The mean of returns of German stock markets is 9.7% and the standard deviation is 36.4%. According to Chebyshev's inequality the proportion of returns that will be in the range from (-44.9%) to + 64.30% will be closest to
a) 86.64%
b) 55.56%
c) 66.67%
Answer B: Chebyshev's inequality states that the proportions of returns that lie between Mean +/- 'k' standard deviations will be given by 1 €“ [ 1/ (1/ k^2) ] ; 9.7% - (-44.9%) = 54.6% and 64.3% - 9.7% = 54.6%. k = 54.6% / 36.4% = 1.5 ; appyling this in the above formula would leave us with a value of 55.56%
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A sample of return that has more frequent extreme large surprises is MOST likely to be
a) Mesokurtic
b) Platykurtic
c) Leptokurtic
Answer:C. When there are frequent surprises the number of observations around the mean will be lesser. This will lead to distribution being less peaked which is called leptokurtic.
Raj an analyst estimates the following about BSI bank Ltd before Q1 results. The probability of EPS decreasing in the next quarter (Q1) is 40%. Probability of EPS increasing in the following quarter (Q2) after an increase in the previous quarter (Q1) is 70%.The probability of EPS decreasing in the following quarter (Q2) followed by an EPS decrease in the previous quarter (Q1) is 75%. Later, given that EPS increased in Q2 the probability of EPS having increased in Q1 also is closest to
Raj an analyst estimates the following about BSI bank Ltd before Q1 results. The probability of EPS decreasing in the next quarter (Q1) is 40%. Probability of EPS increasing in the following quarter (Q2) after an increase in the previous quarter (Q1) is 70%.The probability of EPS decreasing in the following quarter (Q2) followed by an EPS decrease in the previous quarter (Q1) is 75%. Later, given that EPS increased in Q2 the probability of EPS having increased in Q1 also is closest to
a) 52.0%
b) 60.0%
c) 80.8%
Answer C: Probability of Q1 Decrease=40%; Q1 Increase = 60%
Probability of Q2 Increase followed by an increase = 60% * 70% = 42%
Probability of Q2 Increase followed by a decrease = 40% * 25% = 10%
Total probability of Q2 Increase = 42% + 10% = 52%
Given that Q2 there was an increase, the probability of Q1 also have increased = 42% / 52% = 80.8%
An analyst estimates that the yearly average and standard deviation of returns for Indian stock markets have as 14% and 18.5% respectively. The probability of the stock market delivering a return in the range of -5% and 0%, assuming the market follows normal distribution is close to (Use Z- Tables)
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An analyst estimates that the yearly average and standard deviation of returns for Indian stock markets have as 14% and 18.5% respectively. The probability of the stock market delivering a return in the range of -5% and 0%, assuming the market follows normal distribution is close to (Use Z- Tables)
a) 7.24%
b) 15.22%
c) 22.46%
Answer: Z= (X-mu) / Sigma; Z value corresponding to 0% = -0.76; Z value corresponding to -5% = -1.03;
From Z table -0.76 corresponds to 22.46% and -1.03 corresponds to 15.22%. This in essence means the probability of return being less than zero is 22.46% and probability of return being less than -5% is 15.22%. Hence the probability of return being between -5% and 0% is 22.46% - 15.22% = 7.24%
The probability of a student sticking for more than a year in his first job is 10%. The probability of at least 2 students sticking to their job for more than one year in a sample of 8 students is closest to
The probability of a student sticking for more than a year in his first job is 10%. The probability of at least 2 students sticking to their job for more than one year in a sample of 8 students is closest to
a) 14.88%
b) 18.69%
c) 61.74%
Answer: Using Binomial distribution P(0) = 43.04%, P(1) = 38.2%. P(X= 2) = 1- 81.3% = 18.69%
An analyst estimates that the monthly average return of a fund is 1.3% and monthly volatility of the fund is 3.7% using the data for past 24 months. The analyst makes a statement “We can say with 95% confidence that monthly average return of this fund is greater than Zero”. The analyst is
a) Incorrect based chi-square test with degrees of freedom of 23.
b) Correct based on student-t test and the standard error of this sample is 0.76%
c) Incorrect based on student-t test and the standard error of this sample is 0.77%
An analyst estimates that the monthly average return of a fund is 1.3% and monthly volatility of the fund is 3.7% using the data for past 24 months. The analyst makes a statement €œWe can say with 95% confidence that monthly average return of this fund is greater than Zero €?. The analyst is
a) Incorrect based chi-square test with degrees of freedom of 23.
b) Correct based on student-t test and the standard error of this sample is 0.76%
c) Incorrect based on student-t test and the standard error of this sample is 0.77%
Answer: A. For testing mean of a sample student's t-test need to be used. Standard error = Sample SD/ Sqrt(n) = 3.7%/ Sqrt(24). Degrees of freedom for t-test are n-1. At 95% confidence level t-table value is 1.714. H0= Mean>0%. 1.3% - 1.741 * 0.76 = 0.01% hence H0 is accepted.
A credit analyst estimates that the probability of default within 1 year for bonds with less than 1.5X interest coverage ratio is 35%. The analyst is tracking 45 such companies. The standard deviation of default for the analyst's tracking portfolio is closest to
I am Shefali...I am in second year of graduation...I am doing it frm school of open learning(Delhi university). I am perusing CA Too. I am a CA final student. My second year result is awaited so Am I in eligible for CFA LEVEL 1 EXAMINATION because to apply for level 1 it is necessary to appear in Final year of graduation bt since my second year result is still awaited will I will be counted
