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Excercise 2

The document contains 6 questions about probability distributions and statistical concepts: 1) Questions about a normal distribution of cola bottle weights and likelihood of weights being below 2L. 2) Questions about the empirical rule and returns on mutual funds based on mean and standard deviation. 3) Questions about independence of variables and probability of outcomes based on a joint probability distribution. 4) Questions about the most and least likely outcomes, average earnings, and risk measure for a business venture probability distribution. 5) Questions about probability of errors in a textbook based on a probability distribution of errors per pages. 6) Questions about finding properties like mean, variance, and probability distribution of a new random variable

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Shivam Rai
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73 views2 pages

Excercise 2

The document contains 6 questions about probability distributions and statistical concepts: 1) Questions about a normal distribution of cola bottle weights and likelihood of weights being below 2L. 2) Questions about the empirical rule and returns on mutual funds based on mean and standard deviation. 3) Questions about independence of variables and probability of outcomes based on a joint probability distribution. 4) Questions about the most and least likely outcomes, average earnings, and risk measure for a business venture probability distribution. 5) Questions about probability of errors in a textbook based on a probability distribution of errors per pages. 6) Questions about finding properties like mean, variance, and probability distribution of a new random variable

Uploaded by

Shivam Rai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PR-2

Q1. A population of 2-litre bottles of cola is known to have a mean fill-weight of


2.06 litres and a standard deviation of 0.02 litres:

(a) If the population is known to be bell shaped, describe the distribution of


fill –weights. Is it very likely that the bottle will contain less than 2 litres of
cola?
(b) If the shape of population is unknown, describe the distribution of fill –
weights. Is it very likely that the bottle will contain less than 2 litres of
cola?
Q2. Consider a population of 1,024 mutual funds that primarily invest in large
companies. It has been determined that the µ, the mean one year total
percentage return achieved by all the funds is 8.20 and that the standard
deviation (sigma) is 2.75.

According to the empirical rule, what percentage of these funds is expected to be:
(a) within +- 1 standard deviation of the mean.
(b) within +- 2 standard deviation of the mean.

According to the Chebyshev rule:

(c) what percentage of these funds is expected to be within +-1, +-2 or +-3
sigma of the mean.
(d) at least 93.75% of these funds are expected to have one-year total returns
between what two amounts?

Q3. In the follow-up survey of 300 households, the actually purchased large-
screen HDTVs, the households were asked if they were satisfied with their
purchases. The distribution of response to the satisfaction question, i.e. whether
the television had a faster refresh rate, is as follows:

TV Satisfied with Purchase


Refresh
rate Yes No Total
Faster 64 16 80
Standard 176 44 220
Total 240 60 300

(a) Determine whether being satisfied with the purchase and refresh rate of
the television purchased are independent.
(b) Consider 80 households that purchased TVs that had a faster refresh rate.
In the above Table, it may be seen that 64 households are satisfied with
their purchase, and 16 are dissatisfied. Suppose 2 households are
randomly selected from the 80 households. Find the probability that both
households are satisfied with their purchase.
QUES 4) Returns on a certain business venture are known to follow certain
probability distribution:
X -2000 -1000 0 1000 2000 3000
P(X) 0.1 0.1 0.2 0.2 0.3 0.1

i. What is the most likely monetary outcome of the business venture?


ii. What is the long-term average earning of the business venture of this
kind?
iii. What is the good measure of the risk involved in the venture of this
kind? Compute this measure.

QUES 5) The number of typographical errors in a textbook varies considerably


from book to book. It is found to follow probability distribution with a mean of
1.5 per 100 pages. If 100 pages of the book are selected at random, what is the
probability that there is no typographical errors.
If:
i. Suppose the new book has 400 pages, what is the probability
that there are no typographical errors.
ii. Probability that there are 5 or fewer typographical errors.

QUES 6) A random variable X has the following distribution:

X -2 5 7 8
P(X) 0.59 0.15 0.25 0.01

i. Find the mean and variance of RV(X).


ii. Determine the probability distribution of RV(Y) where Y = 5X.
iii. Use the probability distribution of part (iii) to determine variance
and standard deviation of Y.
iv. Use the laws of expected value and variance to find the then
expected value and variance of Y from the parameters of X.

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