Quantitative (12%) Flashcards

Question 1

Q

P(AB)

Answer

A

P(A|B) * P(B)

Question 2

Q

P(A or B)

Answer

A

P(A) + P(B) - P(AB)

Question 3

Q

Probability

to

Odds

Answer

A

P(E)

—————

1 - P(E)

Question 4

Q

Expected Value

E(x)

Answer

A

Σx_n*P(x_n)

Weighted average of the possible outcomes of a random variable, where the weights are the probabilities that the outcomes will occur.

Question 5

Q

Degrees of Freedom

Question 6

Q

Combination

Answer

A

n!

——————

(n - r)! r!

Question 7

Q

Permutation

Answer

A

n!

——————

(n - r)!

Question 8

Q

Percentile

Answer

A

(n + 1)*(y/100)

Question 9

Q

Money-Weighted

Rate of Return

Answer

A

The internal rate of return on a portflio, IRR

The rate of return where NPV = 0

Question 10

Q

Time-Weighted

Rate of Return

Answer

A

For periods less than one year

(1 + HPR_n) - 1

For periods greater than one year (geometric mean)

(1 + HPR_n)^1/n - 1

geom always less than arith

The rate at which $1 compounds over time.

1.21903 [ENTER] 3 [1/x]

Question 11

Q

HPR

Answer

A

(P₁ + D)

   ————   - 1

P

Question 12

Q

Harmonic Mean

Answer

A

1

———————

Σ(1/P_n)

Average cost of shares purchased over time.

(Dollar cost averaging)

Question 13

Q

Population Variance

Answer

A

Σ(x - µ)^{2}

—————

n

Question 14

Q

Sample Variance

Answer

A

Σ(x - µ)^{2}

—————

(n - 1)

Question 15

Q

MAD

Answer

A

Σ|x - µ|

—————

n

Question 16

Q

Z or T

Answer

A

(x - µ)

————

σ

Question 17

Q

Standard Deviation

σ

Answer

A

SQRT of the Variance (σ2)

_SQRTσ²

Question 18

Q

Standard Error

Answer

A

σ

————

_SQRTn

in stats the sample mean deviates from the population mean. This deviation is the standard error.

Question 19

Q

Z Score for 90%

Answer

A

1.65

Mean+-1.65σ

Question 20

Q

Z Score for 95%

Question 21

Q

Z Score for 99%

Question 22

Q

Confidence Interval

Answer

A

X(+/-) Zσ

or

X(+/-) Z(Standard Error)

Question 23

Q

7 Steps in

Hypothesis Testing

Answer

A

State hypothesis
Select test statistic
Specify level of significance
State decision rule
Collect sample, calculate sample statistic
Make a decision based on hypothesis
Make a decision based on results

Question 24

Q

Hypothesis Test Statistic

Answer

A

(x - H₀)

————————

Standard Error

Question 25

Q

Coefficient of Variation

CV

Answer

A

S

———

X

Excess risk per unit of return.

(Lower is better)

Question 26

Q

Sharpe Ratio

Answer

A

E(R_p) - R_rf

——————

σ_p

Excess return per unit of risk.

(Higher is Better)

Question 27

Q

Chebyshev’s Inequality

Answer

A

The percentage of observations that lie within k standard deviations of the mean is at least

1 - 1/k²

for all k > 1 regardless of the shape of the distribution.

Question 28

Q

Roy’s Safety First Criterion

Answer

A

E(R_p) - R_L

——————

σ_p

Probability that the portfolio expected return E(Rp) will be greater than the threshold R_L.

(Higher is Better)

Question 29

Q

APR to EAR

Answer

A

(1 + APR/n)ⁿ - 1

Question 30

Q

EAR to APR

Answer

A

[(1 + EAR)^1/n- 1]n

Question 31

Q

EAR to HPR

Answer

A

(1 + EAR)^n/365 - 1

Question 32

Q

HPR to EAR

Answer

A

(1 + HPR)^365/n - 1

Question 33

Q

HPR to r_{mm}

Answer

A

HPR(360/n)

Question 34

Q

EAR with

Continuous Compounding

Answer

A

e^r - 1

or

(re^x - 1)

Question 35

Q

Perpetuity

Answer

A

PMT

P = ———

Question 36

Q

What does it mean to be a discrete distribution?

