Actuarial Society of India

EXAMINATIONS
16th May 2006

Subject CT3 – Probability and Mathematical Statistics

Time allowed: Three Hours (10.30 – 13.30 pm)

Total Marks: 100

INSTRUCTIONS TO THE CANDIDATES

1. Do not write your name anywhere on the answer scripts. You have only to write your
Candidate’s Number on each answer script.

2. Mark allocations are shown in brackets.

3. Attempt all questions, beginning your answer to each question on a separate sheet.
However, answers to objective type questions could be written on the same sheet.

4. Fasten your answer sheets together in numerical order of questions. This, you may
complete immediately after expiry of the examination time.

5. In addition to this paper you should have available graph paper, Actuarial Tables and
an electronic calculator.

Professional Conduct:
“It is brought to your notice that in accordance with provisions contained in the Professional Conduct Standards, If
any candidate is found copying or involved in any other form of malpractice, during or in connection with the
examination, Disciplinary action will be taken against the candidate which may include expulsion or suspension from
the membership of ASI.”

Candidates are advised that a reasonable standard of handwriting legibility is expected by the examiners and
that candidates may be penalized if undue effort is required by the examiners to interpret scripts.

AT THE END OF THE EXAMINATION

Hand in both your answer scripts and this question paper to the supervisor.
ASI CT3 0506

Q1) The following table gives the one-way commuting distance (in nearest kms) of 30
working women in an Insurance company.
Commuting distance (kms)
13 47 10 3 16
7 25 8 21 19
12 45 1 8 4
6 2 14 13 7
34 13 41 28 50
14 26 10 24 36
(a) Make a stem- leaf display of the data. (1)
(b) Taking class intervals of the form 1-5, 6-10, 11-15 and so on construct a frequency
distribution and using this draw Histogram. (2)
(c) Find the mean and variance of the commuting distances based on the frequency
distribution (3)
[6]
Q2) A card is drawn at random from a pack of cards. Let A be the event that the card is red
and B be the event that the card is king. Does the colour of card affect its probability of
being a king? [2]

Q3) In an entrance examination in Mathematics and Statistics, of the 120 students appeared
for the examination, 65 passed in Mathematics, 75 passed in Statistics and 35 passed in
both the tests. A student is selected at random. What is the probability that the student
has
(a) failed in both the tests (2)
(b) passed in Mathematics given that the student has passed in one test atleast. (3)
[5]
Q4) The joint cdf of (X,Y) is
FX,Y(x,y) = 1 – e-2x –e-3y + e-(2x+3y) ; x,y > 0
= 0 elsewhere
Find
(a) Joint pdf of (X,Y) (1)
(b) Marginal pdf of X and Y (2)
(c) P[(X ≤ 1) ∩ (Y ≤1) ] (1)
(d) P[(1 < X < 3) ∩ ( 1 < Y < 2)] (2)
[6]
Q5) A random variable X has the following pdf
1 − x −a a
f (x ) = e ; a > 0, - ∞ < x < ∞
2a
= 0 elsewhere
[5]
Find the cumulant generating function and find mean and variance.

Q6) In a certain Metropolitan city the daily consumption of electric power (in Million
Kilowatt Hour (MKH)) may be rega rded as a random variable having Gamma
distribution with parameter (3,2). If the power plant has a daily capacity of 12 MKH,
what is the probability that this power supply will be inadequate on any given day. [3]

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ASI CT3 0506

Q7) During a promotional campaign of a new soft drink the company places prize winning
caps on one of every ten bottles. Hoping to win a prize, a child decides to try a bottle of
new drink each day for one full week. What is the probability that the child will win
prize(s)
(a) atleast one day (1)
(b) none of the days? (1)
(c) all the days? (1)
[3]

Q8) On the average 8 calls per hour are received in a telephone board. Assuming that the
number of calls received in the board in a given length of time is a Poisson process, find
the probability that
(i) 6 calls received in 2 Hours (1)
(ii) atleast 2 calls in the next 20 minutes (2)
[3]

