For an investment, the interest rate is the rate of interest earned on the ____________.

For an investment, the interest rate is the rate of interest earned on the ____________. Open choices for matching

When the algebraic signs on the net cash flows change more than once, the cash flow sequence is called ____________.

When the algebraic signs on the net cash flows change more than once, the cash flow sequence is called ____________. Open choices for matching

When there is more than one sign change in the net cash flows, multiple i* values are possible in the range of _______________.

When there is more than one sign change in the net cash flows, multiple i* values are possible in the range of _______________. Open choices for matching

The total number or real i* values is always ______________ the number of sign changes in the cumulative cash flow sequence.

The total number or real i* values is always ______________ the number of sign changes in the cumulative cash flow sequence. Open choices for matching

The composite rate of return assumes that net positive cash flows not immediately needed by the project are reinvested at the __________.

The composite rate of return assumes that net positive cash flows not immediately needed by the project are reinvested at the __________. Open choices for matching

Norstrom's criterion uses the ________ to determine if a unique rate may exist.

Norstrom's criterion uses the ________ to determine if a unique rate may exist. Open choices for matching

An interest rate calculated on the original amount each period is ________than one based on the unrecovered balance.

 

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4. Suppose that n light bulbs are burning simultaneously to determine the lengths of their lives. We shall assume that they burn independently and that the lifetime of each bulb has the exponential distribution with parameter . Let X; denote the lifetime (in thousand hours) of bulb i, for i 1, . ...,n. The pdf, mean and variance of exponential distribution Exp() are = f(x) = e-x, E(X) = 1 B' Var (X) - 1 32 (a) What does the central limit theorem say about the distribution of when n is large? n(X-1/B) 1/B (b) Find a two-sided 95% confidence interval of the mean lifetime (1/3). Express your answer in terms of n, X and z (the z critical values). Interpret the confidence interval you obtain in context of the situation. H: B = 1 H : 1. (c) Now, suppose that we want to test whether or not the mean lifetime is 1000 hours, we would consider Derive the likelihood ratio statistic. (d) Denote the likelihood ratio statistic by A(X). Should the null hypothesis Ho be rejected when A(X) is large or small? (e) What is the large-sample distribution of -2 log A(X) when the null hypothesis Ho is true? (f) Explain what a Type I error would mean in context of this problem. 4. Suppose that n light bulbs are burning simultaneously to determine the lengths of their lives. We shall assume that they burn independently and that the lifetime of each bulb has the exponential distribution with parameter . Let X; denote the lifetime (in thousand hours) of bulb i, for i 1, . ...,n. The pdf, mean and variance of exponential distribution Exp() are = f(x) = e-x, E(X) = 1 B' Var (X) - 1 32 (a) What does the central limit theorem say about the distribution of when n is large? n(X-1/B) 1/B (b) Find a two-sided 95% confidence interval of the mean lifetime (1/3). Express your answer in terms of n, X and z (the z critical values). Interpret the confidence interval you obtain in context of the situation. H: B = 1 H : 1. (c) Now, suppose that we want to test whether or not the mean lifetime is 1000 hours, we would consider Derive the likelihood ratio statistic. (d) Denote the likelihood ratio statistic by A(X). Should the null hypothesis Ho be rejected when A(X) is large or small? (e) What is the large-sample distribution of -2 log A(X) when the null hypothesis Ho is true? (f) Explain what a Type I error would mean in context of this problem.

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