21102856

MAHATMA GANDHI UNIVERSITY KOTTAYAM

IV Semester B.Com. Degree (CBCS) Examination, October 2021
CORE COURSE – C04CRT12 – QUANTITATIVE TECHNIQUES II
IMPORTANT: Marking pattern (*) in the scheme of valuation is applicable ONLY TO FIRST ATTEMPTED
(Regular/Private) CANDIDATES (2019 Admission). For Supplementary & Improvement candidates (2017
onwards), marking Pattern should be strictly based on the instructions in the question paper.
PART A: (Q. Nos. 1 to 12): Answer any TEN questions. Each question carries 2 marks.
(*) For FIRST ATTEMPTED Candidates: Answer any SIX questions. Each question carries 3 marks.
1) (A01) Define correlation: According to A. M. Tuttle, “Analysis of co-variation of two or more variables is usually
called correlation”. It measures the strength of association between two variables and also the direction (+ve
or -ve) of their relationship.
2) (A02) What is a Coefficient of non-determination? A Coefficient of Non-determination (1 – R2) explains the
amount of unexplained, or unaccounted for, variance between two variables, or between a set of variables
(predictors) in an outcome variable.
3) (A03) Calculate coefficient of correlation.
Rank 1 1 4 3 2 5 6
Rank 2 3 5 6 1 2 4
Ans ►► In this case, 2 values (1 and 2) are repeated

X Y Rx Ry D D2
1 2 1.5 2.5 -1.0 1.00
1 3 1.5 4 -2.5 6.25
4 5 5 6 -1.0 1.00
3 6 4 7 -3.0 9.00
2 1 3 1 2.0 4.00
5 2 6 2.5 3.5 12.25
6 4 7 5 2.0 4.00
N= 7 Σ D2 = 37.50
1
Two correction factors [ 12 (m3 – m)] are to be added with the base formula as follows:
1
No. Repeated Rank Correction factor = (𝑚3 − 𝑚)
12
Value Series Times Position
1 1 X 2 1 and 2 assigned
1.5 1
(23 – 2) = 0.5
12
1
2 2 Y 2 2 and 3 2.5 (23 – 2) = 0.5
12

1 1
6 [𝛴 𝐷 2 + (𝑚3 − 𝑚) + (𝑚3 − 𝑚) + . . . . . . . . .] 6 [37.5+0.5+ 0.5] 231
12 12
r=1– 𝑁3 − 𝑁
=1– 73 − 7
=1– 336
= 0.313
N:B: Examiners are advised to award full marks for the following answers also:
6 [𝛴 𝐷 2 ]
a) Rank correlation without considering the repeated ranks by using the formula: r = 1 – 𝑁3 − 𝑁
b) Karl Pearson’s Coefficient of Correlation as follows:
dx dy
X Y dx2 = dy2 = dxdy
A=3 A=3
1 2 -2 4 -1 1 2
1 3 -2 4 0 0 0
4 5 1 1 2 4 2
3 6 0 0 3 9 0
2 1 -1 1 -2 4 2
5 2 2 4 -1 1 -2
6 4 3 9 1 1 3
N= 7 (Σdx) = Σ dX2 = (Σdy) = Σ dY2 = (Σdxdy) =
1 23 2 20 7
 21102856 IV Semester B.Com. – Quantitative Techniques II (October 2021)
𝑛. 𝛴𝑑𝑥𝑑𝑦−(𝛴𝑑𝑥) (𝛴𝑑𝑦) 7 × 7 −1 x 2 47
r= = = = 0.319
√𝑛. 𝛴𝑑𝑥 2 −(𝛴𝑑𝑥)2 √𝑛. 𝛴𝑑𝑦 2 −(𝛴𝑑𝑦)2 √7 × 23− (1)2 √7 × 20 − (2)2 12.65 𝑥 11.66

