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5DISCRETE CHAPTER PROBABILITY DISTRIBUTIONS
MULTIPLE CHOICE 1. A numerical description of the outcome of an experiment is called a a. descriptive statistic b. probability function c. variance d. random variable
PTS: 1 TOP: Discrete Probability Distributions
2. A random variable that can assume only a finite number of values is referred to as a(n) a. infinite sequence b. finite sequence c. discrete random variable d. discrete probability function PTS: 1 TOP: Discrete Probability Distributions
3. A probability distribution showing the probability of x successes in n trials, where the probability of success does not change from trial to trial, is termed a a. uniform probability distribution b. binomial probability distribution c. hypergeometric probability distribution d. normal probability distribution PTS: 1 TOP: Discrete Probability Distributions
4. Variance is a. a measure of the average, or central value of a random variable b. a measure of the dispersion of a random variable c. the square root of the standard deviation d. the sum of the squared deviation of data elements from the mean PTS: 1 TOP: Discrete Probability Distributions
5. A continuous random variable may assume a. any value in an interval or collection of intervals b. only integer values in an interval or collection of intervals c. only fractional values in an interval or collection of intervals d. only the positive integer values in an interval PTS: 1 TOP: Discrete Probability Distributions
6. A description of the distribution of the values of a random variable and their associated probabilities is called a a. probability distribution b. random variance c. random variable d. expected value PTS: 1 TOP: Discrete Probability Distributions
7. Which of the following is a required condition for a discrete probability function?
a. b. c. d.
f(x) = 0 for all values of x f(x) 1 for all values of x f(x) < 0 for all values of x f(x) = 1 for all values of x PTS: 1 TOP: Discrete Probability Distributions
8. A measure of the average value of a random variable is called a(n) a. variance b. standard deviation c. expected value d. coefficient of variation PTS: 1 TOP: Discrete Probability Distributions
9. Which of the following is not a required condition for a discrete probability function? a. f(x) 0 for all values of x b. f(x) = 1 for all values of x c. f(x) = 0 for all values of x d. f(x) 1 for all values of x PTS: 1 TOP: Discrete Probability Distributions
10. The standard deviation is the a. variance squared b. square root of the sum of the deviations from the mean c. same as the expected value d. positive square root of the variance PTS: 1 TOP: Discrete Probability Distributions
11. The variance is a measure of dispersion or variability of a random variable. It is a weighted average of the a. square root of the deviations from the mean b. square root of the deviations from the median c. squared deviations from the median d. squared deviations from the mean PTS: 1 TOP: Discrete Probability Distributions
12. A weighted average of the value of a random variable, where the probability function provides weights is known as a. a probability function b. a random variable c. the expected value d. random function PTS: 1 TOP: Discrete Probability Distributions
13. An experiment consists of making 80 telephone calls in order to sell a particular insurance policy. The random variable in this experiment is a a. discrete random variable b. continuous random variable c. complex random variable d. simplex random variable
PTS: 1
TOP: Discrete Probability Distributions
14. An experiment consists of determining the speed of automobiles on a highway by the use of radar equipment. The random variable in this experiment is a a. discrete random variable b. continuous random variable c. complex random variable d. simplex random variable PTS: 1 TOP: Discrete Probability Distributions
15. The number of electrical outages in a city varies from day to day. Assume that the number of electrical outages (x) in the city has the following probability distribution. x 0 1 2 3 f(x) 0.80 0.15 0.04 0.01
The mean and the standard deviation for the number of electrical outages (respectively) are a. 2.6 and 5.77 b. 0.26 and 0.577 c. 3 and 0.01 d. 0 and 0.8 PTS: 1 TOP: Discrete Probability Distributions
16. The number of customers that enter a store during one day is an example of a. a continuous random variable b. a discrete random variable c. either a continuous or a discrete random variable, depending on the number of the customers d. either a continuous or a discrete random variable, depending on the gender of the customers PTS: 1 TOP: Discrete Probability Distributions
17. The weight of an object is an example of a. a continuous random variable b. a discrete random variable c. either a continuous or a discrete random variable, depending on the weight of the object d. either a continuous or a discrete random variable depending on the units of measurement PTS: 1 TOP: Discrete Probability Distributions
18. Four percent of the customers of a mortgage company default on their payments. A sample of five customers is selected. What is the probability that exactly two customers in the sample will default on their payments? a. 0.2592 b. 0.0142 c. 0.9588 d. 0.7408 PTS: 1 TOP: Discrete Probability Distributions
19. When sampling without replacement, the probability of obtaining a certain sample is best given by a a. hypergeometric distribution b. binomial distribution c. Poisson distribution d. normal distribution PTS: 1 TOP: Discrete Probability Distributions
20. Twenty percent of the students in a class of 100 are planning to go to graduate school. The standard deviation of this binomial distribution is a. 20 b. 16 c. 4 d. 2 PTS: 1 TOP: Discrete Probability Distributions
21. If you are conducting an experiment where the probability of a success is .02 and you are interested in the probability of 4 successes in 15 trials, the correct probability function to use is the a. standard normal probability density function b. normal probability density function c. Poisson probability function d. binomial probability function PTS: 1 TOP: Discrete Probability Distributions
22. Which of the following statements about a discrete random variable and its probability distribution are true? a. Values of the random variable can never be negative. b. Some negative values of f(x) are allowed as long as f(x) = 1. c. Values of f(x) must be greater than or equal to zero. d. The values of f(x) increase to a maximum point and then decrease. PTS: 1 TOP: Discrete Probability Distributions
23. In the textile industry, a manufacturer is interested in the number of blemishes or flaws occurring in each 100 feet of material. The probability distribution that has the greatest chance of applying to this situation is the a. normal distribution b. binomial distribution c. Poisson distribution d. uniform distribution PTS: 1 TOP: Discrete Probability Distributions
24. The Poisson probability distribution is a a. continuous probability distribution b. discrete probability distribution c. uniform probability distribution d. normal probability distribution PTS: 1 TOP: Discrete Probability Distributions
25. The binomial probability distribution is used with a. a continuous random variable
b. a discrete random variable c. any distribution, as long as it is not normal d. None of these alternatives is correct. PTS: 1 TOP: Discrete Probability Distributions
26. The expected value of a discrete random variable a. is the most likely or highest probability value for the random variable b. will always be one of the values x can take on, although it may not be the highest probability value for the random variable c. is the average value for the random variable over many repeats of the experiment d. None of these alternatives is correct. PTS: 1 TOP: Discrete Probability Distributions
27. Which of the following is not a characteristic of an experiment where the binomial probability distribution is applicable? a. the experiment has a sequence of n identical trials b. exactly two outcomes are possible on each trial c. the trials are dependent d. the probabilities of the outcomes do not change from one trial to another PTS: 1 TOP: Discrete Probability Distributions
28. Which of the following is a characteristic of a binomial experiment? a. at least 2 outcomes are possible b. the probability changes from trial to trial c. the trials are independent d. None of these alternatives is correct. PTS: 1 TOP: Discrete Probability Distributions
29. The expected value of a random variable is a. the value of the random variable that should be observed on the next repeat of the experiment b. the value of the random variable that occurs most frequently c. the square root of the variance d. None of these alternatives is correct. PTS: 1 TOP: Discrete Probability Distributions
