Ophelia O’Brien, VP of Consumer Credit of American First Banks (AFB), monitors the
default rate on personal loans at the AFB member banks. One of her standards is “no
more than 5% of personal loans should be in default.” On each Friday, the default rate
is calculated for a sample of 500 personal loans. Last Friday’s sample contained 30
defaulted loans. Ophelia’s null hypothesis is _______.
a) p> 0.05
b) p= 0.05
c) n= 30
d) n= 500
e) n= 0.05
Frank Forgione has the right to enter a contest where he has a 50% chance of winning
$50,000 and a 50% chance of losing $0. It costs Frank nothing to enter the contest. If he
is willing to give up his right to enter the contest for a sure payment of $25,000, he is
___.
a) a risk avoider
b) an optimist
c) a risk taker
d) risk neutral (an EMV’er)
e) a gambler
The city golf course is interested in starting a junior golf program. The golf pros has
collected data on the number of youths under 13 that have played golf during the last 4
months. Using a three-month moving average, the forecast value for October made at
the end of September in the following time series would be ____________.
a) 24
b) 21
c) 21.56
d) 19.22
e) 22
A market research firms conducts studies regarding the success of new products. The
company is not always perfect in predicting the success. Suppose that there is a 50%
chance that any new product would be successful (and a 50% chance that it would fail).
In the past, for all new products that ultimately were successful, 80% were predicted to
be successful (and the other 20% were inaccurately predicted to be failures). Also, for
all new products that were ultimately failures, 70% were predicted to be failures (and
the other 30% were inaccurately predicted to be successes). What is the a priori
probability that a new product would be a success?
a) 0.50
b) 0.80
c) 0.70
d) 0.60
e) 0.95
The expected (mean) life of a particular type of light bulb is 1,000 hours with a standard
deviation of 50 hours. The life of this bulb is normally distributed. What is the
probability that a randomly selected bulb would last longer than 1150 hours?
a) 0.4987
b) 0.9987
c) 0.0013
d) 0.5013
e) 0.5513
The average starting salary for graduates at a university is $33,000 with a standard
deviation of $2,000. If a histogram of the data shows that it takes on a mound shape, the
empirical rule says that approximately 95% of the graduates would have a starting
salary between _______.
a) 29,000 and 37,000
b) 27,000 and 39,000
c) 25,000 and 41,000
d) 29,000 and 37,000
e) 21,000 and 29,000
Collinsville Construction Company purchases steel rods for its projects. Based on
previous tests, Claude Carter, Quality Assurance Manager, has recommended
purchasing rods from Redding Rods, Inc. (population 1), rather than Stockton Steel
(population 2), since Redding’s rods had less variability in length. Recently, Stockton
revised it rod shearing operation, and Claude has sampled the outputs from Redding’s
and Stockton’s rod manufacturing processes. The results for Redding were s1
2= 0.15
with n1= 8, and, for Stockton, the results were s2
2= 0.05 with n2= 10. Assume that rod
lengths are normally distributed in the population. If
= 0.05, the appropriate decision
is _________.
a) reject the null hypothesis
b) reject the null hypothesis
c) do not reject the null hypothesis
d) do not reject the null hypothesis
e) do nothing
If E and F are mutually exclusive, then _______.
a) the probability of the union is zero
b) P(E) = 1 – P(F)
c) the probability of the intersection is zero
d) the probability of the union is one
e) P(E) = P(F)
According to the central limit theorem, if a sample of size 56 is drawn from a
population with a mean of 16, the mean of all sample means would equal _______.
a) 56
b) 16
c) 7.5
d) 44.0
e) 196
Consider the following frequency distribution:
What is the cumulative frequency of the second class interval?
a) 25
b) 40
c) 15
d) 50
Circuit boards for wireless telephones are etched, in an acid bath, in batches of 100
boards. A sample of seven boards is randomly selected from each lot for inspection. A
particular batch contains two defective boards; and x is the number of defective boards
in the sample. P(x=2) is _______.
a) 0.1315
b) 0.8642
c) 0.0042
d) 0.6134
e) 0.0034
The empirical rule says that approximately what percentage of the values would be
within 1 standard deviation of the mean in a bell shaped set of data?
a) 95%
b) 68%
c) 50%
d) 97.7%
e) 100%
Annie Mikhail, market analyst for a national company specializing in historic city tours,
is analyzing the relationship between the sales revenue from historic city tours and the
size of the city. She gathers data from six cities in which the tours are offered. Annie’s
dependent variable is annual sales revenues and her independent variable is the city
population. Regression analysis of the data yielded the following tables.
The numerical value of the correlation coefficient between the historic city tour sales
and the size of city population is __________.
a) 0.969785
b) 0.940483
c) 0.224675
d) -0.14156
e) 1.000000
Dianna Ivy is evaluating a plan to expand the production facilities of International
Compressors Company which manufactures natural gas compressors. Dianna feels that
the price of coal is a significant factor in her decision, but she cannot control it. For her
decision, the different prices of coal represent the _____________.
a) payoffs
b) decision alternatives
c) states of nature
d) revised probabilities
e) prior probabilities
For the following ANOVA table, the HSD value, assuming equal sample sizes and
using
= 0.05 is ______
a) 1.86
b) 3.94
c) 3.19
d) 1.645
e) 3.52
Abel Alonzo, Director of Human Resources, is exploring employee absenteeism at the
Plano Power Plant. Ten percent of all plant employees work in the finishing department;
20% of all plant employees are absent excessively; and 7% of all plant employees work
in the finishing department and are absent excessively. A plant employee is selected
randomly; F is the event “works in the finishing department;” and A is the event “is
absent excessively.” P(A F) = _____________.
a) 0.07
b) 0.10
c) 0.20
d) 0.23
e) 0.37
A researcher believes a new diet should improve weight gain. To test his hypothesis a
random sample of 10 people on the old diet and an independent random sample of 10
people on the new diet were selected. The selected people on the old diet gain an
average of 5 pounds with a standard deviation of 2 pounds, while the average gain for
selected people on the new diet was 8 pounds with a standard deviation of 1.5 pounds.
