leiyou

 

11、Brian Ci believes that the average return on equity in the airline industry, μ, is less than 5%. What are the appropriate null (H0) and alternative (Ha) hypotheses to test this belief?

A) H0: μ < 0.05 versus Ha: μ > 0.05.

B) H0: μ > 0.05 versus Ha: μ < 0.05.

C) H0: μ ≥ 0.05 versus Ha: μ < 0.05.

D) H0: μ < 0.05 versus Ha: μ ≥ 0.05.

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.

leiyou

 

12、Robert Patterson, an options trader, believes that the return on options trading is higher on Mondays than on other days. In order to test his theory, he formulates a null hypothesis. Which of the following would be an appropriate null hypothesis? Returns on Mondays are:

A) greater than returns on other days.

B) less than returns on other days.

C) not greater than returns on other days.

D) not less than returns on other days.

leiyou

 

The correct answer is C

An appropriate null hypothesis is one that the researcher wants to reject. If Patterson believes that the returns on Mondays are greater than on other days, he would like to reject the hypothesis that the opposite is true–that returns on Mondays are not greater than returns on other days.

leiyou

 

13、Given the following hypothesis:

?            The null hypothesis is H0 : μ = 5

?            The alternative is H1 : μ ≠ 5

?            The mean of a sample of 17 is 7

?            The population standard deviation is 2.0

What is the calculated z-statistic?

A) 4.00.

B) 8.00.

C) 8.25.

D) 4.12.

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

 

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 B

 

 

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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.