Quantitative Reasoning and Financial Literacy practice questions

Question 1

If a borrower makes payments that cover only the interest due on a loan, will the loan principal decrease?

Accepted Answer

No; paying only interest leaves the principal unchanged.

Answer

Yes; every interest payment reduces principal by the same amount.

Question 2

Student ID numbers are randomly selected by a computer for a survey of student opinions on exam scheduling. What sampling method is used?

Accepted Answer

Simple random sampling

Answer

Convenience sampling

Answer

Stratified sampling

Answer

Cluster sampling

Answer

Systematic sampling

Question 3

People are classified according to clothing style, and then random samples are taken from every resulting group. Which sampling method is used?

Accepted Answer

Stratified sampling

Answer

Convenience sampling

Answer

Cluster sampling

Answer

Systematic sampling

Answer

Simple random sampling

Question 4

Portfolio returns have a standard deviation of 0.55 for a one-stock portfolio and 0.335 for a 34-stock portfolio. What does this indicate about risk?

Accepted Answer

The 34-stock portfolio has less return variability and therefore less measured risk

Answer

Both portfolios have the same risk

Answer

The 34-stock portfolio has more risk because its standard deviation is lower

Answer

Risk must be found by dividing standard deviation by the number of stocks

Answer

The one-stock portfolio has less risk because it contains fewer securities

Question 5

Researchers select 42 participants ages 20–29, 42 ages 30–39, and 42 ages 40–49. Which sampling method is used?

Accepted Answer

Stratified sampling

Answer

Cluster sampling

Answer

Systematic sampling

Answer

Simple random sampling

Answer

Convenience sampling

Question 6

Assume each weekday is equally likely as a birth day. Which method should be used to find the probability that a randomly selected future president was born on Tuesday, and what is the probability?

Accepted Answer

Theoretical probability; 1/7

Answer

Relative frequency; there are many observations

Answer

Relative frequency; there are no observations

Answer

Theoretical probability; 6/7

Question 7

What is a graph with observed values or value intervals on the horizontal axis, frequencies on the vertical axis, and bars representing frequency?

Accepted Answer

Histogram

Answer

Stem-and-leaf display

Answer

Circle graph

Answer

Frequency polygon

Question 8

Which measure of center will usually best represent the individual weights of oranges in a 5-pound bag when few outliers are expected?

Accepted Answer

Mean, because few outliers are likely

Answer

Mode, because outliers are likely

Answer

Mode, because it always finds the best center

Answer

Median, because outliers are likely

Answer

Mean, only because it is commonly understood

Answer

Median, because it is easier to calculate

Question 9

An auditor randomly selects 60 taxpayers from each filing-status category: single, head of household, married filing jointly, and married filing separately. Which sampling method is used?

Accepted Answer

Stratified sampling

Answer

Systematic sampling

Answer

Convenience sampling

Answer

Cluster sampling

Answer

Simple random sampling

Question 10

Every 23rd person in a concert-ticket line is asked their age. Which sampling method is used?

Accepted Answer

Systematic sampling

Answer

Simple random sampling

Answer

Convenience sampling

Answer

Stratified sampling

Answer

Cluster sampling

Quantitative Reasoning and Financial Literacy practice questions

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Quantitative Reasoning and Financial Literacy practice questions

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