s portfolio?

A) –16.45%.

B) –33.33%.

C) –7.00%.

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Find the weighted mean. (0.10)(0.02) + (0.30)(0.095) + (0.60)(–0.325) = –16.45%.

bmaggie

Which measure of central tendency can be used for both numerical and categorical variables?

A) Mode.

B) Mean.

C) Median.

bmaggie

Which measure of central tendency can be used for both numerical and categorical variables?

A) Mode.

B) Mean.

C) Median.

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The mode is the only choice that makes sense since you cannot take an average or median of categorical data such as bond ratings (AAA, AA, A, etc.) but the mode is simply the most frequently occurring number or category.

bmaggie

For the last four years, the returns for XYZ Corporation’s stock have been 10.4%, 8.1%, 3.2%, and 15.0%. The equivalent compound annual rate is:

A) 9.1%.

B) 9.2%.

C) 8.9%.

bmaggie

For the last four years, the returns for XYZ Corporation’s stock have been 10.4%, 8.1%, 3.2%, and 15.0%. The equivalent compound annual rate is:

A) 9.1%.

B) 9.2%.

C) 8.9%.

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(1.104 × 1.081 × 1.032 × 1.15)^0.25 ? 1 = 9.1%

bmaggie

What is the compound annual growth rate for stock A which has annual returns of 5.60%, 22.67%, and -5.23%?

A) 7.08%.

B) 6.00%.

C) 8.72%.

bmaggie

What is the compound annual growth rate for stock A which has annual returns of 5.60%, 22.67%, and -5.23%?

A) 7.08%.

B) 6.00%.

C) 8.72%.

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Compound annual growth rate is the geometric mean. (1.056 × 1.2267 × 0.9477)^1/3 – 1 = 7.08%