4) (A04) Write a note on regression lines. The best fitting straight line drawn on the basis of the principle of least
squares of a given bivariate data (two variables) is known as regression line. i.e., A regression line is simply a
single line that best fits the data. i.e., in terms of having the smallest overall distance from the line to the
plotted points on a graph.
5) (A05) Calculate the correlation co-efficient if bxy is 1.364 and byx is 0.613.
Ans ►► Correlation coefficient = ± √𝑏𝑦𝑥 x 𝑏𝑥𝑦 = √0.613 x 1.364 = 0.914
6) (A06) What do you mean by Quantity Index Number? Quantity index number is helpful to study the output of
an economy. It reveals the changes in the volume of goods produced/consumed.
7) (A07) A box contains 8 tickets bearing the following numbers: (1, 2, 3, 4, 5, 6, 8 and 10). One ticket is drawn at
random and kept aside. Then a second ticket is drawn. Find the probability that both the tickets show even
5 4 5
numbers. Solution ►► Using Multiplication Theorem = 8 x 7 = 14
8) (A08) Describe Fixed Base Index Number. Under this method of calculating index numbers, all Index numbers
constructed during the given period are with respect to a fixed base period. i.e., the base year will remain the
Current Year Price x 100
same throughout the period. Fixed Base Index: FBI =
Fixed Base Year Price
9) (A09) What purpose is served by analysis of Time Series? The main purpose of analysis of time series is to
discover and measure all types of variations which characterize a time series. The central objective is to
decompose the various elements present in a time series and to use them in decision making.
10) (A10) Write a note on Additive Model of Time Series Analysis. The various forces which affect the values of a
phenomenon in a time series are broadly divided into four categories as: (1) Long term movement or Secular
Trend (2) Seasonal variations (3) Cyclical variations and (4) Random or irregular variations. Additive model
assumes that the four components are independent of one another i.e., the pattern of occurrence and
magnitude of movements in any particular component does not affect and are not affected by the other
component. The model assumes that the four components are arithmetically additive. i.e., magnitude of time
series is the sum of separate influences of its four components. i.e., Yt= T + C + S + I, where, Yt = Time series,
T = Trend variation, C = Cyclical variation, S = Seasonal variation and C = Random or irregular variation.
11) (A11) Describe impossible event with an example. Impossible events are those events which will not happen.
The probability of happening an impossible event is 0. For example, the probability of selecting a Clover King
in Red colour from a pack of playing cards.
12) (A12) The following table gives the group index numbers and the corresponding group weights with reference
to the cost of living for a given year. Construct the overall cost living for the year.
Group Index number Weight
Food 360 60
Clothing 295 5
Fuel and lighting 287 7
House rent 110 8
Miscellaneous 315 20
Ans: ►►
Group Index number (I) Weight (W) IW
Food 360 60 21,600
Clothing 295 5 1,475
Fuel and lighting 287 7 2,009
House rent 110 8 880
Miscellaneous 315 20 6,300
Σ IW = 32,264
Σ IW 32,264
Weighted Average of Price Index = x 100 = x 100 = 322.64
ΣW 100

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 21102856 IV Semester B.Com. – Quantitative Techniques II (October 2021)

PART B: (Q. No.13 to 21): Answer any SIX questions. Each question carries 5 marks.
(*) For FIRST ATTEMPTED Candidates: Answer any FOUR questions. Each question carries 8 marks.
13) (B13) In order to find the correlation coefficient between two variables X and Y from 12 of observations, the
following calculations were made.
∑X = 30, ∑ Y = 5, ∑X2 = 670, = ∑Y2 = 285, ∑XY = 334
On subsequent verification, it was found that the pair (X = 11, Y = 4) was copied wrongly, the correct value
being (X = 10, and Y = 14). Find the correct value of correlation coefficient.
Solution ►► Values required for calculating ‘r’ have been corrected as:
ΣX = 30 – 11 + 10 = 29; ΣY = 5 – 4 + 14 = 15
ΣX2 = 670 – 112 + 102 = 649 ΣY2 = 285 – 42 + 142 = 465;
ΣXY = 334 – (11 x 4) + (10 x 14) = 430
𝑛 .𝛴𝑋𝑌−(𝛴𝑋) (𝛴𝑌) 12 × 430 − 29 × 15
r= =
√𝑛 .𝛴𝑋 2 −(𝛴𝑋)2 √𝑛 .𝛴𝑌 2 −(𝛴𝑌)2 √12 × 649 − (29)2 √12 × 465 −(15)2
5160−435 4725
= = = +0.775
√7788−841 √5580−225 83.35 × 73.18
14) (B14) Prove that coefficient of correlation is independent of change scale and origin: This can be answered
only if the candidate has sufficient knowledge about ‘Scales of Measurements’. Therefore, examiners are
advised to value liberally even if the idea is not clear.
15) (B15) Distinguish between correlation and regression. Regression analysis is possible only after ensuring the
existence of correlation between the given variables. The following are differences between correlation and
regression.
Correlation Regression
1 Correlation is used to represent a linear Regression is used to fit the best line and to
relationship between the given variables. estimate one variable based on the other
2 Coefficient of correlation indicates the direction Coefficient of regression indicates the impact of
and the extent to which two variables move. such change. i.e., the estimated value of
dependent variable on the basis of the other.
3 There will not be any change in Co-efficient of Values of Regression coefficient of X on Y and
correlation (r) even if the dependent and Regression coefficient Y on X are different.
independent variables are interchanged
4 Identification of dependent and independent Regression equation of Y on X implies that Y is
variables is not a pre–requisite for calculating dependent variable while X is independent. (vice
correlation. versa)
5 Correlation shows the degree of relationship and It indicates the causes and effect relationship
not the cause-and-effect relationship between between the variables and the functional
the variables relationship can be established
6 Correlation is confined to only linear relationship Regression studies both linear and nonlinear
between the variables and hence it has only relationship between the variables and hence, it
limited application. has wider application
7 Correlation is not much useful for further It is widely used for further mathematical
mathematical treatment. treatment.
8 There may be spurious correlation between two In regression there is no such spurious regression.
variables.
16) (B16) From the following data, calculate price index under Simple Aggregative Method and Simple Average of
Relatives Method:
Commodities Price in 2017 Price in 2018
Rice 12 14
Wheat 14 18
Oil 40 55
Pulses 25 35

