CMA FOUNDATION MATHEMATICS AND STATISTICS

Chapter 1 – Ratio, Proportion and Variation

Meaning of Ratio Meaning of Proportion

Division of two quantities a and b of a,b,c,d are in proportion if a:b = c:d [it is an
same units. Denoted by a:b equality of two ratios]

Inverse Ratio Term/ Proportional

b:a is inverse ratio of a:b first = a, second = b, third =c, fourth = d

Compound Ratio Mean Proportional

Compound ratio of a:b and c:d is ac:bd In a continued proportion a:b=b:c, b2=ac, b
is called mean proportion.
Duplicate Ratio
Cross Product Rule
Duplicate ratio of a:b is a2:b2
If a:b=c:d, then ad = bc
Sub-duplicate Ratio
2
Invertendo
Sub-Duplicate ratio of a:b is √𝑎: √𝑏
2

If a:b=c:d, then b:a = d:c

Triplicate Ratio
Alternendo
Triplicate ratio of a:b is a3:b3
If a:b=c:d, then a:c = b:d
Sub-triplicate Ratio
3
Componendo
Sub-Triplicate ratio of a:b is √𝑎: √𝑏
3

If a:b=c:d, then (a+b):b = (c+d):d

Commensurate
Dividendo
If ratio can be expressed in the form of
integers If a:b=c:d, then (a−b):b = (c−d):d

Incommensurate Componendo and dividendo

If ratio cannot be expressed in the form If a:b=c:d, then (a+b):(a−b) = (c+d):(c−d) or

of integers (a−b):(a+b) = (c−d):(c+d)

Continued Ratio Addendo

Ratio of three or more quantities e.g. If a:b = c:d = e:f = ……. = k, then also
a:b:c (a+c+e+……):(b+d+f+….) = k

CA HARDIK MISHRA 1
 CMA FOUNDATION MATHEMATICS AND STATISTICS

VARIATIONS

Direct variations

A varies directly as B. that can be written as A α B.

A = KB or, K = A/B

Inverse variation

A is said to be varies inversely as B. if A varies directly as the reciprocal of B.

i.e. A α 1/B

A = K*1/B or, K = AB

Joint variation

A is said to varies jointly as B, C, D…. if A varies directly as the product of B, C, D …. i.e

A ∝ (B, C, D ... ... ...) Or, A = K(B, C, D ... ... ...)

Some Elementary Results:

(i) If A ∝ B, then B ∝ A

(ii) If A ∝ B and B ∝ C, then A ∝ C

(iii) If A ∝ B and B ∝ C, then A-B ∝ C

(iv) If A ∝ C and B ∝ C , then A-B ∝ C

(v) If A ∝ C and B ∝ C, then √AB ∝ C

(vi) If A ∝ B, then An ∝ Bn.

(vii) If A ∝ B and C ∝ D, then AC ∝ BD and A/C=B/D

(viii) If A ∝ BC, then B ∝ A/C and C ∝ A/B

CA HARDIK MISHRA 2
 CMA FOUNDATION MATHEMATICS AND STATISTICS

CHAPTER 2 – TIME VALUE OF MONEY AND ANNUITY – SIMPLE

AND COMPOUND INTEREST
Interest

Interest is the additional money which is paid by the borrower to the lender on the principal
borrowed. The additional money (or) interest is paid for the use of money by the borrower.
Interest is usually denoted by I.

SIMPLE INTEREST COMPOUND INTEREST

Formula: Formula:
S.I. =
PRT
C.I. = P (1+ R/100)n – P
100
A = P + S.I.
A = P (1+ R/100)n
P = Principal (Amount invested)
R = Rate of interest P = Principal (Amount invested)
T = Time of investment R = Rate of interest
T = Time of investment

Effective Rate of Interest

Formula: E = [(1 + 𝑖)n − 1]

Period Duration No. of compounding

Yearly 1
Half yearly 2
Quarterly 4
Monthly 12
Daily 365

Here n = number of compounding in one year.

i = Interest rate according to number of compounding.

i.e. R ÷ number of compounding.

Higher the compounding for a rate of interest Higher the effective rate.

Time Value of Money

A rupee today will be more valuable than the same in future. Because a receipt today generate
more preferable current consumption whereas a receipt tomorrow causes less preferable
future consumption. To entice an individual for future receipt something extra is to be given
with the present receipt.

This something extra is the compensation for foregoing current consumption – in financial
term called INTEREST.

CA HARDIK MISHRA 3
 CMA FOUNDATION MATHEMATICS AND STATISTICS

Applications

Time value of money analysis is applied

(i) For pricing of Bonds.

(ii) For pricing of stocks/firms.

(iii) For finding out the value a new project contributes to the organization.

