Quant

Question 1

Formula for test-statistic of a sample StDev

Answer 1

• Chi-squared statistic
• Chi-Sq = [(n -1)(Var.S)] /(Var.O)
  - Var.S = sample variance
  - Var.O = Hypothesized variance

Question 2

Lognormal Distribution RVs cannot be?

Answer 2

Negative

Question 3

Standardized Value of a Normal Distribution Formula

Answer 3

(Xi - Mu)/StDev.S

Question 4

Test of Equality of 2 Variances

Answer 4

• F-Test
• H0: Var(1) = Var(2)
• Ha: Var(1) ≠ Var(2)

Question 5

Bayes Formula: P(Event l new Information)

Answer 5

= [P(information l event) / P(information) ] x P(event)

Question 6

Z-Stat is most appropriate for tests of pop. mean under what 2 conditions?

Answer 6

1. Pop. variance is known

2. Sample is Norm Dist

Question 7

Std. Error vs. Relative Sample Mean difference:

For a statistically significant null rejection

Answer 7

• Statistic (t-stat) would have to be relatively large

- Therefore Std. Error (denominator) must be small vs. Sample mean difference (numerator: Xi - Mu)

Question 8

Odds against Event, given P(event) = P(E)

Answer 8

• (1 - P(E))/ P(E) to 1

- e.g. P(E) = .2, odds against = (.8/.2) to 1 = 4 to 1