30. In a binomial experiment a. the probability does not change from trial to trial b. the probability does change from trial to trial c. the probability could change from trial to trial, depending on the situation under consideration d. None of these alternatives is correct. PTS: 1 TOP: Discrete Probability Distributions
31. Assume that you have a binomial experiment with p = 0.5 and a sample size of 100. The expected value of this distribution is a. 0.50 b. 0.30 c. 100 d. 50
PTS: 1
TOP: Discrete Probability Distributions
32. Which of the following is not a property of a binomial experiment? a. the experiment consists of a sequence of n identical trials b. each outcome can be referred to as a success or a failure c. the probabilities of the two outcomes can change from one trial to the next d. the trials are independent PTS: 1 TOP: Discrete Probability Distributions
33. The Poisson probability distribution is used with a. a continuous random variable b. a discrete random variable c. either a continuous or discrete random variable d. any random variable PTS: 1 TOP: Discrete Probability Distributions
34. The standard deviation of a binomial distribution is a. (x) = P(1 - P) b. (x) = nP c. (x) = nP(1 - P) d. None of these alternatives is correct. PTS: 1 TOP: Discrete Probability Distributions
35. The expected value for a binomial probability distribution is a. E(x) = Pn(1 - n) b. E(x) = P(1 - P) c. E(x) = nP d. E(x) = nP(1 - P) PTS: 1 TOP: Discrete Probability Distributions
36. The variance for the binomial probability distribution is a. var(x) = P(1 - P) b. var(x) = nP c. var(x) = n(1 - P) d. var(x) = nP(1 - P) PTS: 1 TOP: Discrete Probability Distributions
37. A production process produces 2% defective parts. A sample of five parts from the production process is selected. What is the probability that the sample contains exactly two defective parts? a. 0.0004 b. 0.0038 c. 0.10 d. 0.02 PTS: 1 TOP: Discrete Probability Distributions
38. When dealing with the number of occurrences of an event over a specified interval of time or space, the appropriate probability distribution is a a. binomial distribution b. Poisson distribution
c. normal distribution d. hypergeometric probability distribution PTS: 1 TOP: Discrete Probability Distributions
39. The hypergeometric probability distribution is identical to a. the Poisson probability distribution b. the binomial probability distribution c. the normal distribution d. None of these alternatives is correct. PTS: 1 TOP: Discrete Probability Distributions
40. The key difference between the binomial and hypergeometric distribution is that with the hypergeometric distribution a. the probability of success must be less than 0.5 b. the probability of success changes from trial to trial c. the trials are independent of each other d. the random variable is continuous PTS: 1 TOP: Discrete Probability Distributions
41. Assume that you have a binomial experiment with p = 0.4 and a sample size of 50. The variance of this distribution is a. 20 b. 12 c. 3.46 d. 144 PTS: 1 TOP: Discrete Probability Distributions
42. In a binomial experiment the probability of success is 0.06. What is the probability of two successes in seven trials? a. 0.0036 b. 0.0600 c. 0.0555 d. 0.2800 PTS: 1 TOP: Discrete Probability Distributions
43. X is a random variable with the probability function: f(X) = X/6 for X = 1, 2 or 3
The expected value of X is a. 0.333 b. 0.500 c. 2.000 d. 2.333 PTS: 1 TOP: Discrete Probability Distributions
44. A random variable that may take on any value in an interval or collection of intervals is known as a a. continuous random variable b. discrete random variable c. continuous probability function
d. finite probability function PTS: 1 TOP: Discrete Probability Distributions
NARRBEGIN: Exhibit 05-01 Exhibit 5-1 The following represents the probability distribution for the daily demand of computers at a local store. Demand 0 1 2 3 4 NARREND 45. Refer to Exhibit 5-1. The expected daily demand is a. 1.0 b. 2.2 c. 2, since it has the highest probability d. of course 4, since it is the largest demand level PTS: 1 NAR: Exhibit 05-01 TOP: Discrete Probability Distributions Probability 0.1 0.2 0.3 0.2 0.2
46. Refer to Exhibit 5-1. The probability of having a demand for at least two computers is a. 0.7 b. 0.3 c. 0.4 d. 1.0 PTS: 1 NAR: Exhibit 05-01 TOP: Discrete Probability Distributions
NARRBEGIN: Exhibit 05-02 Exhibit 5-2 The student body of a large university consists of 60% female students. A random sample of 8 students is selected. NARREND 47. Refer to Exhibit 5-2. What is the probability that among the students in the sample exactly two are female? a. 0.0896 b. 0.2936 c. 0.0413 d. 0.0007 PTS: 1 NAR: Exhibit 05-02 TOP: Discrete Probability Distributions
48. Refer to Exhibit 5-2. What is the probability that among the students in the sample at least 7 are female? a. 0.1064
b. 0.0896 c. 0.0168 d. 0.8936 PTS: 1 NAR: Exhibit 05-02 TOP: Discrete Probability Distributions
49. Refer to Exhibit 5-2. What is the probability that among the students in the sample at least 6 are male? a. 0.0413 b. 0.0079 c. 0.0007 d. 0.0499 PTS: 1 NAR: Exhibit 05-02 TOP: Discrete Probability Distributions
NARRBEGIN: Exhibit 05-03 Exhibit 5-3 Roth is a computer-consulting firm. The number of new clients that they have obtained each month has ranged from 0 to 6. The number of new clients has the probability distribution that is shown below. Number of New Clients 0 1 2 3 4 5 6 NARREND 50. Refer to Exhibit 5-3. The expected number of new clients per month is a. 6 b. 0 c. 3.05 d. 21 PTS: 1 NAR: Exhibit 05-03 51. Refer to Exhibit 5-3. The variance is a. 1.431 b. 2.047 c. 3.05 d. 21 PTS: 1 NAR: Exhibit 05-03 TOP: Discrete Probability Distributions TOP: Discrete Probability Distributions Probability 0.05 0.10 0.15 0.35 0.20 0.10 0.05
52. Refer to Exhibit 5-3. The standard deviation is a. 1.431 b. 2.047 c. 3.05
d. 21 PTS: 1 NAR: Exhibit 05-03 TOP: Discrete Probability Distributions
NARRBEGIN: Exhibit 05-04 Exhibit 5-4 Forty percent of all registered voters in a national election are female. A random sample of 5 voters is selected. NARREND 53. Refer to Exhibit 5-4. The probability that the sample contains 2 female voters is a. 0.0778 b. 0.7780 c. 0.5000 d. 0.3456 PTS: 1 NAR: Exhibit 05-04 TOP: Discrete Probability Distributions
54. Refer to Exhibit 5-4. The probability that there are no females in the sample is a. 0.0778 b. 0.7780 c. 0.5000 d. 0.3456 PTS: 1 NAR: Exhibit 05-04 NARRBEGIN: Exhibit 05-05 Exhibit 5-5 Probability Distribution x 10 20 30 40 f(x) .2 .3 .4 .1 TOP: Discrete Probability Distributions
NARREND 55. Refer to Exhibit 5-5. The expected value of x equals a. 24 b. 25 c. 30 d. 100 PTS: 1 NAR: Exhibit 05-05 TOP: Discrete Probability Distributions
56. Refer to Exhibit 5-5. The variance of x equals a. 9.165 b. 84 c. 85 d. 93.33
PTS: 1 NAR: Exhibit 05-05
TOP: Discrete Probability Distributions
NARRBEGIN: Exhibit 05-06 Exhibit 5-6 A sample of 2,500 people was asked how many cups of coffee they drink in the morning. You are given the following sample information. Cups of Coffee 0 1 2 3 NARREND 57. Refer to Exhibit 5-6. The expected number of cups of coffee is a. 1 b. 1.2 c. 1.5 d. 1.7 PTS: 1 NAR: Exhibit 05-06 TOP: Discrete Probability Distributions Frequency 700 900 600 300 2,500
58. Refer to Exhibit 5-6. The variance of the number of cups of coffee is a. .96 b. .9798 c. 1 d. 2.4 PTS: 1 NAR: Exhibit 05-06 TOP: Discrete Probability Distributions
NARRBEGIN: Exhibit 05-07 Exhibit 5-7 The probability that Pete will catch fish when he goes fishing is .8. Pete is going to fish 3 days next week. Define the random variable X to be the number of days Pete catches fish. NARREND 59. Refer to Exhibit 5-7. The probability that Pete will catch fish on exactly one day is a. .008 b. .096 c. .104 d. .8 PTS: 1 NAR: Exhibit 05-07 TOP: Discrete Probability Distributions
60. Refer to Exhibit 5-7. The probability that Pete will catch fish on one day or less is a. .008 b. .096 c. .104
d. .8 PTS: 1 NAR: Exhibit 05-07 TOP: Discrete Probability Distributions
61. Refer to Exhibit 5-7. The expected number of days Pete will catch fish is a. .6 b. .8 c. 2.4 d. 3 PTS: 1 NAR: Exhibit 05-07 TOP: Discrete Probability Distributions
62. Refer to Exhibit 5-7. The variance of the number of days Pete will catch fish is a. .16 b. .48 c. .8 d. 2.4 PTS: 1 NAR: Exhibit 05-07 TOP: Discrete Probability Distributions
NARRBEGIN: Exhibit 05-08 Exhibit 5-8 The random variable x is the number of occurrences of an event over an interval of ten minutes. It can be assumed that the probability of an occurrence is the same in any two-time periods of an equal length. It is known that the mean number of occurrences in ten minutes is 5.3. NARREND 63. Refer to Exhibit 5-8. The random variable x satisfies which of the following Discrete Probability Distributions? a. normal b. Poisson c. binomial d. Not enough information is given to answer this question. PTS: 1 NAR: Exhibit 05-08 TOP: Discrete Probability Distributions
