# Quiz3 - trading day is assumed to be an equally likely random event What is the probability that a stock will show an increase in its closing price

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GB 303 –Fall 2011 Name: Quiz 3 (Chapter 5 covered) 1) The strength of the relationship between two numerical variables is measured by the: A) Expected Value. B) Variance. C) Covariance. D) Standard Deviation. 2) Given the following probability distribution for variables X and Y: P(X i Y i ) X Y .5 5 7 .2 -2 12 .3 10 0 Compute E(X+Y). A) 8 B) 9 C) 10 D) 11 Use the following information for questions 3, 4, and 5. P(X i Y i ) X Y .4 100 200 .6 200 100 3) Which of the following is true? A) E(X) > E(Y) B) E(X) < E(Y) C) E(X) = E(Y) D) Cannot be determined from the given information 4) Which of the following is true? A) σ 2 X > σ 2 Y B) σ 2 X < σ 2 Y C) σ 2 X = σ 2 Y D) Cannot be determined from the given information 5) What is σ XY ? A) 2400 B) -2400 C) 480 D) -480 6) True or False? Regardless of whether two variables are independent or dependent, the variance of their sum is equal to the sum of their variances, i.e. Var(X+Y) = σ 2 X + σ 2 Y .

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GB 303 –Fall 2011 Name: 7) The increase or decrease in the price of a stock between the beginning and end of a
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