Assume that the values are normally distributed in each population and that the
population variances are approximately equal. Using
= 0.05, the observed tvalue for
this test is _______.
a) -1.96
b) -1.645
c) -2.100
d) -3.79
e) -1.734
Often, index numbers are expressed as ____________.
a) percentages
b) frequencies
c) cycles
d) regression coefficients
e) correlation coefficients
Ray Crofford is evaluating investment alternatives for the $100,000 which he inherited
from his grandfather. His investment advisor has identified two alternatives and
constructed the following tables which show (1) expected profits (in $10,000’s) for
various market conditions and their probabilities, and (2) the advisor’s track record on
predicting Bull and Bear markets.
If the advisor predicts a Bear market the EMV of the Bonds alternative, using revised
probabilities, is ________.
a) $36,600
b) $24,600
c) $56,800
d) $48,200
e) $45,800
Nels Neugent, Purchasing Manager at Mid-West Medical Center, is designing a p chart
to monitor the proportion of defective purchase orders issued at Mid-West. He has the
proportions defective for 22 samples of purchase orders. Each sample contains 150
purchase orders, and the average proportion defective is 0.08. The centerline for Nels’s
p chart is ___________.
a) 0.08
b) 75
c) 22
d) 1.76
e) 0.008
An instructor made a frequency table of the scores his students got on a test
Approximately what percent of students got more than 70?
a) 36
b) 20
c) 50
d) 10
e) 64
Trey Leeman, Operations Manager at National Consumers, Inc. (NCI), is evaluating
alternatives for increasing capacity at NCI’s Fountain Hill plant. He has identified four
alternatives, and has constructed the following payoff table which shows payoffs (in
$1,000,000’s) for the three possible levels of market demand.
The opportunity loss for the combination “Purchase New Equipment” and “Low” is
____.
a) 0.5
b) 1.5
c) 2.5
d) 3.0
e) 3.5
A commuter travels many miles to work each morning. She has timed this trip 5 times
during the last month. The time (in minutes) required to make this trip was 34, 39, 41,
35, and 41. The median time (in minutes) required for this trip was _______.
a) 39
b) 41
c) 37.5
d) 38
e) 35.5
A multiple regression analysis produced the following tables.
Using
= 0.01 to test the model, these results indicate that ____________.
a) at least one of the regression variables is a significant predictor of y
b) none of the regression variables are significant predictors of y
c) y cannot be sufficiently predicted using these data
d) y is a good predictor of the regression variables in the model
e) the y intercept in this model is the best predictor variable
If there is perfect negative correlation between two sets of numbers, then _______.
a) r = 0
b) r = -1
c) r = +1
d) SSE=1
e) MSE = 1
The nonparametric alternative to the one-way analysis of variance is the _______.
a) chi-square goodness of fit test
b) Kruskal-Wallis test
c) Mann-Whitney U test
d) Wilcoxon test
e) Friedman test
Collinsville Construction Company purchases steel rods for its projects. Based on
previous tests, Claude Carter, Quality Assurance Manager, has recommended
purchasing rods from Redding Rods, Inc. (population 1), rather than Stockton Steel
(population 2), since Redding’s rods had less variability in length. Recently, Stockton
revised it rod shearing operation, and Claude has sampled the outputs from Redding’s
and Stockton’s rod manufacturing processes. The results for Redding were s1
2= 0.15
with n1= 8, and, for Stockton, the results were s2
2= 0.04 with n2= 10. Assume that rod
lengths are normally distributed in the population If
= 0.05, the observed Fvalue is
___________.
a) 0.27
b) 0.52
c) 1.92
d) 3.75
e) 4.25
The net profit from a certain investment is normally distributed with a mean of $2,500
and a standard deviation of $1,000.. The probability that the investor’s net gain will be
at least $2,000 is _____________.
a) 0.0000
b) 0.3413
c) 0.0005
d) 0.0500
e) 0.5000
A market research firm is investigating the appeal of three package designs. The table
below gives information obtained through a sample of 200 consumers. The three
package designs are labeled A, B, and C. The consumers are classified according to age
and package design preference.
If one of these consumers is randomly selected and is under 25, what is the probability
that the person prefers design A?
a) 0.22
b) 0.23
c) 0.29
d) 0.18
e) 0.78
Pinky Bauer, Chief Financial Officer of Harrison Haulers, Inc., suspects irregularities in
the payroll system, and orders an inspection of a random sample of vouchers issued
since January 1, 2006. A sample of ten vouchers is randomly selected, without
replacement, from the population of 2,000 vouchers. Each voucher in the sample is
examined for errors and the number of vouchers in the sample with errors is denoted by
x. If 20% of the population of vouchers contains errors, the mean value of x is
__________.
a) 400
b) 2
c) 200
d) 5
e) 1
A multiple regression analysis produced the following tables.
These results indicate that ____________.
a) none of the predictor variables are significant at the 5% level
b) each predictor variable is significant at the 5% level
c) x1is the only predictor variable significant at the 5% level
d) x2is the only predictor variable significant at the 5% level
e) the intercept is not significant at 5% level