64. Refer to Exhibit 5-8. The appropriate probability distribution for the random variable is a. discrete b. continuous c. either discrete or continuous depending on how the interval is defined d. None of these alternatives is correct. PTS: 1 NAR: Exhibit 05-08 TOP: Discrete Probability Distributions
65. Refer to Exhibit 5-8. The expected value of the random variable x is a. 2 b. 5.3 c. 10 d. 2.30 PTS: 1 TOP: Discrete Probability Distributions
NAR: Exhibit 05-08 66. Refer to Exhibit 5-8. The probability that there are 8 occurrences in ten minutes is a. .0241 b. .0771 c. .1126 d. .9107 PTS: 1 NAR: Exhibit 05-08 TOP: Discrete Probability Distributions
67. Refer to Exhibit 5-8. The probability that there are less than 3 occurrences is a. .0659 b. .0948 c. .1016 d. .1239 PTS: 1 NAR: Exhibit 05-08 TOP: Discrete Probability Distributions
NARRBEGIN: Exhibit 05-09 Exhibit 5-9 The probability distribution for the daily sales at Michael's Co. is given below. Daily Sales (In $1,000s) 40 50 60 70 NARREND 68. Refer to Exhibit 5-9. The expected daily sales are a. $55,000 b. $56,000 c. $50,000 d. $70,000 PTS: 1 NAR: Exhibit 05-09 TOP: Discrete Probability Distributions Probability 0.1 0.4 0.3 0.2
69. Refer to Exhibit 5-9. The probability of having sales of at least $50,000 is a. 0.5 b. 0.10 c. 0.30 d. 0.90 PTS: 1 NAR: Exhibit 05-09 TOP: Discrete Probability Distributions
NARRBEGIN: Exhibit 05-10 Exhibit 5-10 The probability distribution for the number of goals the Lions soccer team makes per game is given below.
Number Of Goals 0 1 2 3 4 NARREND
Probability 0.05 0.15 0.35 0.30 0.15
70. Refer to Exhibit 5-10. The expected number of goals per game is a. 0 b. 1 c. 2, since it has the highest probability d. 2.35 PTS: 1 NAR: Exhibit 05-10 TOP: Discrete Probability Distributions
71. Refer to Exhibit 5-10. What is the probability that in a given game the Lions will score at least 1 goal? a. 0.20 b. 0.55 c. 1.0 d. 0.95 PTS: 1 NAR: Exhibit 05-10 TOP: Discrete Probability Distributions
72. Refer to Exhibit 5-10. What is the probability that in a given game the Lions will score less than 3 goals? a. 0.85 b. 0.55 c. 0.45 d. 0.80 PTS: 1 NAR: Exhibit 05-10 TOP: Discrete Probability Distributions
73. Refer to Exhibit 5-10. What is the probability that in a given game the Lions will score no goals? a. 0.95 b. 0.05 c. 0.75 d. 0.60 PTS: 1 NAR: Exhibit 05-10 TOP: Discrete Probability Distributions
NARRBEGIN: Exhibit 05-11 Exhibit 5-11 A local bottling company has determined the number of machine breakdowns per month and their respective probabilities as shown below: Number of Breakdowns Probability
0 1 2 3 4 NARREND
0.12 0.38 0.25 0.18 0.07
74. Refer to Exhibit 5-11. The expected number of machine breakdowns per month is a. 2 b. 1.70 c. one, since it has the highest probability d. at least 4 PTS: 1 NAR: Exhibit 05-11 TOP: Discrete Probability Distributions
75. Refer to Exhibit 5-11. The probability of at least 3 breakdowns in a month is a. 0.93 b. 0.88 c. 0.75 d. 0.25 PTS: 1 NAR: Exhibit 05-11 TOP: Discrete Probability Distributions
76. Refer to Exhibit 5-11. The probability of no breakdowns in a month is a. 0.88 b. 0.00 c. 0.50 d. 0.12 PTS: 1 NAR: Exhibit 05-11 TOP: Discrete Probability Distributions
NARRBEGIN: Exhibit 05-12 Exhibit 5-12 The police records of a metropolitan area kept over the past 300 days show the following number of fatal accidents. Number of Fatal Accidents 0 1 2 3 4 NARREND 77. Refer to Exhibit 5-12. What is the probability that in a given day there will be less than 3 accidents? a. 0.2 b. 120 c. 0.5 Number of Days 45 75 120 45 15
d. 0.8 PTS: 1 NAR: Exhibit 05-12 TOP: Discrete Probability Distributions
78. Refer to Exhibit 5-12. What is the probability that in a given day there will be at least 1 accident? a. 0.15 b. 0.85 c. at least 1 d. 0.5 PTS: 1 NAR: Exhibit 05-12 TOP: Discrete Probability Distributions
79. Refer to Exhibit 5-12. What is the probability that in a given day there will be no accidents? a. 0.00 b. 1.00 c. 0.85 d. 0.15 PTS: 1 NAR: Exhibit 05-12 TOP: Discrete Probability Distributions
NARRBEGIN: Exhibit 05-13 Exhibit 5-13 Oriental Reproductions, Inc. is a company that produces handmade carpets with oriental designs. The production records that show the monthly production has ranged from 1 to 5 carpets. The production levels and their respective probabilities are shown below. Production Per Month x 1 2 3 4 5 NARREND 80. Refer to Exhibit 5-13. the expected monthly production level is a. 1.00 b. 4.00 c. 3.00 d. 3.84 PTS: 1 NAR: Exhibit 05-13 TOP: Discrete Probability Distributions Probability f(x) 0.01 0.04 0.10 0.80 0.05
81. Refer to Exhibit 5-13. The standard deviation for the production is a. 4.32 b. 3.74 c. 0.374 d. 0.612
PTS: 1 NAR: Exhibit 05-13 PROBLEM
TOP: Discrete Probability Distributions
1. Thirty-two percent of the students in a management class are graduate students. A random sample of 5 students is selected. Using the binomial probability function, determine the probability that the sample contains exactly 2 graduate students? ANS: 0.322 (rounded) PTS: 1 TOP: Discrete Probability Distributions
2. Seventy percent of the students applying to a university are accepted. Using the binomial probability tables, what is the probability that among the next 18 applicants a. b. c. d. e. f. At least 6 will be accepted? Exactly 10 will be accepted? Exactly 5 will be rejected? Fifteen or more will be accepted? Determine the expected number of acceptances. Compute the standard deviation.
0.9986 b. 0.0811 c. 0.2017 d. 0.1646 e. 12.6 f. 1.9442 PTS: 1 TOP: Discrete Probability Distributions
3. General Hospital has noted that they admit an average of 8 patients per hour. a. b. What is the probability that during the next hour less then 3 patients will be admitted? What is the probability that during the next two hours exactly 8 patients will be admitted?
0.0137 b. 0.0120 PTS: 1 TOP: Discrete Probability Distributions
4. The demand for a product varies from month to month. Based on the past year's data, the following probability distribution shows MNM company's monthly demand. x Unit Demand 0 1,000 2,000 f(x) Probability 0.10 0.10 0.30
3,000 4,000 a. b.
0.40 0.10
Determine the expected number of units demanded per month. Each unit produced costs the company $8.00, and is sold for $10.00. How much will the company gain or lose in a month if they stock the expected number of units demanded, but sell 2000 units?
2300 b. Profit = $1600 PTS: 1 TOP: Discrete Probability Distributions
5. Twenty-five percent of the employees of a large company are minorities. A random sample of 7 employees is selected. a. b. c. d. e. What is the probability that the sample contains exactly 4 minorities? What is the probability that the sample contains fewer than 2 minorities? What is the probability that the sample contains exactly 1 non-minority? What is the expected number of minorities in the sample? What is the variance of the minorities?
0.0577 b. 0.4450 c. 0.0013 d. 1.75 e. 1.3125 PTS: 1 TOP: Discrete Probability Distributions
6. A salesperson contacts eight potential customers per day. From past experience, we know that the probability of a potential customer making a purchase is .10. a. b. c. d. What is the probability the salesperson will make exactly two sales in a day? What is the probability the salesperson will make at least two sales in a day? What percentage of days will the salesperson not make a sale? What is the expected number of sales per day?
0.1488 b. 0.1869 c. 43.05% d. 0.8 PTS: 1 TOP: Discrete Probability Distributions
7. A life insurance company has determined that each week an average of seven claims is filed in its Nashville branch. a. b. What is the probability that during the next week exactly seven claims will be filed? What is the probability that during the next week no claims will be filed?
c. d.
What is the probability that during the next week fewer than four claims will be filed? What is the probability that during the next week at least seventeen claims will be filed?
0.1490 b. 0.0009 c. 0.0817 d. 0.0009 PTS: 1 TOP: Discrete Probability Distributions
8. When a particular machine is functioning properly, 80% of the items produced are non-defective. If three items are examined, what is the probability that one is defective? Use the binomial probability function to answer this question. ANS: 0.384 PTS: 1 TOP: Discrete Probability Distributions
9. Ten percent of the items produced by a machine are defective. Out of 15 items chosen at random, a. b. c. what is the probability that exactly 3 items will be defective? what is the probability that less than 3 items will be defective? what is the probability that exactly 11 items will be non-defective?