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 21102856 IV Semester B.Com. – Quantitative Techniques II (October 2021)

Solution ►►
Item p0 p1 I = P1 ÷ P0) x 100 Unweighted Price Index Methods
A 12 14 116.67 Simple Aggregate Method:
B 14 18 128.57 (ΣP1 ÷ ΣP0) x 100
C 40 55 137.50 = (122 ÷ 91) x 100 = 134.07%
D 25 35 140.00 Simple Average of Relative Method
N= Σp0 = Σp1 = Σ (P1 ÷ P0) x 100 = = Σ[(P1 ÷ P0) x 100] ÷ 4
4 91 122 522.74 = 522.7 ÷ 4 = 130.68%
17) (B17) An enquiry into the budget of certain middle-class families in a town gave the following information.
Heads of expenditure Food Rent Clothing Fuel Sundries
Price in 2012 100 20 70 20 40
Quantity in 2012 30 15 20 10 25
Price in 2016 90 20 60 15 55
Quantity in 2016 25 20 30 15 10
Compute weighted arithmetic mean of price relatives taking P0Q1 as weights of the items.
Ans ►► Weighted Price Method taking P0Q1
Item Base Year Current Year I = P1 x 100 W= I W=
P0
p0 q0 p1 q1 P0Q1 I x P0Q1
Food 100 30 90 25 90.00 2500 225000
Rent 20 15 20 20 100.00 400 40000
Clothing 70 20 60 30 85.71 2100 180000
Fuel 20 10 15 15 75.00 300 22500
Sundries 40 25 55 10 137.50 400 55000
N= Σp0 = q0 = Σp1 = Σq1 = Σ(P1÷P0) = ΣW= Σ IW =
5 250 100 240 100 488.21 5700 522500
∑ 𝐼𝑊 522500
Weighted Price Method = ∑ x 100 = x 100 = 91.67%
𝑊 5700
18) (B18) Explain the merits and demerits of Semi-average Method.
Merits:
a) This method is simple to understand and easy to calculate. It also requires little time for the
preparation
b) Everyone will get the same trend line for the given data set and hence there is no scope for
personal judgement or manipulation
c) The line can be extended towards both directions and hence, the estimation is possible for earlier
or later periods.
Demerits:
a) This method assumes the presence of linear trend to the values of time series. But in practice,
such a relationship may not exist.
b) The two points to be joined on a graph is calculated on the basis of average. Therefore, trend line
is greatly influenced by extreme values. Moreover, limitations of averages also exist.
c) Trend/predicted values obtained by using this method are not much reliable.
19) (B19) Apply the method of Semi-averages for determining the trend:
Year 2010 2011 2012 2013 2014 2015 2016 2017 2018
Production 10 12 15 20 18 25 24 28 34
Ans ►► Number of years included in the given series is odd. (i.e., 9 years’ data). If the number of years in
the given series is odd, middle year with its data is ignored. Then, it becomes a series of even number of years
(8 years’ data).

