1. Define Range as a measure of dispersion. State two merits and demerits.

 Range = Highest value – Lowest value

Merits:

 Simple to compute

 Quick estimate of spread

Demerits:

 A ected by extreme values

 Ignores all but two values

4. Classify data into class limits, boundaries, class width, etc.

→ From frequency table, find:

 Class limits

 Class boundaries (subtract/add 0.5)

 Class width

 Frequency density = Frequency ÷ Class width

5. What is Moving Average? Mention 2 merits and demerits.

It smooths short-term fluctuations to highlight longer-term trends.
Merits:

 Simple and easy

 Highlights trend clearly

Demerits:

 Data loss at edges

 Not useful for forecasting sudden changes

(xi) Define positive and negative correlation. [2 marks]

 Positive Correlation: When one variable increases, the other also increases.
Example: Income and expenditure.

 Negative Correlation: When one variable increases, the other decreases.

Example: Price and demand.
(xii) What is the cost of living index number? [2 marks]

It is an index number that shows the relative change in the cost of living of people over time.
It is calculated using weighted average prices of consumer goods and services.

Formula (using aggregate expenditure method):

Business Mathematics and Statistics (GE-2), B.Com Semester VI (General)

University: Kazi Nazrul University

Exam Year: 2022

Section 3: Long Answer Questions (10 × 2 = 20 marks)

Answer any 2 of the following.

(i) What do you mean by correlation? Describe various methods of studying

correlation. Also, write the merits and demerits of any one method.

[10 marks]

✳ Meaning of Correlation:

Correlation is a statistical technique that measures the degree to which two variables
move in relation to each other.
It indicates whether an increase or decrease in one variable corresponds to an increase or
decrease in another variable.

 If both variables increase or decrease together: Positive Correlation

 If one increases while the other decreases: Negative Correlation

 If there is no consistent relationship: Zero Correlation

✳ Types of Correlation:
 1. Positive and Negative Correlation

2. Linear and Non-linear Correlation

3. Simple, Partial, and Multiple Correlation

✳ Methods of Studying Correlation:

(1) Scatter Diagram:

 A graph of plotted points showing the relationship between two variables.

 Nature of the scatter suggests the degree and type of correlation.

Merits: Simple to understand.

Demerits: Does not give the exact degree of correlation.

(2) Karl Pearson’s Coe icient of Correlation (r):

 Measures linear correlation between two variables.

 Formula:

Merits: Gives a precise numerical value (–1 ≤ r ≤ +1).

Demerits: A ected by extreme values; only measures linear correlation.

✳ Merits and Demerits of Karl Pearson’s Method:

Merits:

 Most popular and accurate method for measuring linear correlation.

 Gives exact value between –1 and +1.

 Based on mathematical formula and suitable for further analysis.

Demerits:

 A ected by extreme values (outliers).

 Assumes a linear relationship.

  Not suitable for ranked or qualitative data.

✳ What is Trend in Time Series?

A trend in time series refers to the long-term movement or direction in data over a period of
time. It reflects the general tendency of data to increase, decrease, or remain constant.

Purpose:
To study the underlying pattern in data and forecast future values.

✳ Methods of Measuring Trend:

(1) Freehand or Graphical Method:

 A smooth curve is drawn through plotted data points on a graph.

 Shows the general direction of the data.

Merits:

 Very simple and visual.

 Easy to use for small datasets.

Demerits:

 Highly subjective.

 Lacks mathematical accuracy.

(2) Semi-Average Method:

 Divide the data into two equal parts.

 Compute the average (mean) of each part.

 Plot both averages and draw a line through them.

Formula:
No specific formula; based on average values.

Merits:

 Simple and quick.

  Removes irregular variations.

Demerits:

 Cannot be used if number of years is odd.

 Less accurate than the least squares method.

(3) Moving Average Method:

 Averages are calculated over a fixed number of periods (e.g., 3, 5 years).

 The average is moved forward by one period each time.

Formula:

Merits:

 Smooths out short-term fluctuations.

 Best suited for seasonal data.

Demerits:

 Does not provide a trend equation.

 Not suitable for forecasting future values directly.

✳ Meaning of Regression Analysis

Regression analysis is a statistical method used to examine the relationship between two
or more variables. It helps in estimating or predicting the value of a dependent variable (Y)
based on the value of an independent variable (X).

Example: Predicting sales (Y) based on advertisement expense (X).

✳ Types of Regression Equations (Lines of Regression)

When studying the relationship between two variables X and Y, there are two lines of
regression:

1. Regression Line of Y on X:

This line predicts the value of Y for a given value of X.

Define correlation. What are the di erent types of correlation?

[10 Marks]

✳ Definition of Correlation

Correlation is a statistical technique that measures the degree and direction of a

relationship between two or more variables.

If a change in one variable results in a corresponding change in another variable, the two
variables are said to be correlated.

Example: As income increases, expenditure also tends to increase — this shows positive
correlation.