0.1285 b. 0.816 c. 0.0428 PTS: 1 TOP: Discrete Probability Distributions
10. The student body of a large university consists of 30% Business majors. A random sample of 20 students is selected. a. b. c. d. What is the probability that among the students in the sample at least 10 are Business majors? What is the probability that at least 16 are not Business majors? What is the probability that exactly 10 are Business majors? What is the probability that exactly 12 are not Business majors?
0.0479 b. 0.2374 c. 0.0308 d. 0.1144 PTS: 1 TOP: Discrete Probability Distributions
11. Shoppers enter Hamilton Place Mall at an average of 120 per hour. a. What is the probability that exactly 5 shoppers will enter the mall between noon and 12:05 p.m.?
b.
What is the probability that at least 35 shoppers will enter the mall between 5:00 and 5:10 p.m.?
0.0378 b. 0.0015 PTS: 1 TOP: Discrete Probability Distributions
12. A production process produces 90% non-defective parts. A sample of 10 parts from the production process is selected. a. b. c. d. What is the probability that the sample will contain 7 non-defective parts? What is the probability that the sample will contain at least 4 defective parts? What is the probability that the sample will contain less than 5 non-defective parts? What is the probability that the sample will contain no defective parts?
0.0574 b. 0.0128 c. 0.0001 d. 0.3487 PTS: 1 TOP: Discrete Probability Distributions
13. Fifty-five percent of the applications received for a particular credit card are accepted. Among the next twelve applications, a. b. c. d. e. what is the probability that all will be rejected? what is the probability that all will be accepted? what is the probability that exactly 4 will be accepted? what is the probability that fewer than 3 will be accepted? Determine the expected number and the variance of the accepted applications.
0.0001 b. 0.0008 c. 0.0762 d. 0.0079 e. 6.60; 2.9700 PTS: 1 TOP: Discrete Probability Distributions
14. The probability distribution of the daily demand for a product is shown below. Demand 0 1 2 3 4 5 6 Probability 0.05 0.10 0.15 0.35 0.20 0.10 0.05
a. b.
What is the expected number of units demanded per day? Determine the variance and the standard deviation.
3.05 b. variance = 2.0475 PTS: 1
std. dev. = 1.431
TOP: Discrete Probability Distributions
15. In a large corporation, 65% of the employees are male. A random sample of five employees is selected. Use the Binomial probability tables to answer the following questions. a. b. c. d. What is the probability that the sample contains exactly three male employees? What is the probability that the sample contains no male employees? What is the probability that the sample contains more than three female employees? What is the expected number of female employees in the sample?
0.3364 b. 0.0053 c. 0.0541 d. 1.75 PTS: 1 TOP: Discrete Probability Distributions
16. For the following probability distribution: x 0 1 2 3 4 5 6 7 8 9 10 a. b. f(x) 0.01 0.02 0.10 0.35 0.20 0.11 0.08 0.05 0.04 0.03 0.01
Determine E(x). Determine the variance and the standard deviation.
4.14 b. variance = 3.7 PTS: 1
std. dev. = 1.924 TOP: Discrete Probability Distributions
17. A random variable x has the following probability distribution: x f(x)
0 1 2 3 4 a. b.
0.08 0.17 0.45 0.25 0.05
Determine the expected value of x. Determine the variance.
2.02 b. 0.9396 PTS: 1 TOP: Discrete Probability Distributions
18. A company sells its products to wholesalers in batches of 1,000 units only. The daily demand for its product and the respective probabilities are given below. Demand (Units) 0 1000 2000 3000 4000 a. b. Probability 0.2 0.2 0.3 0.2 0.1
Determine the expected daily demand. Assume that the company sells its product at $3.75 per unit. What is the expected daily revenue?
1800 b. $6,750 PTS: 1 TOP: Discrete Probability Distributions
19. The records of a department store show that 20% of its customers who make a purchase return the merchandise in order to exchange it. In the next six purchases, a. b. c. what is the probability that three customers will return the merchandise for exchange? what is the probability that four customers will return the merchandise for exchange? what is the probability that none of the customers will return the merchandise for exchange?
0.0819 b. 0.0154 c. 0.2621 PTS: 1 TOP: Discrete Probability Distributions
20. In a large university, 15% of the students are female. If a random sample of twenty students is selected, a. what is the probability that the sample contains exactly four female students?
b. c. d. e. f.
what is the probability that the sample will contain no female students? what is the probability that the sample will contain exactly twenty female students? what is the probability that the sample will contain more than nine female students? what is the probability that the sample will contain fewer than five female students? what is the expected number of female students?
0.1821 b. 0.0388 c. 0.0000 d. 0.0002 e. 0.8298 f. 3 PTS: 1 TOP: Discrete Probability Distributions
21. In a southern state, it was revealed that 5% of all automobiles in the state did not pass inspection. Of the next ten automobiles entering the inspection station, a. b. c. d. e. f. g. what is the probability that none will pass inspection? what is the probability that all will pass inspection? what is the probability that exactly two will not pass inspection? what is the probability that more than three will not pass inspection? what is the probability that fewer than two will not pass inspection? Find the expected number of automobiles not passing inspection. Determine the standard deviation for the number of cars not passing inspection.
0.0000 b. 0.5987 c. 0.0746 d. 0.0011 e. 0.9138 f. 0.5 g. 0.6892 PTS: 1 TOP: Discrete Probability Distributions
22. The random variable x has the following probability distribution: x 0 1 2 3 4 a. b. c. d. f(x) .25 .20 .15 .30 .10
Is this probability distribution valid? Explain and list the requirements for a valid probability distribution. Calculate the expected value of x. Calculate the variance of x. Calculate the standard deviation of x.
yes f(x) b. 1.8 c. 1.86 d. 1.364 PTS: 1
0 and f(x) = 1
TOP: Discrete Probability Distributions
23. The probability function for the number of insurance policies John will sell to a customer is given by f(X) = .5 - (X/6) for X = 0, 1, or 2 a. b. c. d. e. Is this a valid probability function? Explain your answer. What is the probability that John will sell exactly 2 policies to a customer? What is the probability that John will sell at least 2 policies to a customer? What is the expected number of policies John will sell? What is the variance of the number of policies John will sell? 0 and f(x) = 1
yes f(x) b. 0.167 c. 0.167 d. 0.667 e. 0.556 PTS: 1
TOP: Discrete Probability Distributions
24. The probability distribution for the rate of return on an investment is Rate of Return (In Percent) 9.5 9.8 10.0 10.2 10.6 a. b. c. Probability .1 .2 .3 .3 .1
What is the probability that the rate of return will be at least 10%? What is the expected rate of return? What is the variance of the rate of return?
0.7 b. 10.03 c. 0.0801 PTS: 1 TOP: Discrete Probability Distributions
25. In a large university, 75% of students live in dormitories. A random sample of 5 students is selected. Use the binomial probability tables to answer the following questions. a. What is the probability that the sample contains exactly three students who live in the dormitories?
b. c. d.
What is the probability that the sample contains no students who lives in the dormitories? What is the probability that the sample contains more than three students who do not live in the dormitories? What is the expected number of students (in the sample) who do not live in the dormitories?
0.2637 b. 0.001 c. 0.0156 d. 1.25 PTS: 1 TOP: Discrete Probability Distributions
26. A manufacturing company has 5 identical machines that produce nails. The probability that a machine will break down on any given day is .1. Define a random variable X to be the number of machines that will break down in a day. a. b. c. d. e. What is the appropriate probability distribution for X? Explain how X satisfies the properties of the distribution. Compute the probability that 4 machines will break down. Compute the probability that at least 4 machines will break down. What is the expected number of machines that will break down in a day? What is the variance of the number of machines that will break down in a day?
binomial b. 0.00045 c. 0.00046 d. 0.5 e. 0.45 PTS: 1 TOP: Discrete Probability Distributions
27. On the average, 6.7 cars arrive at the drive-up window of a bank every hour. Define the random variable X to be the number of cars arriving in any hour. a. b. c. What is the appropriate probability distribution for X? Explain how X satisfies the properties of the distribution. Compute the probability that exactly 5 cars will arrive in the next hour. Compute the probability that no more than 5 cars will arrive in the next hour.