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 21102856 IV Semester B.Com. – Quantitative Techniques II (October 2021)

Year Sales Semi-Average

2010 10 Middle year of first part is between 2012 and 2013
2011 12 Average = (10 + 12 + 15 + 20) = 14.25
2012 15 4
2013 20 i.e., The value plotted against the middle of 2011 & 2012
2014 18 → This year is ignored as it is the middle year of the series
2015 25 Middle year of second part is between 2017 and 2018
2016 24 Average = (25 + 24 + 28 + 34) = 27.75
2017 28 4
2018 34 i.e., The value plotted against the middle of 2016 & 2017

The values read out from the trend line are as follows:
Year 2010 2011 2012 2013 2014 2015 2016 2017 2018
Sales 10.5 13.0 16.0 18.5 21.0 24.0 26.5 29.2 32.0
20) (B20) The odds that A speaks the truth is 3:2 and the odds that B speaks the truth is 5:3. In what percentage
of cases are they likely to contradict each other on an identical point.
3 3 2 5 19
Ans ►► P(A) + P(B) = ( x ) + ( x ) = = 47.50%
5 8 5 8 40
21) (B21) Suppose that the probability of a women entering a shop buys rice is 0.90 and the probability that she
buys sugar is 0.70. Assuming that she is free to choose the items for purchase, what is the probability that she
will buy both sugar and rice. Ans ►► P(A) x P(B) = 0.9 x 0.7 = 0.63
PART C: (Q. No.22 to 25) Answer any TWO questions. Each question carries 15 marks.
(*) FIRST ATTEMPTED Candidates: Answer any 3 questions of 15 Marks each. Ignore marks scored over 30.
22) (C22) From the following data, determine the coefficient of concurrent deviation
Price 7 9 10 8 7 6 5 6 7 6 9 40
Supply 50 60 55 70 80 120 110 60 40 70 65 40
Ans ►►
Sl. No. Price Supply Dx Dy Dx X D y
1 7 50
2 9 60 + + +
3 10 55 + – –
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 21102856 IV Semester B.Com. – Quantitative Techniques II (October 2021)

4 8 –70 + –
5 7 –80 + –
6 6 120
– + –
7 5 110
– – +
8 6 +60 – –
9 7 +40 – –
10 6 –70 + –
11 9 +65 – –
12 40 +40 – –
Total number no. of signs in last column (N) = 11; No. of + signs in last column (C) = 2
(2𝐶−𝑁) (2 𝑥 2 −11)
Concurrent Deviation = ±√ ± 𝑁
= ±√± 11
= √− 0.636 = – 0.798
23) (C23a) A bag contains 6 white, 4 red and 10 black balls. Two balls are drawn at random. Find the probability
that they will both be black. (C23b) A bag contains 8 white and 4 red balls. Five balls are drawn at random.
What is the probability that 2 of them are red and 3 white?
10 𝑥 9 20 𝑥 19 10 𝑥 9 9
Ans ►► (a) Both are black = [10C2 ÷ 20C2] = 2 𝑥 1 ÷ 2 𝑥 1 = 20 𝑥 19 = 38
(b) 2 are Red and 3 are white = [(4C2 x 8C3) ÷ 12C5] =
4𝑥3 8𝑥7𝑥6 12 𝑥 11 𝑥 10 𝑥 9 𝑥 8 4𝑥3 8𝑥7𝑥6 5𝑥4𝑥3𝑥2𝑥1
= ( 2𝑥1 x 3𝑥2𝑥1 ) ÷ 5𝑥4𝑥3𝑥2𝑥1
= 2 𝑥 1 x 3 𝑥 2 𝑥 1 x 12 𝑥 11 𝑥 10 𝑥 9 𝑥 8
24) (C24) Below are given the annual production of X Ltd.
Years 2010 2011 2012 2013 2014 2015 2016
Production 70 75 90 91 95 98 100
(a) Fit a straight line by the method of least squares tabulate the trend values. (b) Estimate the production for
the year 2017. (c) Eliminate the trend using Additive Model. What components of the time series are left over?
(d) Convert annual trend equation to monthly trend equation
Ans ►►
Middle year = 2013 Coded X X2 XY
Year Y (Year – 2013)
2010 70 -3.0 9 -210
2011 75 -2.0 4 -150
2012 90 -1.0 1 -90
2013 91 0.0 0 0
2014 95 1.0 1 95
2015 98 2.0 4 196
2016 100 3.0 9 300
ΣY = 619 ΣX = 0 Σ X2 = 28 ΣXY = 141
∑Y 619 ∑XY 141
a= N
= 7
= 88.43 b = ∑X2 = 28
= 5.04
(a) Trend line equation = 88.43 + 5.04X
(b) Coded X for the year 2017 = 2017 – 2013 = 4
Therefore, estimated production for 2017 = 88.43 + 5.04 x 4 = 108.59
(d) Conversion of annual trend equation to monthly trend equation:
88.43 5.04
Monthly trend equation = 12 + 122 X = 7.37 + 0.035X
Examiners are advised to award full marks for Q. No. C24 if (a) and (b) above are correct
25) (C25) A panel of Judges A and B graded seven debaters and independently awarded the following marks
Debater 1 2 3 4 5 6 7
Marks by A 40 34 28 30 44 38 31
Marks by B 32 39 26 30 38 34 28

