Test the Following Sequence for Randomness at α = 0

question 27

Multiple Choice

Test the following sequence for randomness at α = 0.05.
A A A A B B B A A A B B
Table of Critical Values for the Number of Runs, α = 0.05
Value of
N₁
Value of n₂
4
5
6
7
6
2
9
3
10
3
11
3
12
7
2
10
3
11
3
12
3
13
8
3
10
3
11
3
12
4
13

• A) Do not reject the hypothesis that the sequence is random, because the test value 4 is between the critical values 3 and 11.
• B) Do not reject the hypothesis that the sequence is random, because the test value 3 is between the critical values 3 and 10.
• C) Do not reject the hypothesis that the sequence is random, because the test value 5 is outside the critical values 3 and 12.
• D) Reject the hypothesis that the sequence is random, because the test value 3 is between the critical values 3 and 11.

Understand the concept of the time value of money and its application in investment decision-making.

Learn to calculate and interpret the net present value (NPV) of an investment.

Understand and apply the profitability index (PI) in investment evaluation.

Comprehend the internal rate of return (IRR) and its implications for investment decisions.

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