Poisson; it shows the probability of x occurrences of the event over a time period. b. 0.1385 c. 0.3406 PTS: 1 TOP: Discrete Probability Distributions
28. Twenty-five percent of all resumes received by a corporation for a management position are from females. Fifteen resumes will be received tomorrow. a. b. What is the probability that exactly 5 of the resumes will be from females? What is the probability that fewer than 3 of the resumes will be from females?
c. d.
What is the expected number of resumes from women? What is the variance of the number of resumes from women?
0.1651 b. 0.2361 c. 3.75 d. 2.8125 PTS: 1 TOP: Discrete Probability Distributions
29. The average number of calls received by a switchboard in a 30-minute period is 15. a. b. c. What is the probability that between 10:00 and 10:30 the switchboard will receive exactly 10 calls? What is the probability that between 10:00 and 10:30 the switchboard will receive more than 9 calls but fewer than 15 calls? What is the probability that between 10:00 and 10:30 the switchboard will receive fewer than 7 calls?
0.0486 b. 0.3958 c. 0.0075 PTS: 1 TOP: Discrete Probability Distributions
30. Two percent of the parts produced by a machine are defective. Twenty parts are selected at random. Use the binomial probability tables to answer the following questions. a. b. c. d. e. What is the probability that exactly 3 parts will be defective? What is the probability that the number of defective parts will be more than 2 but fewer than 6? What is the probability that fewer than 4 parts will be defective? What is the expected number of defective parts? What is the variance for the number of defective parts?
0.0065 b. 0.0071 c. 0.9974 d. 0.4 e. 0.392 PTS: 1 TOP: Discrete Probability Distributions
31. Compute the hypergeometric probabilities for the following values of n and x. Assume N = 8 and r = 5. a. b. c. d. n = 5, x = 2 n = 6, x = 4 n = 3, x = 0 n = 3, x = 3
0.1786 b. 0.5357 c. 0.01786 d. 0.1786 PTS: 1 TOP: Discrete Probability Distributions
32. Seven students have applied for merit scholarships. This year 3 merit scholarships were awarded. If a random sample of 3 applications (from the population of 7) is selected, a. b. what is the probability that 2 students were recipients of scholarships? what is the probability that no students were the recipients of scholarship?
0.2143 b. 0.1143 PTS: 1 TOP: Discrete Probability Distributions
33. Determine the probability of being dealt 4 kings in a 5-card poker hand. ANS: 120/6,497,400 = 0.00001847 PTS: 1 TOP: Discrete Probability Distributions
34. Twenty percent of the applications received for a particular position are rejected. What is the probability that among the next fourteen applications, a. b. c. d. e. none will be rejected? all will be rejected? less than 2 will be rejected? more than four will be rejected? Determine the expected number of rejected applications and its variance.
0.0440 b. 0.0000 c. 0.1979 d. 0.1297 e. 2.8, 2.24 PTS: 1 TOP: Discrete Probability Distributions
35. An insurance company has determined that each week an average of nine claims are filed in their Atlanta branch. What is the probability that during the next week a. b. c. d. exactly seven claims will be filed? no claims will be filed? less than four claims will be filed? at least eighteen claims will be filed?
0.1171 b. 0.0001 c. 0.0212 d. 0.0053 PTS: 1 TOP: Discrete Probability Distributions
36. A local university reports that 10% of their students take their general education courses on a pass/fail basis. Assume that fifteen students are registered for a general education course. a. b. c. d. What is the expected number of students who have registered on a pass/fail basis? What is the probability that exactly five are registered on a pass/fail basis? What is the probability that more than four are registered on a pass/fail basis? What is the probability that less than two are registered on a pass/fail basis?
1.5 b. 0.01050 c. 0.0127 d. 0.5491 PTS: 1 TOP: Discrete Probability Distributions
37. Only 0.02% of credit card holders of a company report the loss or theft of their credit cards each month. The company has 15,000 credit cards in the city of Memphis. Use the Poisson probability tables to answer the following questions. What is the probability that during the next month in the city of Memphis a. b. c. d. e. f. no one reports the loss or theft of his or her credit cards? every credit card is lost or stolen? six people report the loss or theft of their cards? at least nine people report the loss or theft of their cards? Determine the expected number of reported lost or stolen credit cards. Determine the standard deviation for the number of reported lost or stolen cards.
0.0498 b. 0.0000 c. 0.0504 d. 0.0038 e. 3 f. 1.73 PTS: 1 TOP: Discrete Probability Distributions
38. A production process produces 2% defective parts. A sample of 5 parts from the production is selected. What is the probability that the sample contains exactly two defective parts? Use the binomial probability function and show your computations to answer this question. ANS: 0.0037648
PTS: 1
TOP: Discrete Probability Distributions
39. A retailer of electronic equipment received six VCRs from the manufacturer. Three of the VCRs were damaged in the shipment. The retailer sold two VCRs to two customers. a. b. c. d. Can a binomial formula be used for the solution of the above problem? What kind of probability distribution does the above satisfy, and is there a function for solving such problems? What is the probability that both customers received damaged VCRs? What is the probability that one of the two customers received a defective VCR?
No, in a binomial experiment, trials are independent of each other. b. Hypergeometric probability distribution c. 0.2 d. 0.6 PTS: 1 TOP: Discrete Probability Distributions
40. The management of a grocery store has kept a record of bad checks received per day for a period of 200 days. The data are shown below. Number of Bad Checks Received 0 1 2 3 4 5 6 7 a. b. c. d. e. Number of Days 8 12 20 60 40 30 20 10
Develop a probability distribution for the above data. Is the probability distribution that you found in Part a a proper probability distribution? Explain. Determine the cumulative probability distribution F(x). What is the probability that in a given day the store receives four or less bad checks? What is the probability that in a given day the store receives more than 3 bad checks?
ANS: Number Bad Checks 0 1 2 3 4 5 6 7 a. Probability .04 .06 .10 .30 .20 .15 .10 .05 c. F(x) .04 .10 .20 .50 .70 .85 .95 1.00
b. d. e.
Yes, the sum of the probabilities is equal to 1. 0.7 0.5 TOP: Discrete Probability Distributions
PTS: 1
41. The following probability distribution represents the number of grievances filed per month with the MNM. Corporation. x 0 1 2 3 4 a. b. c. f(x) 0.04 0.36 0.50 0.08 0.02
Determine the expected value of the number of grievances in a month. Determine the variance. Compute the standard deviation.
1.68 b. 0.5776 c. 0.76 PTS: 1 TOP: Discrete Probability Distributions
42. The number of bad checks received per day by a store and the respective probabilities are shown below. Number of Bad Checks Received Per Day 0 1 2 3 4 5 6 7 a. b. c. Probability 0.04 0.06 0.10 0.30 0.20 0.15 0.10 0.05
What is the expected number of bad checks received per day? Determine the variance in the number of bad checks received per day. What is the standard deviation?
3.66 b. 2.7644 c. 1.6626 PTS: 1 TOP: Discrete Probability Distributions
43. A cosmetics salesperson, who calls potential customers to sell her products, has determined that 30% of her telephone calls result in a sale. Determine the probability distribution for her next three calls. Note that the next three calls could result in 0, 1, 2, or 3 sales. ANS: x 0 1 2 3 PTS: 1 p 0.3430 0.4410 0.1890 0.0270 TOP: Discrete Probability Distributions
44. The following table shows part of the probability distribution for a random variable x.
x 0 1 2 3 4 f(x) 0.2 ? 0.15 ? 0.15
a. b.
The mean of the above distribution is known to be 1.8 (i.e., E(x) = 1.8). Determine f(1) and f(3). Compute the variance and the standard deviation for the above probability distribution.
0.3 and 0.2 b. Variance = 1.86, Standard deviation = 1.364 (rounded) PTS: 1 TOP: Discrete Probability Distributions
45. The following table shows part of the probability distribution for the number of boats sold daily at Boats Unlimited. It is known that the average number of boats sold daily is 1.57.
x 0 1 2 3 4 5 f(x) 0.20 0.30 0.32 ? 0.05 0.02
Compute the variance and the standard deviation for this probability distribution. ANS: Variance = 1.4051, Standard deviation = 1.1854 (rounded) PTS: 1 TOP: Discrete Probability Distributions