Answer

A

finite number of outcomes.

IE. rolling a dice.

Question 37

Q

What is a univariate distribution?

Answer

A

distribution between 1 variable.

Question 38

Q

What is the multivariate distrbution? Explain how it can be both continuous and discrete?

Answer

A

probabilities between a group of variables. The behaviour of one variable is tied into the other.

When discrete you can explain probability using joint prob tables.
When continuous use normal distribution.

Question 39

Q

What is the binomial distribution?

Answer

A

Also called bernoulii experiment.
discrete prob distribution in which yes/no experiements each of which has prob p

Question 40

Q

Describe properties of the central limit theorem.

Answer

A

sample size is large, n>30
mean of population, and mean of sample are equal
variance = σ²/n

Question 41

Q

When do you use t vs. z stat?

Answer

A

When sampl from small sample large sample

Normal dis, known σ² z-stat t-stat

Normal, unknown σ² t-stat t-stat*

nonnormal, known σ² N/A z-stat

nonnormal, unknown σ^{2 N/A t-stat*}

z-stat theoretically works, but t-stat more conservative.
NO test, if non-normal, variance unknown, and small.

Question 42

Q

A low put/call ratio is a sign of what type of mkt?

Question 43

Q

What is subjective probability?

What is joint probability?

What is empirical probability?

What is conditional probability?

Answer

A

probability based on judgement.

prob that two or more events happen concurrently.

prob calced based on historical data.

prob of one happening given the other occurs.

Question 44

Q

What is the sampling error?

Answer

A

sampling error of mean = sample mean - pop mean

x - ü

Question 45

Q

Desirable properties of estimators should be?

Answer

A

unbiased
- expected value =parameter you are trying to estimate
efficient
- if varince of unbiased estimator is smaller than all other unbiased estimators or parameters you are trying to esimate.
consistent
- accuracy of sample size increases as sample size increases. As sample size increases, SE approaches 0.

Question 46

Q

What do total capitalized costs include?

Answer

A

fixed production costs, direct conversion costs of material and labor, and storage costs part of production. Do not include waste costs.

Question 47

Q

When is DPS antidilutive?

Answer

A

When it exceeds EPS. If it does then you use EPS.

Question 48

Q

Cash flow debt coverage ratio?

Answer

A

CFO/total debt

Question 49

Q

Interim report?

Answer

A

Interim reports, either quarterly or semi-annual, contain updated information on a company’s performance and financial position since the last annual report.

Question 50

Q

Impairment using IFRS

Answer

A

Under IFRS, an asset is considered to be impaired when its carrying amount exceeds its 
recoverable amount (the higher of fair value less cost to sell or value in use).

Fair value less costs to sell: 480,000 – 50,000 = 430,000 
Value in use = 440,000 
Recoverable amount (higher value of the above two amounts) = 440,000 
Impairment loss under IFRS = Carrying value (net book value) – recoverable amount 
Impairment loss = 500,000 – 440,000 = C$60,000

Question 51

Q

double declining balance

Answer

A

2*SL rate

*do not take out residual value, yo.

Question 52

Q

longitudal data?

Answer

A

observations over time of multiple characteristics of same entity (GDP, unemployement), over 10 years

Question 53

Q

panel data

Answer

A

multiple characteristics, multiple companies, over time.

Question 54

Q

p value

Answer

A

smallest level of significance in which hypothesis can be rejected.

Question 55

Q

standard deviation

Answer

A

You can do in calc.

SE= Divide this by sqrt n

Question 56

Q

FV of continuous compounding?

Answer

A

PV * E^r*t

Question 57

Q

Nominal rate =?

Answer

A

RFR+inflation premi + risk premiums (default, liquidity, maturity pref)

Question 58

Q

Two populations, variances equal, What is the t-stat to determine whether two population means are equal?

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Quantitative (12%) Flashcards

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