Question

# 1.6 The percentage change in the Russell 2000 Index of the stock prices of 2,000 small...

1.6 The percentage change in the Russell 2000 Index of the stock prices of 2,000 small companies was +18.33% in 2004 and +4.55% in 2005. Compute the geometric rate of return and tick the correct answer below.

a) Mean rate of return is 13.78%

b) Mean rate of return is 11.44%

c) Mean rate of return is 18.89%

d) Mean rate of return is 11.23%

1.7 Multiple regression allows us to use many different _______ variables to predict one _______ variable.

2 points

a)Independent; continuous

b)Dependent; categorical

c) Independent; dependent

d) Dependent; independent

1.8 The null hypothesis for a _______ test is that the difference between groups is exactly zero.

a) 2 points

b) Lower tailed

c) One-tailed

d) Upper tailed

Two-tailed

1.9 A Type I error occurs when we . . .

a) Reject the null hypothesis when it is true

b) Accept the null hypothesis when it is false

c) Reject the null hypothesis when it is false

d) Accept the null hypothesis when it is true

Data given:

The percentage change in the Russell 2000 Index of the stock prices of 2,000 small companies was +18.33% in 2004 and +4.55% in 2005.

Geometric rate of return = ?

As we know, the formula for computing the geometric rate of return is given as - where - rate of returns

n - number of periods

Using the above formula, we can compute the geometric rate of return for the given scenario as -      Thus, the geometric mean rate of return is approximately 11.23% .

Hence, the correct option is (d) .

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