KINDLY REFER TO CHAPTER 9 OF THE COMPREHENSIVE VIDEO LECTURES AND READ UP THE TOPICS BELOW BEFORE YOU ATTEMPT THE QUESTIONS THAT FOLLOW.

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1 KINDLY REFER TO CHAPTER 9 OF THE COMPREHENSIVE VIDEO LECTURES AND READ UP THE TOPICS BELOW BEFORE YOU ATTEMPT THE QUESTIONS THAT FOLLOW. THANKS CIS QA LEVEL 1 WEEK 4 TOPIC: MEASURES OF RELATIONSHIP: CORRELATION AND REGRESSION OBJECTIVE AND SHORT ANSWER QUESTIONS 1. A simple linear regression model for y on x is y a bx where ' a' and 'b' are constants. Then y and x represent which of the following? A. Dependent variable and gradient respectively B. Independent and dependent variables respectively C. Control and independent variables respectively D. Independent and control variables respectively E. Dependent and independent variables respectively STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 1

2 2. If the correlation coefficient of total monthly sales on monthly cost of advertising is 0:89, find the coefficient of determination: A B C D Which of the following can be regarded as a goodness of fit test? A. Chi-Square test. B. ANOVA. C. Poisson distribution test. D. Regression slope test. 4. The correlation coefficient that indicates the weakest linear relationship between two variables is? A STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 2

3 B C D A study was conducted to estimate urban car travel time between locations in two cities. Data was collected for passenger cars and a simple linear regression was conducted using data sets for different types of vehicles, where Y=urban travel time in minutes and X=distance between locations in kilometers. The following regression equation was obtained: Y= x. R2=0.75 What is the estimated increase in travel time for a commuter planning to move 8 km farther from his workplace? A B STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 3

4 C D The correlation coefficient is simply regarded as. 7. There is a perfect relationship between variables X and Y if their product moment correlation is A. Equal to Zero B. Zero C. Less than 1 D. Less or equal to 1 E. Equal to 1 8. Given the following trend equation: Y= x What is the expected value of Y when x is 10? A STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 4

5 B C D The correlation co-efficient that indicates the strongest linear relationship between variables is: A B C D Which of the following statements about covariance and correlation is least likely correct? A. A zero covariance implies there is no linear relationship between the returns on two assets. B. If two assets have perfect negative correlation, the variance of returns for a portfolio that consists of these two assets will equal zero. STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 5

6 C. The covariance of a two-stock portfolio is equal to the correlation coefficient times the standard deviation of one stock s returns times the standard deviation of the other stock s returns. D. None of the above. 11. A study of relationship existing between a population and samples drawn from the population is called 12. The method of least squares is a method of fitting a... equation by...the sum of squares of the deviations of the estimated regression values from the observed values of the series 13. Regression analysis is being used to find the line of best fit (y = a + bx) from eleven pairs of data. The calculations have produced the following information: Σx = 440, Σy = 330, Σx2 = 17,986, Σy2 = 10,366, Σxy = 13,467 and b = What is the value of a in the equation for the line of best fit (to 2 decimal places)? STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 6

7 A B C D Which of the following statements most accurately describes a situation in which the regression coefficient between a security and the market index is 0.4? A. For every percent move in the market, the security's return is expected to change by 0.4% B. The relationship between the two securities is positive; however, the degree to which they move in the same direction is not perfect. C.This certainly implies that the portfolio has a high degree of unsystematic risk. D. Movements in the market explain 40% of the variation in the security's return. STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 7

8 15. When the Correlation Coefficient is positive, it is said to be...correlated 16. Which of the following statements with regards to correlation analysis is not true? A. Correlation simply means an interrelationship or association. B. Correlation analysis always assumes that the relationship between the dependent and independent variable is linear. C. There is positive correlation when movement in one variable causes movement in the same direction in the other variable. D. Coefficient of determination explains that portion of the variability in the dependent variable that is not explained by the independent variable. 17. Given the trend equation Y= x. What does the figure 5.47 represent? A. Slope STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 8

9 B. Intercept C. Derivative D. Rate of change 18. An analyst estimated that ABC s earnings will grow from N3 to N4.50 per share over the next eight years. What is the rate of growth in ABC s earnings? A. 4.9% B. 5.2% C. 6.7% D. 7.2% 19. Regression and correlation are concerned with relationships between variables STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 9

10 20. The coefficient of determination takes on real values between... and Which of the following is/are true? I. Correlation measures pattern of relationships II. When the rank correlation is +1, it means perfect agreement III. Coefficient of determination can only take possible integer values. A. I only B. II only C. III only D. I and II E. II and III 22. Which of the following is/are true of moving average method? I. Extreme values are always lost II. The method is suitable for forecasting STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 10

11 III. It is not good for non-linear trend A. I only B. I and II C. I, II and III D. II only E. III only 23. Observations taken over a period of time often contains the following characteristics EXCEPT A. A long- term trend B. Secular trend C. Moving average method D. Seasonal fluctuations E. Residual variations 24. Which of the following statements is true about uncorrelated variables? STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 11

12 A. No relationship exists between them B. Partial relationship exists between them C. Perfect relationship exists between them D. Inverse relationship exists between them E. Positive relationship exists between them 25. Given the regression line of y on x as y x.The value of regression coefficient is A. 17 B. 3.6 C D E If co-efficient of correlation of a distribution is What is the co-efficient of determination of the same distribution? A STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 12

13 B C D A simple relationship between the Spearman s coefficient of rank correlation (r), the differences in the corresponding pairs of ranks (d) and the total number of rankings (n) is given by... STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 13

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