(iv) For finding out the value of a particular division within an organization.

(v) For loan amortization.

(vi) For comparative study between rebate and low financing.

Types of Valuation

Future value of a single flow:

Future value = Present value (1+ R/100)n

Here (1+ R/100)n is termed as

Compounding factor, or
Future value interest factor (FVIF), or
Terminal value interest factor

C.I. = P (1+ R/100)n – P

Future value of an Annuity:

Annuity is a periodical flow of money, where at equal interval of time equal quantum of
money flows. So a flow of money will be considered as annuity if two factors are satisfied-

Interval between any two successive flows is same;

Quantum of money flow in each interval is same;

These two factors are to be satisfied simultaneously. Breaking of any one of these or both,
will constitute a multiple flow but not an annuity.

➢ 5000 deposited at the end of each month - Annuity

➢ 10000 deposited at the beginning of every quarter – Annuity
➢ 5000 deposited from January to march at the end of each month then 8000 from April
to December at the end of each month – Not an annuity
➢ 10000 deposited from January to march at the end of each month then 10000 from
April to December at the beginning of each month – Not an annuity

Annuities are of two types:

1. Regular annuity or deferred annuity when flow of money occurs at the end of a period;
2. Annuity due when flow of money occurs at the beginning of a period;

Future value (Regular Annuity) = Instalment x (1+ r)n – 1 = Instalment x FVIF

r

Here, R/100 = r

CA HARDIK MISHRA 4
 CMA FOUNDATION MATHEMATICS AND STATISTICS

Future value (Due Annuity) = F.V. (Regular Annuity) x (1+ r)

Present value of a single flow:

Present value = Future value ÷ (1 + R/100)n

Present value of an annuity:

Present value of an (ordinary) annuity = Instalment x (1 + r)n – 1

r (1 + r)n

Present value of an (Due) annuity = P.V. of ordinary annuity x (1 + r)

Doubling Period

A frequently asked question in finance is “how long it would take to double the invested
amount at a given interest rate?”

A rule of thumb called “Rule of 72’’ is available to answer this question. This rule states that
the doubling period will be obtained by dividing 72 by the given interest rate.

For example if interest rate is 6 percent then doubling period will be 72/6 i.e. 12 years.

Another thumb rule of doubling period is named “Rule of 69”. As per this rule the doubling
period will be = 0.35 + (69 / interest rate)

CA HARDIK MISHRA 5
 CMA FOUNDATION MATHEMATICS AND STATISTICS

CHAPTER 3 – Arithmetic & geometric progression

Sequence

An ordered collection of numbers arranged as per some definite rule or pattern. 𝑎1, 𝑎2, 𝑎3, … ,
𝑎n is a sequence if you are able to identify pattern and there by the value of 𝑎n (nth term).

Example: 6,11,16…… is a sequence such that every term is +5 more than the preceding term.

Example: 2,4,6…… is a sequence such that every term is +2 more than the preceding term.

Finite Sequence – sequence having finite elements.

Infinite Sequence – sequence having infinite elements.

Series
Sum of the elements of the sequence is called as Series.
𝑆n = 𝑎1 + 𝑎2 + 𝑎3 + ⋯ + 𝑎n
𝑆1 = 𝑎1,
𝑆2 = 𝑎1 + 𝑎2,
𝑆3 = 𝑎1 + 𝑎2 + 𝑎3

Arithmetic Progression

If certain quantities are increased or decreased by same constant then the quantities form a
series then the series is called arithmetic progression. Simply it can be written as A.P. Here
the same constant is called common difference of an arithmetic progression.

Example: 2+4+6…… is an A.P

Example: 9+6+3+0-3…… is an A.P

Important formulas of A.P.

Particulars Formula
1. nth term of an A.P. an = a + (n-1) d
2. Sum of nth term of an A.P. Sn = n/2 {2a+ (n-1)}
3. Sum of first n natural numbers n(n+1)/2
4. Sum of first n odd numbers n2
5. Sum of squares of first n n(n+1)(2n+1)/6
natural numbers
6. Sum of cubes of first n natural {n(n+1)/2}2
Numbers
Geometric Progression

If certain quantities are multiplied or divided by the same constants then the series is called
geometric progression simply it can be written as G.P.

Here The same constant is called common ratio of G.P and is denoted by ‘r’

Example: 4, 16, 64……….. are in G.P With common ratio r = 4.

