T/f: The mean absolute deviation is more sensitive to large deviations than the mean square error.

T/f: A smoothing constant of 0.1 will cause an exponential smoothing forecast to react more quickly to a sudden change than a value of 0.3 will.

T/f:An advantage of the exponential smoothing forecasting method is that more recent experience is given more weight than less recent experience.

T/f: Linear regression can be used to approximate the relationship between independent and dependent variables.

T/f:"Forecasting techniques such as moving-average, exponential smoothing, and the last-value method all represent averaged values of time-series data."

T/f: The moving-average forecasting method is a very good one when conditions remain pretty much the same over the time period being considered.

You are the account manager in charge of Internet advertising at Impact Sales. Spending on Internet advertising has increased steadily over the last few years and you predict the growth will continue.

) Do you think a linear model is appropriate for this data? Explain clearly.

f) Find a quadratic model for this data since 2000.

g) Which model better fits your data? Support your answer with a scatter plot of the data and both models on the same set of axis.

h) Using the quadratic model what is the average rate of change between 2002 and 2004?

i) As the account manager what would you budget for Internet advertising in 2008?

TABLE:

Year Internet Advertising Spending (Billions)

2001 0

2002 0.3

2003 0.8

2004 1.9

2005 3

2006 4.3

2007 5.8

Table below shows the multiple logistic regression for factors associated with having three or more cardiovascular disease risk factors among a population of 500 participants who participated in a cross-sectional survey.

Table 4. Multiple Logistic Regression for the predictors of having three or more Cardio Vascular Disease risk factors (N=500)

Which variable(s) is considered to be statistically significant? Interpret the odds ratio and the 95% confidence interval for the significant variable(s). [PROVIDE JUSTIFICATION(S) AND RATIONALES]

Assume you have applied for two scholarships, a Merit scholarship (M) and an Athletic scholarship (A). The probability that you receive an Athletic scholarship is 0.18. The probability of receiving both scholarships is 0.11. The probability of getting at least one of the scholarships is 0.3.

1. A horse race contains 8 horses. If you wished to bet on every possible top three finishes (first, second, and third place), how many bets would you need to place?
2. The following represents a binomial experiment. Seven plants are operated by a garment manufacturer in seven different countries. There is a 10% chance of strike at any time. It is also believed that strikes at one plant do not influence strikes at any other plant (because these are in third world countries with little access to news information.)  What is the probability of at most two plants going on strike?
3. The pH measurements of water specimens from various locations along a given river basin are normally distributed with mean 8 and standard deviation 0.3.  What is the probability that the pH measurement of a randomly selected water specimen is dangerous—less than 7.2?

In a study concerning the relationship between the use of exogenous estrogens and subsequent risk of breast cancer, a sample of 1000 pre-menopausal women was followed for 8 years. The results are presented in the table below.

1.What kind of study is this?

1. cross-sectional
2. ecological
3. case-control
4. cohort

2.Is this study prospective or retrospective?

1. prospective
2. retrospective
3. none of these

3.The cumulative incidence of breast cancer among women receiving estrogen therapy is:

1. 0.2
2. 0.3
3. 0.4
4. 0.6
5. 0.8

4.The cumulative incidence of breast cancer among women who did not receive estrogen therapy is:

1. 0.05
2. 0.2
3. 0.4
4. 0.6
5. 0.8

5.The relative risk associated with estrogen therapy in this study is:

1. 0.25
2. 0.33
3. 0.5
4. 2
5. 3

Greta, an elderly investor, has a degree of risk aversion of A = 3 when applied to return on wealth over a one-year horizon. She is pondering two portfolios, the S&P 500 and a hedge fund, as well as a number of one-year strategies. (All rates are annual and continuously compounded.) The S&P 500 risk premium is estimated at 8.8% per year, with a SD of 23.8%. The hedge fund risk premium is estimated at 13.8% with a SD of 38.8%. The returns on both of these portfolios in any particular year are uncorrelated with its own returns in other years. They are also uncorrelated with the returns of the other portfolio in other years. The hedge fund claims the correlation coefficient between the annual returns on the S&P 500 and the hedge fund in the same year is zero, but Greta is not fully convinced by this claim. Calculate Greta’s capital allocation using an annual correlation of 0.3

PKC Ltd is considering raising $120 million from the markets. In its recent management meeting, Winnie Poon, the CFO, suggested PKC to issue perpetual bonds with a face value of $1,000 each and a coupon rate of 8.1% paid annually. The current market interest rate is 8%. Winnie estimates a 0.3 probability that next year’s interest rate will increase to 10%, and a 0.7 probability that it will fall to 6%.

(a) Calculate the current market value of the perpetual bond If PKC issues perpetual bond based on Winnie’s suggestion . (Show your calculations).

(b) The CEO, John Lung, decides to include a call provision in the bond contract such that the bonds are callable in one year. Calculate the coupon rate of the callable bonds such that the bonds will be sold at par. Assume the bonds will be called if the interest rates fall and the call premium is $150. (Show your calculations).

It is July 16. A company has a portfolio of stocks worth $100 million. The beta of the portfolio is 1.6. The company would like to use the CME December futures contract on the S&P 500 to change the beta of the portfolio to 0.3 during the period July 16 to November 16. The December S&P 500 index futures price is currently 1,000, and each contract is on $250 times the index.

(a) What position should the company take? How many December S&P 500 futures contracts should the company buy or sell now?

(b) Suppose that the company changes its mind and decides to increase the beta of the portfolio from 1.6 to 1.8. What position in futures contracts should it take? How many December S&P 500 futures contracts should the company buy or sell now?

please answer i only have 3-4 minutes !!!

On any given day, a bike shop sells either 0, 1, 2, or 3, bikes, with probabilities 0.3, 0.4, 0.2, and 0.1 respectively.

Suppose they make a profit of $400 from each bike sold, but they have a fixed cost of $400 per day for rent and salaries at the small dealer.

Let the random variable X = the net profit per day. (i.e., the profit from the sale of bicycles minus the fixed cost).

a) Develop a probability distribution for the net profit per day. What are the X and f(x) values?

b) Show that your probability distribution satisfies the conditions for a discrete probability distribution. In other words, describe in words why the probability distribution that you created is a valid one.

c) Calculate the expected value of the probability distribution. Interpret what this means in words.