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%
Morgan Stanley 91.36%
Sun Microsystems 25.99%
Travelers 39.42%
US Airways 26.71%
Warner-Lambert 35.00%

Answers) mean = 33.17

Variance = 0.02871
Standard deviation = 0.16945
The outliers are morgan stanley(91.36%) which is the highest outlier given in a data set.

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

Answer:
(i) IQR = 7
(ii) From the data set we can say it is positively skewed.
(iii) If 25 is 2.5 is placed then the point lies between 0 to 5 , which means no outlier will be
formed.

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?
(ii) Comment on the skewness of the dataset.
(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.

Answer:
(i) In these data set the mode will lie at 5&6.
(ii) The skewness is positively skewed.
(iii) If the data set are same then the information of these data set will lie min value at
5,and meadian at 10, and max at 15 and outliers wil lie at 25.

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

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)
 calls is misdirected. What is the probability that at least one in five attempted telephone calls
reaches the wrong number? (Assume independence of attempts.)

Answer:
Probability of call misdirecting p =1/200
Probability of call not misdirecting q=1-1/200=199/200
Number of calls = 5
Then P(x) = ⁿCₓpˣqⁿ⁻ˣ
n=5, p=1/200,q=99/200

at least one in five attempted telephone calls reaches the wrong number

= 1  -  none of the call reaches the wrong number

= 1  - P(0)

= 1   -  ⁵C₀(1/200)⁰(199/200)⁵⁻⁰

= 1  -  (199/200)⁵

= 0.02475

probability that at least one in five attempted telephone calls reaches the wrong number = 0.02475

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?

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)
 (ii) Is the venture likely to be successful? Explain
(iii) What is the long-term average earning of business ventures of this kind? Explain
(iv) What is the good measure of the risk involved in a venture of this kind? Compute this
measure
Answer)

(i) The monetary outcome will p(0.3) due to high monetary value.
(ii) Yes the venture will be successful because the p(0.1)and p(0.1) will be in loss and
p(0.2)p(0.3)andp(0.1) will be gained . in these way venture can be successful.
(iii) Log term average will calculated as Exception . by these the long term earnings will be
average =800.
(iv) It is involved good measure . well if we calculate from p(0.2)p(0.1)and p(0.1) the tha x of
earnings will be decreasing the from p(0.2)p(0.2)&p(0.3)p(0.1) the earnings are
increasing, from these it is involved in good measure.

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