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CHAPTER 6CONTINUOUS PROBABILITY DISTRIBUTIONSMULTIPLE CHOICE 1. The center of a normal curve is a. always equal to zero b. is the mean of the distribution c. cannot be negative d. is the standard deviation ANS: B PTS: 1 TOP: Continuous Probability Distri

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CHAPTER 7SAMPLING AND SAMPLING DISTRIBUTIONSMULTIPLE CHOICE 1. From a group of 12 students, we want to select a random sample of 4 students to serve on a university committee. How many different random samples of 4 students can be selected? a. 48 b. 20,7

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CHAPTER 8INTERVAL ESTIMATIONMULTIPLE CHOICE 1. The absolute value of the difference between the point estimate and the population parameter it estimates is a. the standard error b. the sampling error c. precision d. the error of confidence ANS: B PTS: 1

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CHAPTER 9HYPOTHESIS TESTSMULTIPLE CHOICE 1. The sum of the values of and a. always add up to 1.0 b. always add up to 0.5 c. is the probability of Type II error d. none of these alternatives is correct ANS: D PTS: 1 TOP: Hypothesis Tests2. What type of e

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CHAPTER 10COMPARISONS INVOLVING MEANS, EXPERIMENTAL DESIGN AND ANALYSIS OF VARIANCEMULTIPLE CHOICE 1. If we are interested in testing whether the mean of population 1 is significantly larger than the mean of population 2, the a. null hypothesis should st

