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Multiple choice questions

1. A normal variable is standardized by:

a. subtracting off its mean from it and multiplying by its standard deviation.

 b. adding its mean to it and multiplying by its standard deviation.c. subtracting off its mean from it and dividing by its standard deviation.

d. adding its mean to it and dividing by its standard deviation.

2. Which of the following is a statistic that can be used to test hypotheses about a single

 population parameter?

a. F statistic

 b. t statistic

c.  2 statistic

d. !urbin Watson statistic

". #onsider the e$uation% & ' (1 ) (2*2 ) u. A null hypothesis% +,: (2 ' , states that:

a. *2 has no effect on the e-pected value of (2.

 b. *2 has no effect on the e-pected value of &.

c. (2 has no effect on the e-pected value of &.

d. & has no effect on the e-pected value of *2.

. /he significance level of a test is:

a. the probability of re0ecting the null hypothesis when it is false.

 b. one minus the probability of re0ecting the null hypothesis when it is false.

c. the probability of re0ecting the null hypothesis when it is true.

d. one minus the probability of re0ecting the null hypothesis when it is true.

True or false questions:

. f the calculated value of the t statistic is greater than the critical value% the null hypothesis%

+, is re0ected in favor of the alternative hypothesis% + 1.

3. +1: ( 0 4 ,% where ( 0 is a regression coefficient associated with an e-planatory variable%

represents a one5sided alternative hypothesis.

Open ended question

6. &ou are given following e$uation:

l og7 salary 8 ' ."2 ) ,.29, log7 sales8 ) ,.,16 roe ) ,.,,,2 ros

•

where salary is #;

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• roe is =eturn of $uity 7=;8 of the company

• ros is =eturn of >ecurities 7=;>8 of the company

Answer following:

1. +ow does #;