Q9)
(a) What is central limit theorem? (1)
(b) Over the years, it has been observed that of all the undergraduate students, in
Mathematics who take a Society’s examination, only 57% pass . Suppose that this year
950 graduate students in Mathematics are taking examination. What is the probability
that
i) 565 or more pass (2)
ii) between 535 and 575 pass? (2)
[5]

Q10) Let X be a random variable following exponential distribution with density

µe−µx if 0< x < ∞, µ>0
f (x | µ) = 
 0 otherwise
For testing H0 : µ = 20 against H1 : µ = 30, a single value is observed from this
distribution. If this value is less than 28, H0 is accepted otherwise rejected. Find the
probabilities of Type I error and Type II error [2]

Q11) Two thousand individuals were chosen at random by a researcher and cross classified
according to gender and colour blindness as given below:
Description Male Female
Normal 904 998
Colour Blind 91 7
(a) Apply an appropriate test to conclude that there is overwhelming evidence against the (4)
hypothesis that there is no association between gender and colour blindness.

(b) A genetic model states that the human population is split in the proportions as illustrated
in the following table where q (0<q<1) is a parameter related to the distribution of the
colour blindness

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ASI CT3 0506

Description Male Female

Normal (1 − q) / 2 (1 − q 2 ) / 2
Colour Blind q/2 q2 / 2

Using the data in a):

i) Write down the likelihood function for the above model. (3)
ii) Determine the maximum likelihood estimate of q (8)

[15]
Q12) Eight pairs of slow learners with similar reading capabilities are identified in a third
grade class. One member of each pair is randomly assigned to the standard
teaching method, while the other is assigned to a new teaching method. The
scores are as given below.
Pair 1 2 3 4 5 6 7 8
New Method 77 74 82 73 87 69 66 80
Old Method 72 68 76 68 84 68 64 76
(a) Test for the difference between mean scores for the two methods (6)
(b) Test for the equality of variances for these two methods (4)
(c) Obtain the 95% of confidence interval for the difference in means. (2)
[12]
Q13) A survey was conducted to investigate whether people tend to marry partners of about
the same age. This question was addressed to 12 married couples and their ages were
given in the following table.

Couple No. 1 2 3 4 5 6 7 8 9 10 11 12
Husband’s age (x) 30 29 36 72 37 36 51 48 37 50 51 36
Wife’s age (y) 27 20 34 67 35 37 50 46 36 42 46 35
(a) Draw the scatter plot and comment on it (1)
(b) Find the correlation coefficient and interpret it (4)
(c) If ρ represents the population correlation coefficient between the ages of partners, test (3)
the significance of ρ at 5% level
[8]
Q14) A study was made on the effect of temperature on the yield of a chemical process. The
following data (in coded form) were collected.
x : -5 -4 -3 -2 -1 0 1 2 3 4 5
y: 1 5 4 7 10 8 9 13 14 13 8
Linear regression model y = β 0 + β1 x +e is fitted for the above data.
(a) Describe the parameters and variables in the model (1)
(b) Obtain the least squares estimates of β 0 and β 1 and hence the prediction equation. (3)
(c) Construct ANOVA table and test H0 : β 1 = 0 at 5% level of significance (3)
(d) What are 95% confidence limits for β 1 ? (2)
(e) What are the confidence limits for the true mean value of y when x = 3 at 95% (2)
confidence level?
(f) Are there any indications that a better model can be tried? (2)
[13]

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ASI CT3 0506

Q15) The joint probability distribution of the amounts X and Y of two commodities supplied
to a market has the probability density function (pdf)
f ( x, y ) = kxy( 4 x + 9 y ) e − ( x + y ) ; x, y > 0, k is a constant
(a) Determine the constant k (3)
(b) Find the conditional pdf of X given Y=y and that of Y given X=x. (4)
(c) Find the conditional variance of X given Y=y. (3)
[10]
Q16) Let X1 ,X2 ,… be i.i.d. random variables from a Poisson distribution with mean 5 and let

∑X
N

S= i , where N follows Binomial with n = 10, p = 0.2. Obtain the mean and
i =1

variance of S. [2]

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