Quants TE3 Test

A sample of 438 observations is randomly selected from a population. The mean of the sample is 382, and the standard deviation is 14. Based on Chebyshev’s inequality, the endpoints of the interval that must contain at least 88.89% of the observations are closest to:

• A. 340 and 424
• B. 396 and 480.
• C. 354 and 410.

Which of the following is characteristic of the normal distribution?

• A. Asymmetry
• B. Kurtosis of 3
• C. Definitive limits or boundaries

Two portfolios have unimodal return distributions. Portfolio 1 has a skewness of 0.77, and Portfolio 2 has a skewness of –1.11.<br /><br />Which of the following is correct?

• A. For Portfolio 1, the median is less than the mean.
• B. For Portfolio 1, the mode is greater than the mean
• C. For Portfolio 2, the mean is greater than the median

A sample mean is computed from a population with a variance of 2.45. The sample size is 40. The standard error of the sample mean is closest to:

• A. 0.039.
• B. 0.247.
• C. 0.387.

A limitation of Monte Carlo simulation is:

• A. its failure to do “what if” analysis.
• B. that it requires historical records of returns
• C. its inability to independently specify cause-and-effect relationships.

The value in six years of $75,000 invested today at a stated annual interest rate of 7% compounded quarterly is closest to:

• A. $112,555.
• B. $113,330.
• C. $113,733.

A nonparametric test is most appropriate when:

• A. comparing differences between means.
• B. data are given in ranks.
• C. data meet distributional assumptions.

In the step “stating a decision rule” in testing a hypothesis, which of the following elements must be specified?

• A. Critical value
• B. Power of a test
• C. Value of a test statistic

A chi-square test is most appropriate for tests concerning:

• A. a single variance.
• B. differences between two population means with variances assumed to be equal.
• C. differences between two population means with variances assumed to not be equal.

• A. 37.50%.
• B. 56.25%.
• C. 18.75%.