Example: 9, 6, 4………. Are in G.P With common ratio r = 2/3

Note: The general form of G.P is a, ar, ar2 …………

CA HARDIK MISHRA 6
 CMA FOUNDATION MATHEMATICS AND STATISTICS

Particulars Formula
1. nth term of an G.P. an = ar(n-1)
2. Sum of nth term of an G.P. Sn = a(1-rn)/(1-r) if r < 1
a(rn-1)/(r-1) if r > 1
3. Sum of Infinite G.P. S∞ = a/(1-r)

CA HARDIK MISHRA 7
 CMA FOUNDATION MATHEMATICS AND STATISTICS

CHAPTER 4 – TIME AND DISTANCE

Time and Distance have a mathematical relationship with Speed. There exists a dependence
of speed, time and distance on each other.

Relation between Time and Distance with Speed

1. Distance = Speed × Time

Unit of Distance is denoted as km or m.

2. Time = Distance ÷ Speed

Unit of Time is denoted as hr, min or sec.

3. Speed = Distance ÷ Time

Unit of Speed is denoted as km/hr or m/sec

CA HARDIK MISHRA 8
 CMA FOUNDATION MATHEMATICS AND STATISTICS

CHAPTER 5 – SET THEORY AND VENN DIAGRAM

SET Set is a well defined collection of distinct objects. The objects of the set are called its
elements (or) members. Sets are generally denoted by capital letters A, B, C.... and the elements
of the sets are denoted by letters in lower case. i.e., a, b, c.... If an element x belongs to the
Set A it is denoted by x ∈ A. If x is not an element of A it is denoted by x ∉ A.

Braces or Tabular or Roaster When set shown as a list of elements within braces { } e.g. A =
{1,3,5,7}

Descriptive form Set can be presented in statement form e.g. A = set of first four odd numbers.

Set builder or algebraic or property form Here Set is written in the algebraic form in this format

{𝑥: 𝑥 satisfies some properties or rules}. The method of writing this form is called as Property
or Rule method.

Belongs to It is denoted by ‘∊’, a ∊ A means that element a is one of the element of Set A.

used for do not belongs to.

Subset Set A is a subset of Set B if all the elements of Set A also exist in Set B. It is denoted by
A⊂B

Proper subset A is a proper subset of B if A is a subset of B and A≠B

Improper subset Two equal sets are improper subsets of each other

Null set A set having no elements is called as Null or Empty Set. It is denoted by ϕ

Universal set The set which contains all the elements under consideration in a particular

problem is called the universal set generally denoted by S.

Complement set or Negation A complement set of set P is a set that contains all the elements
contained in the universe other than elements of P. It is denoted by P’ or Pc

Equivalent Set Two sets A and B are equivalent sets if n(A) = n(B)

Power Set Collection of all possible subsets of a given set A is called Power set of Set A. It is
denoted by P(A)

Equal sets Two sets A and B are said to be equal sets if they have the same elements (i.e.
every element of set A is an element of B and also every element of B is an element of A then
A = B)
Disjoint sets Two sets A and B are said to be disjoint sets if they have no element in common
i.e., A∩B = Ø.

Set of Sets When all the elements of a set are sets in themselves, that set is called set of
sets.

For Example, T = {a, b, c, d}

Where, a = {1, 2, 3, 4}; b = {1, 3, 5, 7}; c = {2, 4, 6, 8}; d = {1, 3, 4, 6}

Here, T would be termed as Set of Sets.

Singleton Set If any set has only one element, it is termed as Singleton Set. In simple terms,
set with just one element is called unit set or singleton set. For example, Given: Set L = {33}

CA HARDIK MISHRA 9
 CMA FOUNDATION MATHEMATICS AND STATISTICS

Finite Set

If the number of elements can be counted for a given set, that set is termed as Finite Set.
Finite Set comprises of specific number of elements.

Infinite Set

When the number of elements to be counted in a given set is infinite, the set is termed as
Infinite Set. So, Infinite set does not have specific number of elements.

Product Set The Product Set of two given sets A & B is the set whose elements are the
Ordered Pairs (a, b) where ‘a’ is an element of set A & B ‘b’ is an element of Set B. It is
written as A X B & read as “A cross B”. It can be noted that A X B & B X A are different.

Let A = {1,2} & B = {a,b,c} then A×B ={1,a), (1,b), (1,c), (2,a), (2,b), (2,c)} and B X A = {(a,1), (a,2),
(b,1), (b,2), (c,1), (c,2)}

No. of subset Formula: no. of subsets = 2n, no. of proper subsets = 2n-1

A∩B Intersection set of A and B is a set that contains common elements between

both of the sets.

A∪B Union set of A and B is a set that contains all the elements contained in both the

sets without repeating the common elements

A-B is a set that contains elements of A other than those which are common in

A and B [A-B = A – (A∩B)]

Symmetric difference of two sets The symmetric difference of two sets A and B denoted by AΔB
and is defined as AΔB = (A-B) U (B-A)

Important points to be kept in mind

1. Every Set would be a Subset of its’ own Set.

Denoted as Q ⊆ Q.

