Chapter 6

Student:
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1. A stock portfolio consists of two stocks X and Y. Their daily closing prices are correlated
random variables with variances X2 = 3.51 and Y2 = 5.22, and covariance XY = -1.55. What is
the standard deviation of the sum of the closing prices of these two stocks?
A. 5.63
B. 7.18
C. 8.73
D. 2.37

2. Which model best describes the number of blemishes per sheet of white bond paper?
A. Binomial
B. Poisson
C. Hypergeometric
D. Geometric

3. The number of male babies in a sample of ten randomly-chosen babies is a

A. continuous random variable.
B. Poisson random variable.
C. binary random variable.
D. binomial random variable.

4. At Ersatz University, the graduating class of 480 includes 96 guest students from Latvia. A
sample of 10 students is selected at random to attend a dinner with the Board of Governors. Use
the binomial model to obtain the approximate hypergeometric probability that the sample
contains at least 3 Latvian students.
A. .3222
B. .1209
C. .8791
D. .6778
5. Which distribution has a mean of 5?
A. Poisson with  = 25.
B. Binomial with n = 200,  = .05.
C. Hypergeometric with N = 100, n = 10, s = 50.

6. Which probability model would you use to describe the number of customers served at a
certain California Pizza Kitchen until the first customer orders split pea soup?
A. Binomial
B. Geometric
C. Uniform
D. Poisson

7. Of the following, the one that most resembles a Poisson random variable is the number of
A. heads in 200 flips of a fair coin.
B. annual power failures at your residence.
C. face cards in a bridge hand of 13 cards.
D. defective CDs in a spool containing 15 CDs.

8. Suppose X is binomially distributed with n = 12 and  = .20. The probability that X will be less
than or equal to 3 is
A. .5584
B. .7946
C. .2362
D. .7638

9. Which of the following is not a requirement of a binomial distribution?

A. Constant probability of success.
B. Only two possible Bernoulli outcomes.
C. Fixed number of trials.
D. Equally likely outcomes.
10. Ten percent of the corporate managers at Axolotl Industries majored in humanities. What is
the probability that the first humanities major is the fifth manager you meet?
A. .0656
B. .8561
C. .5904
D. .4095

11. The coefficient of variation for a Poisson distribution with  = 4 is:

A. 35.2%
B. 58.9%
C. 50.0%
D. 26.4%

12. The discrete random variable X is the number of students that show up for Professor Smith's
office hours on Monday afternoons. The table below shows the probability distribution for X.
What is the probability that fewer than 2 students come to office hours on any given Monday?

A. .10
B. .40
C. .70
D. .90

13. In a randomly-chosen week, which probability model would you use to describe the number
of accidents at the intersection of two streets?
A. Binomial
B. Poisson
C. Hypergeometric
D. Geometric
14. The discrete random variable X is the number of students that show up for Professor Smith's
office hours on Monday afternoons. The table below shows the probability distribution for X.
What is the expected value E(X) for this distribution?

A. 1.2
B. 1.0
C. 1.5
D. 2.0

15. Which model best describes the number of births in a hospital until the first twins are
delivered?
A. Binomial
B. Poisson
C. Hypergeometric
D. Geometric

16. A discrete random variable

A. can be treated as continuous when it has a large range of values.
B. cannot be treated as continuous.
C. is best avoided if at all possible.
D. is usually uniformly distributed.

17. The expected value of a random variable X is 10 and the standard deviation is 2. The standard
deviation of the random variable Y = 2X - 10 is:
A. 2
B. 4
C. -10
D. -6

18. Which distribution is most strongly right-skewed?

A. Binomial with n = 50,  = .70
B. Binomial with n = 50,  = .90
C. Binomial with n = 50,  = .40
D. Binomial with n = 50,  = .10
19. If X is a discrete uniform random variable ranging from 1 to 8, its mean is
A. 4.0
B. 4.5
C. 5.0
D. 5.5

20. The discrete random variable X is the number of students that show up for Professor Smith's
office hours on Monday afternoons. The table below shows the probability distribution for X.
What is the probability that at least 1 student comes to office hours on any given Monday?

A. .30
B. .40
C. .50
D. .60

21. In Quebec, 90 percent of the population subscribes to the Roman Catholic religion. In a
random sample of 8 Quebecois, find the probability that the sample contains at least five Roman
Catholics.
A. .0050
B. .0331
C. .9950
D. .9619

22. Which model best describes the number of incorrect fare quotations by a well-trained airline
ticket agent between 2 p.m. and 3 p.m. on a particular Thursday?
A. Binomial
B. Poisson
C. Hypergeometric
D. Geometric
23. The probability that an Oxnard University student is carrying a backpack is .70. If 10
students are observed at random, what is the probability that fewer than 7 will be carrying
backpacks?
A. .3504
B. .2001
C. .6177
D. .2668

24. For which binomial distribution would a Poisson approximation not be acceptable?
A. n = 35,  = 0.07
B. n = 95,  = 0.01
C. n = 80,  = 0.02

25. Which model best describes the number of non-working web URLs ("This page cannot be
displayed") you encounter in a randomly-chosen minute while surfing web sites for Florida
vacation rental condos?
A. Binomial
B. Poisson
C. Hypergeometric
D. Geometric

26. If 90 percent of automobiles in Orange County have both headlights working, what is the
probability that in a sample of 8 automobiles, at least 7 will have both headlights working?
A. .6174
B. .3826
C. .8131
D. .1869

27. The geometric distribution best describes

A. the number of successes in a sample of n trials.
B. the number of trials until the first success.
C. the number of events in a given unit of time.
D. the process of sampling without replacement.
28. A discrete probability distribution
A. is a listing of all possible values of the random variable.
B. assigns a probability to each possible value of the random variable.
C. can assume values between -1 and +1.
D. is independent of the parameters of the distribution.

29. The expected value of a random variable X is 140 and the standard deviation is 14. The
standard deviation of the random variable Y = 3X - 10 is:
A. 42
B. 6.48
C. 14
D. 32

30. The probability that a customer will use a stolen credit card to make a purchase at a certain
Target store is 0.003. If 400 purchases are made in a given day, what is the approximate Poisson
probability that 4 or fewer will be with stolen cards?
A. .0053
B. .0076
C. .0023
D. .0555

31. The true proportion of accounts receivable with some kind of error is .02 for Venal
Enterprises. If an auditor randomly samples 200 accounts receivable, what is the approximate
Poisson probability that fewer than two will contain errors?
A. .1038
B. .0916
C. .1465
D. .0015

32. The probability that a ticket holder will miss a flight is .005. If 180 passengers take the flight,
what is the approximate Poisson probability that at least 2 will miss the flight?
A. .9372
B. .0628
C. .1647
D. .2275
33. A stock portfolio consists of two stocks X and Y. Their daily closing prices are independent
random variables with standard deviations X = 2.51 and Y = 5.22. What is the standard
deviation of the sum of the closing prices of these two stocks?
A. 33.55
B. 6.48
C. 7.73
D. 5.79

34. A random variable X is distributed binomially with n = 8 and  = 0.70. The standard
deviation of the variable X is approximately
A. 0.458
B. 2.828
C. 1.680
D. 1.296

35. The binomial distribution describes the number of

A. trials to obtain the first "success" in a Bernoulli Process.
B. trials to obtain n "successes" in a Bernoulli Process.
C. "successes" or "failures" in a Bernoulli Process.
D. "successes" in n Bernoulli trials.

36. A project has three independent stages that must be completed in sequence. The time to
complete each stage is a random variable. The expected times to complete the stages are 1 = 23,
2 = 11, 3 = 17. The expected project completion time is:
A. 51
B. 23
C. 40
D. 32

37. Based on experience, 60 percent of the women who request a pregnancy test at a certain
clinic are actually pregnant. In a random sample of 12 women, what is the probability that at
least ten are pregnant?
A. .0639
B. .1424
C. .0196
D. .0835
38. On average, an IRS auditor discovers 4.7 fraudulent income tax returns per day. On a
randomly chosen day, what is the probability that she discovers fewer than two?
A. .0518
B. .0427
C. .1005
D. .1523

39. Ephemeral Services Corporation (ESCO) knows that nine other companies besides ESCO are
bidding for a $900,000 government contract. Each company has an equal chance of being
awarded the contract. If ESCO has already spent $100,000 in developing its bidding proposal,
what is its expected net profit?
A. $100,000
B. $90,000
C. -$10,000
D. $0

40. If 5 percent of automobiles in Oakland County have one burned-out headlight, what is the
probability that in a sample of 10 automobiles at least 2 will have a burned-out headlight?
A. .0862
B. .0746
C. .0116
D. .1872

41. An example of a geometric random variable is the number of trees with Dutch Elm disease in
a random sample of 15 trees.
True False

42. When  = .70 the discrete binomial distribution is negatively skewed.

True False

43. The Poisson distribution can be skewed either left or right, depending on .
True False
44. Arrival of cars per minute at a toll booth may be characterized by the Poisson distribution if
A. the arrivals are independent.
B. no more than one arrival can occur in a minute.
C. there is only one lane leading to the booth.

45. The number of male babies in a sample of ten randomly-chosen babies is a

A. continuous random variable.
B. Poisson random variable.
C. binary random variable.
D. binomial random variable.

46. The variance will reach a maximum in a binomial distribution when

A.  = 1 and 1- = 0
B.  = 1/4 and 1- = 3/4
C.  = 1/2 and 1- = 1/2
D.  = 0 and 1- = 1

47. The probability that a customer will use a stolen credit card to make a purchase at a certain
Target store is 0.003. If 400 purchases are made in a given day, what is the approximate Poisson
probability that 4 or fewer will be with stolen cards?
A. .0053
B. .0076
C. .0023
D. .0555

48. There is a .02 probability that a customer's Visa charge will be rejected at a certain Target
store because the transaction exceeds the customer's credit limit. What is the expected number of
Visa transactions until the first one is rejected?
A. 10
B. 20
C. 50
D. 98
49. A random variable is a function or rule that assigns a numerical value to each outcome in the
sample space of a stochastic (chance) experiment.
True False

50. A fair die is rolled. If it comes up 1 or 2 you win $2. If it comes up 3, 4, 5, or 6 you lose $1.
Find the expected winnings.
A. $0
B. $1
C. $0.50
D. $0.25