Worksheet 2

Page 233. Q. C.3.

The first one is discrete as countable values are possible.
The second one is continuous as time duration consists of infinite possible values.

“Do you think global warming will have an impact on you during your lifetime?” A 2022 CBS
News poll of 1000 adults in India asked this question. Consider the responses by age groups
shown below.
Response Age
18-29 30+
Yes 134 293
No 131 432
Unsure 2 8

a. What is the probability that a respondent 18–29 years of age thinks that global warming
will not pose a serious threat during his/her lifetime? 0.4906

b. What is the probability that a respondent 30+ years of age thinks that global warming will
not pose a serious threat during his/her lifetime? 0.5894

b. For a randomly selected respondent, what is the probability that a respondent answer
yes? (134+293)/1010

d. Based on the survey results, does there appear to be a difference between the negative
responses for ages 18–29 and 30+ on impact of global warming? Yes, there’s a difference
between the probability associated with 18-29 years respondents and respondents aged 30+
years on global warming not posing a serious threat during his/her lifetime.

Information about mutual funds provided by Morningstar includes the type of mutual fund
(Domestic Equity, International Equity, or Fixed Income) and the Morningstar rating for the
fund. The rating is expressed from 1-star (lowest rating) to 5-star (highest rating). Suppose a
sample of 25 mutual funds provided the following counts:

● Sixteen mutual funds were Domestic Equity funds.

● Thirteen mutual funds were rated 3-star or less.
● Seven of the Domestic Equity funds were rated 4-star.
● Two of the Domestic Equity funds were rated 5-star.

Assume that one of these 25 mutual funds will be randomly selected in order to learn more
about the mutual fund and its investment strategy.
a. What is the probability of selecting a Domestic Equity fund? 16/25
b. What is the probability of selecting a fund with a 4-star or 5-star rating? 12/25
c. What is the probability of selecting a fund that is both a Domestic Equity fund and a fund
with a 4-star or 5-star rating? 9/25
d. What is the probability of selecting a fund that is a Domestic Equity fund or a fund with a
4-star or 5-star rating? 16/25+12/25-9/25 = 19/25

The Bureau of Transportation Statistics reports on-time performance for airlines at major
Indian airports. Suppose that the percentage of on-time flights reported was 76.8% for
Indigo, 71.5% for Air India, and 82.2% for Vistara. Assume that 35% of the flights arriving at
Terminal 1 of Delhi airport are Indigo flights, 45% are Air India flights, and 20% are Vistara
flights.

a. Develop a joint probability table with three rows (the airlines) and two columns (on-time
and late).
Airline On-time Late Total
Indigo 0.2688 0.0812 0.35
Air India 0.3217 0.1283 0.45
Vistara 0.1644 0.0356 0.2
Total 0.7549 0.2451 1

b. An announcement is made that Flight 1382 will be arriving at gate 20 of terminal 1.

What is the probability that Flight 1382 will arrive on time?
0.7549

c. What is the most likely airline for Flight 1382? What is the probability that Flight 1382 is
by this airline?
Air India. P(Incoming flight is Air India| Incoming flight arrived on time) = 0.426

d. Suppose that an announcement is made saying that Flight 1382 will now be arriving late.
What is the most likely airline for this flight? What is the probability that Flight 1382 is by
this airline?
Air India. P(Incoming flight is Air India| Incoming flight arrived late) = 0.5235

As a promotion strategy, a cell phone company decides to offer a discount of either Rs. 2000
or Rs. 3000 or Rs. 5000 to the first 5000 customers e-ordering a particular model on its
website. The price of the phone is Rs. 10000. As soon as the customer places an order the
discount amount will be flashed and will be deducted from the price. To decide on the
discount to be offered to a customer, the company uses the following random mechanism. As
soon as an order is placed, a digit between 0 to 9 will be selected at random. If the chosen
digit is either 0 or 1, the offered discount will be Rs. 5000, if it is between 2 and 4 (both
inclusive), the discount will be Rs. 3000, and otherwise the discount will be Rs. 2000. Write
the probability distribution of the price of the phone for a customer (one among the first
5000).

X: Price of the phone for a customer

X=k 8000 7000 5000

P(X=k) 0.5 0.3 0.2

To better understand how husbands and wives feel about their finances, Money magazine
conducted a national poll of 1010 married adults age 25 and older with monthly household
incomes of Rs 100000 or more. Consider the following example set of responses to the
question, “Who is better at getting deals?”
Who is Better? Respondent
Husband Wife
I am 278 290
My Spouse 127 111
We are equal 102 102
a. Construct the probabilities for Who Is Better (I Am, My Spouse, We Are Equal). Comment.
Who is Better? Respondent
Husband Wife Total
I am 0.2752 0.2871 0.5623
My Spouse 0.1257 0.1099 0.2357
We are equal 0.1010 0.1010 0.2020
Total 0.5019 0.4981 1

P(‘I am’)=0.56, P(‘My Spouse’) = 0.2357, P(‘We are equal’) = 0.2020

b. Given that the respondent is a husband, what is the probability that he feels he is better
at getting deals than his wife? 0.2752/0.5019

c. Given that the respondent is a wife, what is the probability that she feels she is better at
getting deals than her husband? 0.2871/0.4981

c. Given a response “My spouse” is better at getting deals, what is the probability that the
response came from a husband? 0.1257/0.2357

d. Given a response “We are equal,” what is the probability that the response came from a
husband? What is the probability that the response came from a wife?
Both 0.5.

