1. An article in a financial section of a newspaper claims that the correlation
ID: 3151827 • Letter: 1
Question
1. An article in a financial section of a newspaper claims that the correlation between changes in stock prices in Europe and the United States was 0.89 in 2000, and then goes on to say: "Crudely, that means that movements on Wall Street can explain about 44% of price movements in Europe." Is this statement true? Yes No What is the percent (± 0.1) explained if r = 0.89?
2. A professor knows from past experience that the time for students to complete a quiz has an N(22,3) distribution.
a.If he allows 23 minutes for the quiz, what percent (± 0.01) of the students will not complete the quiz?
b.Suppose that he wants to allow sufficient time so that 90% of the students will complete the quiz in the allotted time. How much time (± 0.1) should he allow for the quiz?
Explanation / Answer
1. The coefficient of variation, R2 is the sqaure of Pearson Coerraltion coefficient, r. Therefore, 0.89^2=0.7921, which means around 79.21% variation price movements in Europe is expalined by variation in movements on Wall street.
Given statement is false, Ans: 79.21%.
2. From information given, Xi=23, Xbar=22, s=3
z=(Xi-Xbar)/s=(23-22)/3=0.33
P(X<23)=P(z<0.33)=0.3707 . Around 37.07% students will not be able to complete the quiz.
b) From information, z=1.28, Xbar=22, s=3
1.23=(Xi-22)/3
Xi=25.69 [Ans]
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.