Topics: Descriptive Statistics and Probability

1. Look at the data given below. Plot the data, find the outliers and find out μ , σ , σ 2

Name of company Measure X

Allied Signal 24.23%
Bankers Trust 25.53%
General Mills 25.41%
ITT Industries 24.14%
J.P.Morgan & Co. 29.62%
Lehman Brothers 28.25%
Marriott 25.81%
MCI 24.39%
Merrill Lynch 40.26%
Microsoft 32.95%
Morgamean(n Stanley 91.36%
Sun Microsystems 25.99%
Travelers 39.42%
US Airways 26.71%
Warner-Lambert 35.00%

import pandas as pd
import seaborn as sns
import matplotlib.pyplot as plt
data=pd.Series([24.23,25.53,25.41,24.14,29.62,28.25,25.81,24.39,40.26,32.95,91.36,25.99,39.42,26.71,
35.00])
names=["Allied Signal","Bankers Trust","General Mills","ITT Industries","J.P.Morgan & Co.","Lehman
Brothers","Marriott","MCI","Merrill Lynch","Microsoft","Morgan Stanley","Sun
Microsystems","Travelers","US Airways","Warner-Lambert"]
%matplotlib inline
fig=plt.figure(figsize=(8,8))
plt.pie(data,labels=names,autopct='%1.2f%%')
plt.show()

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)
 sns.boxplot(data)

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)
 round(data.mean(),4)
33.2713

round(data.std(),4)
16.9454

round(data.var(),4)
287.1466

2.

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)
 Answer the following three questions based on the box-plot above.
(i) What is inter-quartile range of this dataset? (please approximate the numbers) In one
line, explain what this value implies.

Here clearly 25 is the outlier.

Median = 7
1st quartile = 5
2nd quartile = 12
IQR = (12-5) = 7

IQR tells us the range of the middle half of the data.

(ii) What can we say about the skewness of this dataset?

Positively skewed.

(iii) If it was found that the data point with the value 25 is actually 2.5, how would the new
box-plot be affected?
In that case there would have been no outliers, and it might have affected in the values
of mean and median slightly. The boxplot might have moved towards right slightly.

3.

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)
 Answer the following three questions based on the histogram above.
(i) Where would the mode of this dataset lie?
Between 5 – 8 (Most frequent data)

(ii) Comment on the skewness of the dataset.

It is positively skewed.

(iii) Suppose that the above histogram and the box-plot in question 2 are plotted for the
same dataset. Explain how these graphs complement each other in providing
information about any dataset.
By comparing both of them it is very clear that the data would be positively skewed.
Also, would help us finding mean, mode value.

4. AT&T was running commercials in 1990 aimed at luring back customers who had switched to
one of the other long-distance phone service providers. One such commercial shows a
businessman trying to reach Phoenix and mistakenly getting Fiji, where a half-naked native on a
beach responds incomprehensibly in Polynesian. When asked about this advertisement, AT&T
admitted that the portrayed incident did not actually take place but added that this was an
enactment of something that “could happen.” Suppose that one in 200 long-distance telephone
calls is misdirected. What is the probability that at least one in five attempted telephone calls
reaches the wrong number? (Assume independence of attempts.)

Probability of call getting misdirected = (1/200)

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)
 Hence probability of call not getting misdirected = 1-(1/200) = 199/200
Number of phone calls attempted = 5

Therefore, probability that at least one in 5 attempted call reaches the wrong number is:

=1-(199/200) ^5
= 0.025

5. Returns on a certain business venture, to the nearest $1,000, are known to follow the following
probability distribution
x P(x)
-2,000 0.1
-1,000 0.1
0 0.2
1000 0.2
2000 0.3
3000 0.1

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

Here the highest probability is for 2000.

(ii) Is the venture likely to be successful? Explain

Yes, because the total earnings of the venture is positive in value i.e 800 and highest
probability of earning is 2000.

(iii) What is the long-term average earning of business ventures of this kind? Explain
x P(x) Income (x*P(X)
-2,000 0.1 -200
-1,000 0.1 -100
0 0.2 0
1000 0.2 200
2000 0.3 600
3000 0.1 300
Total 800
800

(iv) What is the good measure of the risk involved in a venture of this kind? Compute this
measure

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)
 x P(x) x*P(X)
-2,000 0.1 -200
-1,000 0.1 -100
0 0.2 0
1000 0.2 200
2000 0.3 600
3000 0.1 300
var 86666.67
std 294.392

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)