Quant Quiz

Within a discussion about the present value of future positive cash flows, Osama stated that the present value will be greater for longer periods. Ehab disagrees with Osama’s statement, adding that the present value increases as the discount rate gets larger. Which of the two statements made by Ehab  is/are correct?

Rix, who lives in US, wants to buy US securities two months from now. ………..…should not be part of the required rate of return?

Which statement is not correct?

A normal distribution has excess kurtosis equal to:

X investor in a mutual fund wants to measure the performance over several years. X should use:

A leptokurtic distribution – relative to the normal distribution – does have

Analyst A: “The probability of an economic recession occurring if there’s an interest rate rise” is an example of unconditional probability.

Analyst B: “The probability of an expansionary monetary policy regardless of the occurrence of a change in the inflation rate” is an example of unconditional probability.

You desire to get the probability that Investment x will have a return higher than the risk-free rate. If you find that Investment x has a positive return. You should deduce that:

Who is correct?

Analyst 1: The correlation coefficient ranges from -1 to +1 and is expressed in terms of square units.
Analyst 2: Correlation measures the strength of the linear relationship between two variables.

It is least correct to declare that:

When a random variable is lognormally distributed, the incorrect statement is:

……………. is least likely to need valuation using Monte Carlo simulation.

Consistent with central limit theorem, the sampling distribution of a population is approximately normally distributed if:

The statement that is correct is …..

An analyst wishes to test for correlation between rows and columns of a contingency table. The distribution of the test statistic is most likely to be:

Statement 1: A non-parametric test makes assumptions regarding the distribution of the population from which samples are drawn.

Statement 2: A non-parametric test can be used when the assumptions of a parametric test cannot be supported.

Which of the following is least likely to be assumed to equal zero regarding linear regression?

Slope coefficient tells us:

The process of grouping items together according to characteristics determined by the algorithm is best described as:

Underfitting is least likely to lead to: