Use the Runs Test to Determine Whether the Given Sequence

question 1

Multiple Choice

Use the runs test to determine whether the given sequence is random. Use a significance level of 0.05. The outcomes (odd number or even number) of a roulette wheel are shown below. Test for randomness of odd (O)
And even (E) numbers. Use a significance level of 0.05. $$\begin{array} { | l l l l l l l l l l l l | } \hline \mathrm { O } & \mathrm { E } & \mathrm { O } & \mathrm { E } & \mathrm { O } & \mathrm { E } & \mathrm { O } & \mathrm { E } & \mathrm { E } & \mathrm { O } & \mathrm { E } & \mathrm { E } \\\mathrm { E } & \mathrm { E } & \mathrm { O } & \mathrm { E } & \mathrm { O } & \mathrm { O } & \mathrm { E } & \mathrm { O } & \mathrm { E } & \mathrm { E } & \mathrm { O } & \mathrm { E } \\\hline\end{array}$$ What is the value of G, the number of runs?

• A) 10
• B) 18
• C) 17
• D) 14

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Definitions:

Neglected Stocks

Stocks that are under-followed or ignored by analysts and investors, often resulting in undervaluation.

Market Efficiency

A market theory that suggests that asset prices fully reflect all available information, making it impossible to consistently achieve higher returns than the overall market.

Semistrong-Form Market Efficiency

A theory stating that all publicly available information is already reflected in stock prices, thus making it impossible to achieve consistently higher returns.

Index Fund

A type of mutual fund or exchange-traded fund (ETF) designed to follow the components of a market index, such as the S&P 500, to provide broad market exposure with low operating expenses.