The following probability distributions of job satisfaction scores for a sample of information
systems (IS) senior executives and middle managers range from a low of 1 (very dissatisfied)
to a high of 5 (very satisfied).
Job Satisfaction Score Probability
IS Senior Executives IS Middle Managers
1 0.05 0.04
2 0.09 0.1
3 0.03 0.12
4 0.42 0.46
5 0.41 0.28

a. What is the expected value of the job satisfaction score for senior executives? 4.05
b. What is the expected value of the job satisfaction score for middle managers? 3.84
c. Compute the variance of job satisfaction scores for executives and middle managers.
variance of job satisfaction scores for executives: 1.24
variance of job satisfaction scores for middle managers: 1.13

d. Compute the standard deviation of job satisfaction scores for both probability
distributions.
SD of job satisfaction scores for executives: 1.11
SD of job satisfaction scores for middle managers: 1.065

Web Browser Market Share: A Market-share-analysis company Net Applications monitors

and reports on Internet browser usage. According to Net Applications, in the summer of
2014, Google’s Chrome browser exceeded a 20% market share for the first time, with a
20.37% share of the browser market (Forbes website). For a randomly selected group of 20
Internet browser users, answer the following questions.
X: Number of internet browser users who use Chrome. n = 20 and p=0.2037.
a. Compute the probability that exactly 8 of the 20 Internet browser users use Chrome as
their Internet browser.
P(X=8)=0.024

b. Compute the probability that at least 3 of the 20 Internet browser users use Chrome as
their Internet browser.
P(X>=3)=0.805

c. For the sample of 20 Internet browser users, compute the expected number of Chrome
users.
The expectation is 4.074

d. For the sample of 20 Internet browser users, compute the variance and standard
deviation for the number of Chrome users.
Variance = 3.244
SD = 1.8

Tracked Emails: According to a 2017 Wired magazine article, 40% of emails that are received
are tracked using software that can tell the email sender when, where, and on what type of
device the email was opened (Wired magazine website). Suppose we randomly select 40
received emails.
a. What is the expected number of these emails that are tracked? 16.
b. What are the variance and standard deviation for the number of these emails that are
tracked?
Variance for the number of emails that are tracked = 9.6 with standard deviation = 3.09.

Large-Cap Domestic Stock Fund: The average return for large-cap domestic stock funds over
the three years was 14.4%. Assume the three-year returns were normally distributed across
funds with a standard deviation of 4.4%.
a. What is the probability an individual large-cap domestic stock fund had a three-year
return of at least 20%? 0.1015
b. What is the probability an individual large-cap domestic stock fund had a three-year
return of 10% or less? 0.1587
c. How big does the return have to be to put a domestic stock fund in the top 10% for the
three-year period? At least 20.03%

Automobile Repair Costs: Automobile repair costs continue to rise with an average 2015
cost of Rs. 4670 per repair. Assume that the cost for an automobile repair is normally
distributed with a standard deviation of Rs. 880. Answer the following questions about the
cost of automobile repairs.
a. What is the probability that the cost will be more than Rs 4500? 0.576
b. What is the probability that the cost will be less than Rs 2500? 0.0068
c. What is the probability that the cost will be between Rs. 2500 and Rs 4500? 0.4166
d. If the cost for your car repair is in the lower 5% of automobile repair charges, what is your
cost? 3222.529
Die Another Day hospital Nursing Staff: At Die Another Day (DAD) hospital, nurses are
given an additional bonus of Rs. 1,00,000 if they stay for more than 32 months with DAD
hospital. The stay of nurses has an average of 28 months with a standard deviation of 4
months. With suitable assumptions, calculate
(a) The expected number of nurses who will be given bonus and the value of bonus that will
be given if 50 new nurses join DAD hospital in the current month. Rs. 8L
(b) How much amount will be saved by DAD hospital if DAD hospital changes the policy
that they will give bonus if the stay exceeds 36 months? 6.75 L
(c) What will be the additional amount paid if DAD hospital changes the policy that they will
give bonus if the stay exceeds 24 months? What assumptions are made in this case?
42L. Assumption: There will be no change in the average employment length and
standard deviation with change in policy.
(d) Is normal assumption required to find the approximate probabilities?
A symmetric distribution assumption of the probability distribution of the data os eough
to calculate the probability.

Local Dhania, the online grocery store makes a promise that it will deliver the order within 92
minutes. Based on the past data, it was found that the delivery time is approximately normal
with the average time taken to deliver being 80 minutes with a standard deviation of 12.
(a) What proportion of orders is delivered after 92 minutes? 16%
(b) If Local Dhania would like to ensure that approximately 99.85% of the orders are
delivered before 90 minutes, what should be the target mean delivery time? Due to
delivery and package constraints, assume no change in the standard deviation in the
delivery of the order. 54 minutes
(c) If it is not possible to reduce the mean time to deliver and its standard deviation, what
should be the promised time to deliver for which the probability of delivery before that
time is 99.85%. 116 minutes