Knowledge Assessment

Question 1

For this Knowledge Assessment, you consider how raw test scores can be converted into more meaningful standardized scores, allowing you to meaningfully compare tests and to compare individuals. In the provided dataset, you previously created a Risk-Taking scale by adding items R1 through R6.

Question 2

What is the standard deviation of a normal distribution, whose mean is 35, in which an x-value of 23 has a z-score of -1.63?

Question 3

What fraction of the terms in a normal distribution have z-scores between -2.41 and -.39?

A. 2.8

B. .6437

C. .5129

D. .3403

E. 2.02

Question 4

Suppose you hear a comment in the news that says “the volatility of the US stock market is lower for the last few years.” can you support the comment? use the data set provided (in excel) and support or disapprove the comment.

-date in column A is the ending date of each one year period

-annual return in column B is the return of an S&P500-stock-index based hypothetical fund in % for example the 2nd row 1/1/1971 means the return of the market cover one year period ending on 1/1/1971 is 12.77% namely from 1/1/1970 to 1/1/1971

-you can consider the data set as “population”

-The volatility is usually measured by the standard deviation of returns