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CHAPTER 11COMPARISONS INVOLVING PROPORTIONS AND A TEST OF INDEPENDENCEMULTIPLE CHOICE 1. When developing an interval estimate for the difference between two population proportions, with sample sizes of n1 and n2, a. n1 must be equal to n2 b. n1 must be s

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CHAPTER 12SIMPLE LINEAR REGRESSIONMULTIPLE CHOICE 1. In a regression analysis, the error term is a random variable with a mean or expected value of a. zero b. one c. any positive value d. any value ANS: A PTS: 1 TOP: Regression Analysis2. The coefficien

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CHAPTER 13MULTIPLE REGRESSIONMULTIPLE CHOICE 1. The mathematical equation relating the expected value of the dependent variable to the value of the independent variables, which has the form of E(y) = a. a simple linear regression model b. a multiple nonl

Mountain State - ACCT - 360

CHAPTER 1 INTRODUCTION TO COST MANAGEMENTQUESTIONS FOR WRITING AND DISCUSSION1. A cost management system is primarily concerned with producing outputs for internal information users, using inputs and processes needed to satisfy management objectives. A

Mountain State - ACCT - 360

CHAPTER 2 BASIC COST MANAGEMENT CONCEPTSQUESTIONS FOR WRITING AND DISCUSSION1. A cost object is any item for which costs are measured and assigned, including such things as products, plants, projects, departments, customers, and activities. 2. An activi

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CHAPTER 3 COST BEHAVIORQUESTIONS FOR WRITING AND DISCUSSION1. Knowledge of cost behavior allows a manager to assess changes in costs that result from changes in activity. This allows a manager to assess the effects of choices that change activity. For e

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CHAPTER 4 ACTIVITY-BASED COSTINGQUESTIONS FOR WRITING AND DISCUSSION1. A predetermined overhead rate is simply an estimate of the overhead used per unit of driver. It is calculated using budgeted overhead and budgeted levels of the associated driver. Pr

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CHAPTER 5 PRODUCT AND SERVICE COSTING: JOB-ORDER SYSTEMQUESTIONS FOR WRITING AND DISCUSSION1. Cost measurement is the process of determining the dollar amounts of direct materials, direct labor, and overhead that should be assigned to production. Cost a

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CHAPTER 6 PRODUCT AND SERVICE COSTING: A PROCESS SYSTEMS APPROACHQUESTIONS FOR WRITING AND DISCUSSION1. A process is a series of activities (operations) that are linked to perform a certain objective. For example, the bottling process of a pain medicati

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CHAPTER 7 ALLOCATING COSTS OF SUPPORT DEPARTMENTS AND JOINT PRODUCTSQUESTIONS FOR WRITING AND DISCUSSION1. Stage one assigns service costs to producing departments. Costs are assigned using factors that reflect the consumption of the services by each pr

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CHAPTER 8 BUDGETING FOR PLANNING AND CONTROLQUESTIONS FOR WRITING AND DISCUSSION1. Budgets are the quantitative expressions of plans. Budgets are used to translate the goals and strategies of an organization into operational terms. 2. Control is the pro

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CHAPTER 9 STANDARD COSTING: A FUNCTIONAL-BASED CONTROL APPROACHQUESTIONS FOR WRITING AND DISCUSSION1. Standard costs are essentially budgeted amounts on a per-unit basis. Unit standards serve as inputs in building budgets. 2. The quantity decision is de

Mountain State - ACCT - 360

CHAPTER 10 DECENTRALIZATION: RESPONSIBILITY ACCOUNTING, PERFORMANCE EVALUATION, AND TRANSFER PRICINGQUESTIONS FOR WRITING AND DISCUSSION1. Decentralization is the delegation of decisionmaking authority to lower levels. In centralized decision making, de

Mountain State - ACCT - 360

CHAPTER 11 STRATEGIC COST MANAGEMENTQUESTIONS FOR WRITING AND DISCUSSION1. A competitive advantage is providing better customer value for the same or lower cost or equivalent value for lower cost. The cost management system must provide information that

Mountain State - ACCT - 360

CHAPTER 12 ACTIVITY-BASED MANAGEMENTQUESTIONS FOR WRITING AND DISCUSSION1. The two dimensions are the cost dimension and the process dimension. The cost dimension is concerned with accurate assignment of costs to cost objects, such as products and custo

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CHAPTER 13 THE BALANCED SCORECARD: STRATEGIC-BASED CONTROLQUESTIONS FOR WRITING AND DISCUSSION1. A strategic-based responsibility accounting system converts an organization's mission and strategy into operational objectives and measures for four perspec

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CHAPTER 14 QUALITY COST MANAGEMENTQUESTIONS FOR WRITING AND DISCUSSION1. All quality costs are incurred because poor quality may or does exist. 2. Prevention costs are incurred to prevent defects in products; appraisal costs are costs incurred to determ

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CHAPTER 15 PRODUCTIVITY MEASUREMENT AND CONTROLQUESTIONS FOR WRITING AND DISCUSSION1. Total productive efficiency is the point where technical and allocative efficiency are achieved. It is the point where the optimal quantity of inputs is used to produc

Mountain State - ACCT - 360

CHAPTER 16 LEAN ACCOUNTING, TARGET COSTING, AND THE BALANCED SCORECARDQUESTIONS FOR WRITING AND DISCUSSION1. Lean manufacturing is an approach designed to eliminate waste and maximize customer value. It is characterized by delivering the right product,

Mountain State - ACCT - 360

CHAPTER 17 COST-VOLUME-PROFIT ANALYSISQUESTIONS FOR WRITING AND DISCUSSION1. CVP analysis allows managers to focus on prices, volume, costs, profits, and sales mix. Many different what-if questions can be asked to assess the effect on profits of changes

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CHAPTER 18 ACTIVITY RESOURCE USAGE MODEL AND TACTICAL DECISION MAKINGQUESTIONS FOR WRITING AND DISCUSSION1. Tactical decision making is choosing among alternatives with an immediate or limited end in mind. 2. Tactical decisions should support the overal

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CHAPTER 19 PRICING AND PROFITABILITY ANALYSISQUESTIONS FOR WRITING AND DISCUSSION1. Perfectly competitive markets are characterized by the following: many buyers and sellers- no one of which is large enough to influence the market; a homogeneous product

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CHAPTER 20 CAPITAL INVESTMENTQUESTIONS FOR WRITING AND DISCUSSION1. Independent projects are such that the acceptance of one does not preclude the acceptance of another. With mutually exclusive projects, however, acceptance of one precludes the acceptan

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CHAPTER 21 INVENTORY MANAGEMENT: ECONOMIC ORDER QUANTITY, JIT, AND THE THEORY OF CONSTRAINTSQUESTIONS FOR WRITING AND DISCUSSION1. Ordering costs are the costs of placing and receiving an order. Examples include clerical costs, documents, and unloading.

