Test Your Quantitative IQ
What skills are needed for an individual investor managing his or her own account? Is the problem different for an investment advisor? For a trader?
Anyone making financial decisions needs quantitative skills. This means more than writing a paragraph that includes numbers. It means understanding how to interpret and analyze data.
An Interesting Problem
Today’s problem provides an interesting test of your "Quantitative IQ." We shall check the response from different audiences to figure out a grading scale! Meanwhile, try your own hand. Look at the table below, taken from a weekly report by the St. Louis Fed. (click table to enlarge)
The table will not win any prizes from Edward Tufte, and that makes it a little more challenging.
This is the kind of problem we might have presented, back in the day, as an exam question. Let us approach it that way. MZM is a measure of money supply, reported on a weekly basis. Feel free to use additional information from the report to help, but it is not really needed for this purpose.
How many of these questions can you answer:
- What is on the horizontal axis?
- What is on the vertical axis?
- What is represented by a specific cell?
- Why does the table not include values for each possibility?
- What is the last time period represented in the table?
- How is the value for a given cell calculated?
- Why might a table like this be useful?
- What is your overall interpretation?
In a day or two we shall post answers to the questions, and show the significance of the problem.