SAMPLE FINAL EXAM QUESTIONS 2020
Theory - 10 questions (Final Exam will have 20 question)
Q1. We have developed a regression model: Rent = b0+ b1* House_WithPool where
House_WithPool is a dummy variable set to 1 if a
...
SAMPLE FINAL EXAM QUESTIONS 2020
Theory - 10 questions (Final Exam will have 20 question)
Q1. We have developed a regression model: Rent = b0+ b1* House_WithPool where
House_WithPool is a dummy variable set to 1 if a house has a Pool and is set to 0 otherwise.
The Regression summary output is
Estimate S.E. t Value Pr>|t|
Intercept 1542.149 2.954 12.58*** <.001
House_WithPool 253.666 3.123 11.42*** <.001
What is the average rent of a house with Pool given the summary output?
a. 1542.149
b. 1795.815
c. 1288.483
d. 253.666
Answer: B
Q2. Why do we use Log-Transformations when we perform transformation of variables?
A. To achieve a more linear relationship
B. To make a distribution more normal
C. To make the variance more constant
D. All the above
Solution: D) A, B and C are the objectives of performing Log Transformations
Q3. What is the relation between Correlation and Covariance
Q4. Which of the following statement is correct regarding the “size effect”?
A) Size effect means smaller firms have higher returns than larger firms on average
B) Stocks with high market capitalization generate returns greater than stocks with low
market capitalization
C) Stocks with low book to market ratio tend to outperform high book to market ratio
stocks
D) Firms that invest more will have a higher stock price
Solution A: (Week 8 Lesson 1)
Q5. Which of the following is not Fama-French factor?
A. Value
B. Size
C. Momentum
D. Market
Answer: C) Fama-French factors include market, size, value factors and others.
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