EC 41, UCLA Spring 2009
Name (print)________________________________
Midterm #2
– 5/13/09
TA: Name__________________________ & Section Time_____________
 The normal table and useful formulas are on the last page of this exam.
 Only pens, pencils and erasers may be used, this is a closed book, closed note, exam.
 Students may use a calculator, but nothing that can access the internet.
 Write noninteger answers to 3 significant digits, e.g., 333, or 3.33 or .0333
 This exam consists of 10 True/False (20 points), 10 short answer (40 points) and 4 longer questions (40 points)
 Clearly write answers on this exam.
No points are awarded for illegible answers.
 Be prepared to show a photo ID during the exam (e.g., UCLA ID)
 You may leave when finished.
Do not disrupt those still taking the exam.
I. Circle T for True or F for False (2 points each)
1)
T or F
The pvalue from Excel regression output assumes a twosided alternate hypothesis, H
A
2) T or F
A confidence interval gets more narrow (smaller) as the number of observations in a sample is increased.
3) T or F
A lower pvalue will provide better evidence in favor of rejecting the null hypothesis.
4) T or F
The number of ways two people can be chosen from a group of five is:
5
C
2
=
⎟
⎟
⎠
⎞
⎜
⎜
⎝
⎛
2
5
= 20
5) T or F
If returns on two investments are uncorrelated,
ρ
= 0, it is theoretically possible to form a portfolio with no
risk (standard deviation and variance of the returns on the portfolio = 0).
6) T or F
The distribution of a sample mean of a NONnormal population with finite standard deviation will approach
a normal distribution as the number of observations becomes large enough.
7) T or F
The standard deviation of the sum of two random variables is the sum of the two individual standard
deviations IF the correlation between them is 0.
8) T or F
For a specific “95% confidence interval,” 95% of the population means,
μ
, are in this interval.
9) T or F
Benford’s Law (used to check accuracy of financial documents) implies that the probability of the first digit
of
numbers in financial documents is equally likely to be any integer from 1 to 9.
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 Spring '07
 Guggenberger
 Normal Distribution, Standard Deviation, Variance, Probability theory

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