Mountain State - ACCT - 345

Chapter 1 The Nature of FraudMULTIPLE CHOICE 1. One way that criminal law differs from civil law is that it: a. Provides remedies for violations of private rights. b. Must yield a unanimous verdict. c. Can have a jury of fewer than 12 persons. d. Allows

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Chapter 2 Why People Commit FraudMULTIPLE CHOICE 1. Which of the following is not a common rationalization of fraud perpetrators? a. The organization owes me b. I'm only borrowing the money c. No one will get hurt d. All of the above are common rationali

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Chapter 3 Fighting Fraud: An OverviewMULTIPLE CHOICE 1. Which of the following are the most effective fraud detectors? a. Auditors b. Customers c. Vendors d. Employees ANS: D A: Auditors usually detect fraud when there are red flags in the financial stat

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Chapter 4 Preventing FraudMULTIPLE CHOICE 1. The default model that deals with fraud has which of the following stages a. Fraud incident b. Action c. Resolution d. All of the above ANS: D D: Correct- all of them are in the default model of fraud 2. The f

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Chapter 5 Recognizing the Symptoms of FraudMULTIPLE CHOICE 1. Of the elements of fraud, which is usually least likely to be detected by auditors? a. Theft act b. Concealment c. Conversion d. Personal pressures ANS: A A: The actual act is hardest for an a

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Chapter 6 Data-Driven Fraud DetectionMULTIPLE CHOICE 1. Which statement is false? a. In recent years there have been many cases of financial statement fraud. b. Proactive fraud detection methods are in their infancy. c. Fraud investigation involves ident

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Chapter 7 Investigating Theft ActsMULTIPLE CHOICE 1. Which of the following is the last step in an investigation? a. Interview suspect b. Interview former employees c. Interview other buyers or co-workers d. Invigilation ANS: A A: Correct B: Incorrect -

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Chapter 8 Investigating ConcealmentMULTIPLE CHOICE 1. _ are commonly used by attorneys involved in litigation to track documents a. RFID tags b. Bates numbers c. Bar codes d. All of the above ANS: B B: Correct 2. Secondary evidence may be used in all of

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Chapter 9 Conversion Investigation MethodsMULTIPLE CHOICE 1. Which of the following types of information do credit reporting agencies not maintain? a. Information of current and former employers b. Account information such as payment schedules, items pur

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Chapter 10 Inquiry Methods and Fraud ReportsMULTIPLE CHOICE 1. Which of the following is a characteristic of a good interviewer? a. One who interrupts respondents b. One who is able to get others to open up and share information c. One who interviews in

Mountain State - ACCT - 345

Chapter 11 Financial Statement FraudMULTIPLE CHOICE 1. Which of the following is true? a. Most financial statement frauds occur in large historically profitable companies. b. Most people who commit management fraud are first-time offenders. c. An active

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Chapter 12 Revenue- and Inventory-Related Financial Statement FraudsMULTIPLE CHOICE 1. Revenue-related financial statement fraud is prevalent for all of the following reasons except: a. There are numerous accounting methods for recognizing revenue. b. Re

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Chapter 13 Liability, Asset, and Inadequate Disclosure FraudsMULTIPLE CHOICE 1. Which of the following is an example of asset overstatement fraud? a. Not recording contingent liabilities b. Under recording debt c. Under recording depreciation expenses d.

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Chapter 14 Fraud Against OrganizationsMULTIPLE CHOICE 1. Bribery involves offering, giving, receiving, or soliciting anything of value in order to influence a/an a. Decision of government agents b. Official act c. Decision of employees d. All of the abov

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Chapter 15 Consumer FraudMULTIPLE CHOICE 1. Consumer fraud is described as any fraud that: a. Is committed by a consumer b. Takes place against an individual c. Is fraud committed within an organization d. Comes from a separate country ANS: B B: Correct;

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Chapter 16 Bankruptcy, Divorce, and Tax FraudMULTIPLE CHOICE 1. All bankruptcy petitions are subject to a. Federal claims court jurisdiction b. U.S. Tax court jurisdiction c. Supreme court jurisdiction d. U.S. district court jurisdiction ANS: D: Correct

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Chapter 17 Fraud in E-CommerceMULTIPLE CHOICE 1. Which activity is used legitimately by companies to monitor network traffic, but may also be used illegally to capture confidential information? a. Sniffing b. Spoofing c. Hijacking d. Impersonation ANS: A

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Chapter 18 Legal Follow-UpMULTIPLE CHOICE 1. A(n) _ is a means of securing documents in the other partys possession that are relevant to the issues of the case. a. Interrogatory b. Request for admission c. Subpoena d. Production request ANS: D D: Correct

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Chapter Three Basic Option Strategies: Covered Calls and Protective Puts Answers to Problems and Questions 1. Covering a call means either 1) buying back a call that you previously wrote, or 2) adding a stock or long option position so that a short call i

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Chapter Four Option Combinations and Spreads Answers to Problems and Questions 1. A straddle involves a higher maximum profit if the stock remains near the option striking price. A strangle has a lower maximum profit, but it occurs over a wider range of p

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Chapter Five Option Pricing Answers to Problems and Questions 1. Arbitrage is the existence of a riskless profit, especially when you do not have to commit funds to earn the profit. 2. Market prices move continually, and frequently move slightly away from

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Chapter Six The Black-Scholes Option Pricing Model Answers to Problems and Questions 1. Interest rates may have changed, the expected amount of the next dividend may have changed, or the market may anticipate a different future level of volatility in the

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Chapter Seven Option Greeks Answers to Problems and Questions 1. Delta is the hedge ratio, a measure of option sensitivity, and sometimes approximately the likelihood of the option ending in the money. 2. As time passes, the delta of an in-the-money optio

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Chapter Eight Fundamentals of the Futures Market Answers to Problems and Questions 1. Open interest measures the number of futures contracts that exist. One side of the contract may change hands many times prior to the delivery month. Each time a trade oc

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Chapter Nine Stock Index Futures Answers to Problems and Questions 1. Theoretically, the more securities in a portfolio, the less the unsystematic risk. Most users of stock index futures as a hedge do so in order to reduce systematic risk. Because of the

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Chapter Ten Foreign Exchange Futures Answers to Problems and Questions 1. There is no single correct answer to this. Some research suggests that hedging foreign exchange risk in investment portfolios is not a good idea because it reduces the risk/return r

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Chapter Eleven Fundamentals of Interest Rate Futures Answers to Problems and Questions 1. Unlike shares in a particular common stock or bushels of inspected soybeans, not all Treasury bonds are identical. Differences in coupon rate and in maturity are mat

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Chapter Twelve Futures Contracts and Portfolio Management Answers to Problems and Questions 1. Immunization refers to the situation in which the effects of interest rate risk and reinvestment rate risk largely cancel. 2. Bullet immunization seeks to ensur

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Chapter Thirteen Swaps and Interest Rate Options Answers to Problems and Questions 1. In an interest rate swap, the swap seller is the party paying the floating rate. 2. The swap tenor is the length (in time) of the swap arrangement. The swap price is the

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Chapter Fourteen Swap Pricing Answers to Problems and Questions 1. If the options are European style you can use the put/call parity model with C P = 0, meaning K = S (1+R)T. Here we have K = 28.55 x (1.055)0.5 = 29.32 If the options are American style, a

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Chapter Fifteen Other Derivative Assets Answers to Problems and Questions 1. At-the-money puts and calls should sell for the same price. 2. 3. Warrants sell for their greatest premium over intrinsic value when they are at-the-money. This is as predicted b

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Chapter Sixteen Financial Engineering and Risk Management Answers to Problems and Questions 1. Finance is based on the premise that the easy access to information will result in few free lunches. People prefer more wealth to less, everything else being eq