✳ Types of Correlation

Correlation can be classified based on:

1. Based on Direction:

(a) Positive Correlation:

When two variables move in the same direction — i.e., if one increases, the other also
increases, and if one decreases, the other also decreases.

Examples:

 Income and Expenditure

 Height and Weight

(b) Negative Correlation:

When two variables move in opposite directions — i.e., if one increases, the other
decreases.

Examples:

 Price and Demand

 Temperature and Use of Heaters

(c) No Correlation:

When there is no relationship between the variables — changes in one do not a ect the
other.

Example:

 Shoe size and intelligence

2. Based on Degree of Relationship:

(a) Perfect Correlation:

If the change in one variable is exactly proportional to the change in another.

 Perfect Positive Correlation: r=+1r = +1r=+1

 Perfect Negative Correlation: r=−1r = -1r=−1

(b) High or Moderate or Low Correlation:

When the relationship exists but is not perfect. The value of rrr lies between 0 and ±1.

 High: rrr near ±1

 Moderate: rrr around ±0.5

 Low: rrr near 0

3. Based on Number of Variables:

(a) Simple Correlation:

Relationship between two variables only.

(e.g., Income and Consumption)

(b) Multiple Correlation:

Relationship among three or more variables.

(e.g., Sales vs. Advertising and Price)

4. Based on Method of Measurement:

(a) Linear Correlation:

The relationship between the variables can be represented by a straight line.

(b) Non-linear (Curvilinear) Correlation:

The relationship forms a curve; change is not constant.

(ii) What do you mean by time series?

[2 marks]

A time series is a sequence of data points collected or recorded at regular time intervals,
such as daily, monthly, quarterly, or yearly.
It helps in analyzing trends, seasonal patterns, and forecasting future values.

Example: Monthly sales data, annual rainfall records, stock prices, etc.

(iv) Define seasonal variation.

[2 marks]

Seasonal variation refers to the regular and periodic fluctuations in a time series that
occur within a fixed period, typically within a year.
Examples:

 Increased ice cream sales in summer

 Higher retail sales during festive seasons

These variations are usually due to climate, customs, or festivals.

(vii) What do you mean by a regression equation?

[2 marks]

A regression equation is a mathematical formula that represents the relationship between

a dependent variable and one or more independent variables. It is used to predict the
value of the dependent variable.

For two variables (X and Y), the regression equations are:

 Y=a+bXY = a + bXY=a+bX (Y on X)

 X=a′+b′YX = a' + b'YX=a′+b′Y (X on Y)

Where:

 a,a′a, a'a,a′ are intercepts

 b,b′b, b'b,b′ are regression coe icients

(viii) What do you mean by correlation?

[2 marks]

Correlation is a statistical tool that measures the degree to which two variables move in
relation to each other. It shows whether an increase or decrease in one variable results in a
similar change in another variable.

Example:

 Height and weight have positive correlation.

 Price and demand often have negative correlation.

(ix) If two variables are independent, what is the value of their correlation coe icient?

[2 marks]
If two variables are independent, then their correlation coe icient (r) is 0.
This means no linear relationship exists between them.

(ii) What are the components of a time series? Explain.

[5 Marks]

A time series is made up of four key components:

1. Trend (T):

 The long-term movement or direction in data.

 Can be upward, downward, or constant over time.

Example: Population growth over years.

2. Seasonal Variation (S):

 Regular, periodic changes within a year.

 Due to climate, festivals, habits, etc.

Example: Higher umbrella sales during monsoon.

3. Cyclical Variation (C):

 Long-term oscillations around the trend line.

 Caused by economic cycles like boom and recession.

 Typically more than one year.

Example: Business cycles.

4. Irregular or Random Variation (I):

 Unpredictable, short-term fluctuations.

 Caused by unforeseen events like strikes, wars, or natural disasters.

Example: Drop in sales due to a pandemic.

Conclusion:
These four components combine as:

1. Discrete Variable:

A discrete variable is a type of quantitative variable that can take only specific, countable
values.
It cannot take any value between two given values.

Characteristics:

 Countable

 Often whole numbers

 No fractions/decimals between values

Examples:

 Number of students in a class (e.g., 30, 31…)

 Number of cars in a parking lot

 Marks out of 100 (if only integers are allowed)

 Number of children in a family

2. Continuous Variable:

A continuous variable is a type of quantitative variable that can take any value within a
given range.
It can include fractions and decimals.

Characteristics:
  Measurable

 Infinite possible values in an interval

 Includes decimals/fractions

Examples:

 Height of a person (e.g., 170.2 cm, 172.85 cm)

 Weight (e.g., 65.5 kg)

 Temperature (e.g., 36.6°C)

 Time taken to complete a task (e.g., 2.75 hours)

Key Di erences:

Feature Discrete Variable Continuous Variable

Type of Values Countable Measurable

Values Include Whole numbers only Whole numbers and decimals

Example Number of books Height of a person

Possibility of Gaps Yes (between values) No (any value in range possible)