Q6. An empirical probability is one that is: A) derived from analyzing past data. B) supported by formal reasoning. C) determined by mathematical principles.
Q7. Which of the following sets of numbers does NOT meet the requirements for a set of probabilities? A) (0.10, 0.20, 0.30, 0.40, 0.50). B) (0.50, 0.50). C) (0.10, 0.20, 0.30, 0.40).
Q8. The probabilities of earning a specified return from a portfolio are shown below: Probability
Return 0.20
10%
0.20
20%
0.20
22%
0.20
15%
0.20
25%
What are the odds of earning at least 20%? A) Two to three. B) Three to five. C) Three to two.
Q9. Which of the following is an empirical probability? A) The probability the Fed will lower interest rates prior to the end of the year. B) For a stock, based on prior patterns of up and down days, the probability of the stock having a down day tomorrow. C) On a random draw, the probability of choosing a stock of a particular industry from the S& 500 based on the number of firms.
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