Quant TE8 Test

Q. Grandparents are funding a newborn’s future university tuition costs, estimated at $50,000/year for four years, with the first payment due as a lump sum in 18 years. Assuming a 6% effective annual rate, the required deposit today is closest to:

• A. $60,699 .
• B. $64,341 .
• C. $68,201 .
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Q. An investment of €500,000 today that grows to €800,000 after six years has a stated annual interest rate closest to:

• A. 7.5% compounded continuously.
• B. 7.7% compounded daily.
• C. 8.0% compounded semiannually.
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A sample of 25 observations has a mean of 8 and a standard deviation of 15. The standard error of the sample mean is closest to:

• A. 1.60.
• B. 3.00.
• C. 3.06.
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Q. For a lump sum investment of ¥250,000 invested at a stated annual rate of 3% compounded daily, the number of months needed to grow the sum to ¥1,000,000 is closest to:

• A. 555 .
• B. 563 .
• C. 576 .
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• A. 48%.
• B. 24%.
• C. 16%.
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• A. 16.67%.
• B. 27.59%.
• C. 33.33%.
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• A. H0: σ2 ≤ 0.36%
• B. Ha: σ2 > 6%
• C. H0: σ2 ≥ 0.36%
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A random number between zero and one is generated according to a continuous uniform distribution. What is the probability that the first number generated will have a value of exactly 0.30?

• A. 70%.
• B. 0%.
• C. 30%.
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Q. 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
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Q. Which one of the following statements about Student’s t-distribution is false?

• A. It is symmetrically distributed around its mean value, like the normal distribution.
• B. It has shorter (i.e., thinner) tails than the normal distribution.
• C. As its degrees of freedom increase, Student’s t-distribution approaches the normal distribution.
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