Question

In your report to your supervisor please include answers to the following five questions:

Q. 1. Your data indicates that the stock market indices of all the countries studied increased between

2005 and 2006. Unexpectedly, interest rates for all but one country also increased during that

period. Perhaps this is partially due to the positive inflation rates in all of these countries. You

would like to find out more information. However, there are variations in the direction and the

size of these changes for each country and this complicates your analysis.

a. The stock prices.xls Excel spreadsheet shows the change in stock market indices between

2005 and 2006 as a percentage of the 2005 indices. It also shows the change in interest

rates between 2005 and 2006 as a percentage of 2005 interest rates. Use Excel to calculate

the mean and standard deviation for the percent changes in market indices. Perform the

same calculations for the percent changes in interest rates. What do these numbers

indicate?

b. Conduct a hypothesis test to see if the mean percent change in stock market indices between

2005 and 2006 are significantly different from zero. Do it without Excel. Conduct the same

test for the mean percent change in interest rates. Use a significance of .05. How do you

interpret your findings?

Q. 2. The results of your answer to question 1 will allow you to compare the mean percent change in

stock market indices and mean percent change in interest rates for the countries studied.

However, they will not show how changes in market indices are related to changes in interest

rates.

a. Use Excel to create scatter plot for these two variables. Comment on whether you believe

there is a relationship between percent changes in market indices and percent changes in

interest rates. If you see a relationship, is it a positive or a negative one? As the change in

interest rates increases, do you believe the change in stock market indices increases or

decreases? How can you explain this? Do you see an unusual observation (i.e., outlier),

which might be excluded from this sample of data? If so, what country is it?

b. Use Excel to conduct a regression analysis of these two variables. Use the data from all

eighteen counties. Let percent changes in the interest rate are independent or

explanatory variable (X) and percent changes in stock market indices be the dependent

variable (Y). (The dependent variable is what you are trying to predict.) Interpret your

regression findings by discussing the coefficient of determination (i.e., R-square), the

the regression coefficient of interest rate change, and the p-value. Is the regression coefficient of

Is X significantly different than zero? What does this mean? Use a significance of .05

c. Did you identify an outlier in part a? If so, discard the outlier and run the regression again.

Do results change?

Q. 3. Now use Excel to do regression of the inflation rate (X) on the percent changes in the stock market

indices (Y). Include the data from all eighteen countries, including Japan. Use a significance of

.05. Interpret your results (R-square, regression coefficient, and p-value). How would inflation

in a foreign country affect the value of foreign profits for a U.S. investor? Explain your answer.

Q. 4. What additional macroeconomic variables should an investor consider when comparing foreign

versus domestic investments?

Q. 5. Would you recommend that national interest rates be considered when making global investment

decisions? Support your answer with your regression findings. Discuss other factors that you

would consider being relevant when making global investment decisions.

3. Express each of the following percentages as a decimal. (a) 0.82% (b) 0.05% 4. Express each of the following percentages as a decimal. (a) 0.25% (b) 0.003% 5. Suppose that your lab scores in a biology class were 61 out of 75 points in Lab 1, 17 out of 20 points in Lab 2, and 118 out of 150 in Lab 3. Compare your lab scores and rank them in order, from best to last. 6. There were four different sections of Financial Mathematics 1 101 offered last semester. In section A, 31 out of 38 stu- dents passed the class; in section B, 47 out of 56 students passed the class; in section C, 34 out of 45 students passed the class; and in section D, 45 out of 52 students passed the class. Compare the passing rates in each section and rank them from best to worst. 7. A 250-piece puzzle is missing 14% of its pieces from its box. 18 How many pieces are in the box? 8. Jefferson Elementary School has 750 students. The Friday before spring break 22% of the student body was absent. How many students were in school that day? 9. At the Happyville Mall, you buy a pair of earrings that are marked $6.95. After sales tax, the bill was $7.61. What is the 19 tax rate in Happyville (to the nearest tenth of a percent)? 10 $5760. If he paidMAT112CO0 Financial Mathematics (Susan Propst) FA20 Homework: Module 5 Homework 1 Score: 0 of 1 pt 5 of 15 (4 complete) 15.1.11 If C CORP had 3,304,000 shares of common stock outstanding when it paid dividends last year, how much did it pay in dividends? Click the icon to view the portion of Stock Exchange Listing It paid $ Data Table Portion of Stock Exchange Listing Name Symbol Open High Low Close Net Chg %Chg Volume 52 Wk High 52 Wk Low Div Yield P/E Ytd % Chg A CORP A 30.6 31 24 305 31.12 0.58 19 994,770 32.9 19 4 24 6.6 B LTD. 28 14 28 57 27.67 28.42 0 28 270 400 28.87 16.11 0.48 17 25.1 C CORP 48.6 49 07 48 52 28 42 0 29 1,598 100 50.33 25 43 1 48 3 52.1 D LTD 14.35 14.58 13 92 14 51 0 16 1:11 54,900 16.55 12.6 -61 E CORP E 23.76 243 23.62 24.03 0.23 0.97 570,711 27 45 17 95 172 -92 Print Done Enter your answer in the answer box and then click Check Answer. All parts showing Clear All O 35 DELLstudents who did this course offered in the first semester 2016 are normally distributed mean value 47 and standard deviation 5.8, Based on these results several arguments put forward and it was informally proposed that we should look at our docanting plan from next year unless a randomly chosen student (who will be writing his final exam November this year) has his/her final marks more than 50. Find the probability that su student will indeed have his/ her final mark more than 50? Q.2a In a game, a player rolls a biased tetrahedron (four-faced) die. The probability each presible score is shown below. Score Probability 1/5 1/10 Find the probability of a total score of six after two rolls Q.2b Distinguish between discrete and continuous random variables, For a standard norms random variable 2. (i) Find P(12) 28). (1) Prove that P( 2) > ) = 28(Z> >). where ? : 0