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 21102856 IV Semester B.Com. – Quantitative Techniques II (October 2021)

An eighth debater was awarded 36 marks by Judge A while Judge B was not present. If Judge B was also
present, how many marks would you expect him to award to the eighth debater assuming that the same degree
of relationship exists in their judgement.
Ans ►► Calculation of Regression equations:
X Y X2 Y2 XY
40 32 1600 1024 1280
34 39 1156 1521 1326
28 26 784 676 728
30 30 900 900 900
44 38 1936 1444 1672
38 34 1444 1156 1292
31 28 961 784 868
2 2
ΣX = ΣY = ΣX = ΣY = ΣXY =
245 227 8781 7505 8066
N=7 X̅ = 245 ÷ 7 = 35 Y̅ = 227 ÷ 7 = 32.429
Calculation of (1) Regression equation of Y on X
Regression equation of Y on X: Y = a + bX
Two simultaneous equations are used to calculate the values of a and b
ΣY = Na + b ΣX ΣXY = a ΣX + b ΣX2
Replacement of two simultaneous equations with the related values
227 = 7 a + 245 b −−−−> (A) 8066 = 245 a + 8781 b −−−−> (B)
Solving the above two simultaneous equations to find the values of a and b
Multiplying equation (A) with 35: 7945 = 245 a + 8575 b (A) x 35 −−−−> (C)
8066 = 245 a + 8781 b −−−−> (B)
Value of ‘b’ = 121 ÷ 206 = 0.587 121 = 206 b (B) – (D) −−−−> (D)
Replacing value of ‘b’ in equation (A):
227 = 7a + 0.587 x 245 ➔ 7a = 83.185 ➔ Therefore, a = 11.87
Replacing the values of ‘a’ and ‘b’ in Regression equations
Regression equation of Y on X: Y = a + bX Y = 11.87 + (0.587 X)
Estimation of the value of one variable based on the value of the other
Value of Y when X is 36 Marks Y = 11.87 + 0.587 x 36 = 33 Marks
Alternatively: Calculation of Regression equation of Y on X using Direct Method:
Regression Co-efficient of Y on X = (byx)
𝑁𝛴𝑥𝑦−(𝛴𝑥)(𝛴𝑦) 7 𝑥 8066 −245 𝑥 227 847
byx = = = = 0.587
𝑁 𝛴𝑋 2 − (𝛴𝑋)2 7 𝑥 8781 − 2452 1442
Replacing the formula to get Regression Co-efficient (byx and bxy)
10 𝑥 10416 −330 𝑥 300 10 𝑥 10416 −330 𝑥 300
byx = = 1.02 bxy = = 0.796
10 𝑥 11396 – 3302 10 𝑥 9648 − 3002

Regression Line of Y on X: Y – Y̅ = byx (X – X̅ ) ➔ Y – 32.429 = 0.587 (X – 35)

Y = 32.429 + 0.587 (X – 35) ➔ Y = 32.429 + 0.587X – 20.545
Regression Line of Y on X: ➔ Y = 11.87 + 0.587X

Prepared by: CMA Dr. RAJU V. P.

Associate Professor
Nirmala College Muvattupuzha
Mobile: 9495608176