Data Analytics for Business Week 8 TA Session Questions

TA Exercise for discrete random variables (Q1-Q4).

Q1. A six-faced die is tossed 3 times. What is the probability of
(a) No fives turning up?
(5/6)^3
Let X be the event the die face is 5
N=3

()( )
0 3−0
0 1 1
P(X=0)=C 3∗ ∗ 1− =0.5787…
6 6
(b) 1 five?

()( )
1 3 −1
1 1 1
P(X=1)=C 3∗ ∗ 1− =0.34722..
6 6
(c) 3 fives?

()( )
2 3 −2
1 2 1
P(X=2)=C ∗ ∗ 1−
3 =0.0046…
6 6

Q2. A very large shipment of parts contains 10% defectives. Two parts are chosen at random
from the shipment and checked. Let the random variable X denote the number of defectives found.
Find the probability distribution function of this random variable
N=2
π=0.1
X = number of defective parts found in the chosen 2 parts
X=k P(X=k)
0 0 2−0
0 C 2∗( 0.10 ) ∗( 1−0.10 ) =0.81
1 1 2−1
1 C 2∗( 0.10 ) ∗( 1−0.10 ) =0.18
2 2 2−2
2 C 2∗( 0.10 ) ∗( 1−0.10 ) =0.0 1

Q3. A (blindfolded) marksman finds that on the average he hits the target 4 times out of 5. If he
fires 4 shots, what is the probability of

1
 (a) More than 2 hits?
(b) At least 3 miss?
(c) Expectation of X
(d) Variance of X

Q4. The following table shows the probabilities of music CD sales per minute of Tower Records
in a given month (back when there was a Tower Records, and back when people actually bought
music CDs) associated with the random distribution of the number of concerts scheduled in that
month. It appears that the two random variables may be correlated. (Note that the zeros at certain
points in the table are by themselves suggestive.) We note that the values in the table are
retrospective – we have simply tabulated observed results over a long history.
CDs sold Per Minute(X)
0 1 2 3 4 Total
0 0.02 0.05 0.04 0.01 0 0.12
Concerts
1 0.02 0.04 0.06 0.03 0 0.15
per month
2 0.01 0.03 0.3 0.04 0.02 0.4
(Y)
3 0 0.03 0.1 0.12 0.08 0.33
Total 0.05 0.15 0.5 0.2 0.1 1

a. What is the mean of CD sales per minute?

b. What is the variance of the number of concerts per month?
c. What is the covariance between the CD sales and number of concerts?
d. What is the correlation coefficient between the two variables.

TA Exercise for continuous random variables (Q5-

Q7):
Q5. For standard normal distribution, find out: 1  P(-7.5<Z<4.5). You can use NORM.DIST
function by setting the last entry to “TRUE” to do it.
Note: This calculation is used in quality control (Six Sigma, 6). For standard normal
distribution, =1, thus Six Sigma(6) means Z=6. However, we are applying Z=4.5 and Z=-7.5
instead of Z=6 for a real world production process in the long term. This is used to measure
the percentage of defective products allowed in a production process (3.4 defective items per
million items produced)

2
Q6. Suppose X is a normal variable with mean 20.0 and standard deviation 10.0. Now find
the X value, , so that only 2.5% of all values are below  (Tip: use the fact that a normal
distribution is symmetric).

.025

=?

Q7. Let a and b be two constant numbers. Construct a new random variable W as
W=aX+bY
Suppose that μX=0.4, μY=0.1, σ2X=0.5, σ2Y=0.2, Corr(X,Y)=-0.2
Now you invest 40% of your money in stock A, (i.e., a=0.4).
Compute E(W) and Var(W), and SD(W).

TA Exercise for Estimation and Hypothesis Testing

(Q8, Q9):
Q8. Continue to finish Exercise 9, Q2 (Lecture Note8.pdf, slides 69-70). Use excel file “Test Scores.xlsx”,
worksheet “exercise-9(Q2)”.

Q9. There is concern about the speed of automobiles travelling over a particular stretch of highway. For
a random sample of 30 automobiles, radar indicated the following speeds, in miles per hour:

82
88
64
78
90
57
74
70
81
60
75

3
 78
85
77
78
65
73
79
73
66
71
70
61
77
66
69
72
67
64
74

Let the mean speed of all automobiles travelling over this stretch of highway be  mph.
(a). Find the sample mean and variance, x , s 2 (you can use excel)
(b). Find the 95% confidence interval for the mean speed of all automibles travelling over this stretch of
highway.
(c). Test the hypothesis that people are speeding, if the legal speed on this highway is 65 mph. That is, test
H0: =65

H1:  > 65

Set significance level  = 0.05.

More exercise questions for Estimation and Hypothesis Testing will be given at the extra TA
sessions.