Assignment-2 Solution
Assignment-2 Solution
AI for Investment
Q1-8 You are the owner of a grocery delivery firm. You are interested in formulating a policy to offer gifts
to delayed deliveries and looking at the data. Historically the delivery time data has followed normal
distribution with a mean (μ) = 8-min average delivery time and standard deviation (SD or σ) = 2-min.
Answer the questions below, using this information. (Hint: Use the following property of normal
distribution, z = -2 to +2 for 95%; z = -1 to +1 for 68% and z = -3 to +3 for 99% area. That is, 68% area
will lie within ±1 SD, 95% area will lie within ± 2 SD, 99% area will lie within ± 3 SD.
Hint: Recall that between 6-10 mins, covers ± 1 S.D around the mean (i.e., 8-1*2=6 mins and 8+2*1=10
mins). This comprises approximately 68% of the area. Therefore, by symmetry (since 8-mins is the mean
and normal distribution is symmetric around the mean), half, that is 34%, area will lie.
Q5 What is the probability of delivery time of 8-12-mins
a) 60%-70%
b) 50%-60%
c) 40%-50%
d) 30%-40%
Hint: Recall that between 4-12 mins, covers ± 2 S.D around the mean (i.e., 8-2*2=4 mins and 8+2*2=12
mins). This comprises approximately 95% of the area. Therefore, by symmetry (since 8-mins is the mean
and normal distribution is symmetric around the mean), half, that is 47.5%, area will lie.
Q6 What is the probability of delivery time of more than 8-mins
a) 85%-95%
b) 45%-55%
c) 75%-85%
d) 65%-75%
Hint: We are given the mean delivery time is 8-mins. Assuming normal distribution, 50% of observations
lie above and 50% lie below this point. In other words, 50% probability of observing a delivery of more
than 8-mins.
Q7 What is the probability of delivery time of less than 8-mins
a) 15%-25%
b) 45%-55%
c) 25%-35%
d) 35%-45%
Hint: We are given the mean delivery time is 8-mins. Assuming normal distribution, 50% of observations
lie above and 50% lie below this point. In other words, 50% probability of observing a delivery of less than
8-mins
Q8 What is the probability of delivery time of 2-8 mins
a) 60%-70%
b) 50%-60%
c) 40%-50%
d) 30%-40%
Hint: Recall that between 2-14 mins, covers ± 3 S.D around the mean (i.e., 8-2*3=2 mins and 8+2*3=14
mins). This comprises approximately 99% of the area. Therefore, by symmetry (since 8-mins is the mean
and normal distribution is symmetric around the mean), half, that is 49.5%, area will lie.
Q9 Which of the following is correct if the two events are mutually exclusive?
a) P(A U B) = P(A) + P(B) - P(A ∩ B)
b) P(A U B) = P(A) + P(B) + P(A ∩ B)
c) P(A U B) = P(A) + P(B)
d) P(A U B) = P(A) - P(B)
Hint: If event A and B are mutually exclusive then P (A intersection B) = 0. Hence P(A U B) = P(A) + P(B)
Q10 Which of the following distributions has a bell-shaped curve?
a) Normal Distribution
b) Poison Distribution
c) Binomial distribution
d) Uniform Distribution
e) None of the above
Hint: Normal Distribution has a bell-shaped curve, is symmetric about the mean, and is widely used in
statistics and probability theory. The peak of the curve represents the mean, median, and mode, and it tapers
off symmetrically on both sides.