A Student Answers 26 Questions Correctly

question 141

Multiple Choice

A student answers 26 questions correctly.Is that enough to convince you that he is not merely guessing? Explain.

• A)No; if the student were guessing,we would expect him to answer 15 questions correctly with a standard deviation of 11.25.26 is 0.98 standard deviations above the expected value.That would not be an unusual result.
• B)Yes; if the student were guessing,we would expect him to answer 15 questions correctly with a standard deviation of 3.10.26 is 3.5 standard deviations above the expected value.That would be an unusual result.
• C)Yes; if the student were guessing,we would expect him to answer 15 questions correctly with a standard deviation of 3.35.26 is 3.3 standard deviations above the expected value.That would be an unusual result.
• D)Yes; if the student were guessing,we would expect him to answer 15 questions correctly with a standard deviation of 3.87.26 is 2.8 standard deviations above the expected value.That would be an unusual result.
• E)No; if the student were guessing,we would expect him to answer 15 questions correctly with a standard deviation of 3.35.26 is 3.3 standard deviations above the expected value.That would not be an unusual result.

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Definitions:

Fund Returns

Fund Returns are the profits or losses from investments in mutual funds, ETFs, or other pooled investment vehicles, typically presented as a percentage gain or loss over a specific period.

Sharpe Measure

A financial metric used to assess the performance of an investment by adjusting for its risk.

Comparison Universe

The set of money managers employing similar investment styles, used for assessing the relative performance of a portfolio manager.

Mutual Funds

Investment programs funded by shareholders that trade in diversified holdings and are managed by professional investment managers.