Please provide solution for the questions from practice question Quiz for the subject Quantitative Analysis

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Q1) The 95 percent confidence interval of the sample mean of the P/E ratio for all listed stocks is 19 to 44.
Around 5,000 stocks are listed and the sample size of this test is 100.Given that the expected value of the price earnings ratio is 31.5,

the standard error of the ratio can be closest to:

Select one:
a. 3.56
b. 12.5
c. 1.96
d. 6.38

Q2) Which statement best reflects possible problems with a multivariate regression as per the materix given below?

Gold Copper Dollar Bond
Gold 1
Copper 0.6 1
Dollar 0.95 0.4 1
Bond 0.7 0.35 0.90 1
Select one:
a. Bond is unnecessary.
b. Copper is not useful
c. Gold should be excluded from regression
d. Dollar may be a redundant variable.

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Posted by Dipti (Questions: 1, Answers: 1)
Asked on April 12, 2015 7:00 am
Category: FRM Part I
Private answer

The confidence interval is 31.5 ± 1.96x, where x is the standard error.

If we take the upper bound, we know that 31.5
+/– 1.96x = 44, or 1.96x = 12.5.

Hence, x = 6.38.


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Posted by pravin Khetan (Questions: 0, Answers: 7)
Answered on April 18, 2015 7:57 pm
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