2. Null Set would be a Subset of every Set.

Denoted as ∅ ⊆ Q.

3. When there are 3 sets – Q, W and R and Q ⊆ W and W ⊆ R, then Q ⊆ R.

In simple terms, If Q is a Subset of W and W is a Subset of R then Q is a Subset of R.

Laws of Algebra of Sets

1. Idempotent :

(i) A ∩ A = A

(ii) A ∪ A = A

While consedring two or more sets, the term idempotent means the sets would be same and
identical even after the operation.

2. Commutative :

(i) A ∩ B = B ∩ A

CA HARDIK MISHRA 10
 CMA FOUNDATION MATHEMATICS AND STATISTICS

(ii) A ∪ B = B ∪ A

While solving two or more sets, the commutative law states that the elements of both the
sets would be added.

3. Associative :

(i) A ∪ (B ∪ C) = (A ∪ B) ∪ C

(ii) A ∩ (B ∩ C) = (A ∩ B) ∩ C

When two or more sets are to be combined, the order of the sets would not matter since the
result would be

same if the sets are associative to each other.

4. Distributive :

(i) A ∩ (B ∪ C) = (A ∩ B) ∪ (A ∩ C)

(ii) A ∪ (B ∩ C) = (A ∪ B) ∩ (A ∪ C)

When two or more sets are to be distributed, the order of the sets would not matter since the
result would be same if the sets are distributive.

5. Identity Law :

(i) A ∪ U = U

(ii) A ∪ φ = A

(iii) A ∩ φ = φ

(iv) A ∩ U = A

For any set A in relation to Universal Set U and Null Set, the above mentioned laws are
applicable.

7. Complement Law :

(i) A ∪ A′ = U

(ii) Φ’ = U

(iii) U′ = Φ

(iv) A ∩ A′ = Φ

(v) (A′)′ = A

For any set A in relation to Universal Set U and Null Set, the above mentioned laws are
applicable

De Morgan’s Law

1. (P∪Q)’ = P’∩Q’

2. (P∩Q)’ = P’∪Q’

CA HARDIK MISHRA 11
 CMA FOUNDATION MATHEMATICS AND STATISTICS

Venn Diagram

Sets Formulas

n(A∪B) = n(A) + n(B) – n(A∩B)

n(A∪B∪C) = n(A) + n(B) + n(C) – n(A∩B) –n(B∩C) –n(C∩A) + n(A∩B∩C)

A or B , atleast A or B, either A or B A∪B

A and B, Both A and B A∩B
Only A means A−B
Only B means B−A
Neither A nor B (A∪B)’
Ordered Pair Pair of two elements both taken from different Sets. E.g. if a∊A and b∊B then
ordered pair is (a,b) where first element will always from A and second always from B in
every pair

Product of Sets Also called as Cartesian Product. If A and B are two non-empty sets, then set
of all the ordered pairs such that a∊A and b∊B is called as Product Set. It is denoted by A×B.
[A×B = {(a:b): a∊A and b∊B}]

Cardinal number No. of distinct elements contained in a finite Set A is called Cardinal
Number. For Set A = {4,6,8,3}, cardinal no. n(A) = 4.

n(A×B) = n(A) × n(B) i.e. cardinal no. of product set is equal to product of cardinal no. of each
set.

CA HARDIK MISHRA 12
 CMA FOUNDATION MATHEMATICS AND STATISTICS

CHAPTER 6 – INDICES AND LOG

Index Log

If a number ‘a’ is taken and added three If 24=16 [2 is base, 4 is power] then
times then we say that a+a+a = 3a.
log216 = 4 (i.e log of 16 base 2)
Instead of addition the same number is
multiplied three times then we say that. basepower = value
a×a×a = a3 here 3 is called index A is called
base logbasevalue = power

Root of a number Formula list for Log

If xn = a then, x is called nth root of a i.e. 1. logaa = 1

x = √𝑎
𝑛 2. loga1 = 0
3. logamn = logam + logan
Formula list for Indices 4. logam/n = logam – logan
5. logamn = nlogam
1. am x an = am+n 6. logbm = logam/logab
23 x 22 = 25 7. logya x logax = logyx
2. am/an = am-n
23 / 22 = 21
3. (a/b)m = am/bm
(2/3)4 = 24/34
4. (ab)m = am x bm
(2 x 3)4 = 24 x 34
5. 1/am = a-m
1/23 = 2-3
6. 𝑛√𝑎 = a1/n
3
√2 = 21/3
7. a0 = 1
20 = 1
8. 22 = 2x then x = 2
9. x2=22 then x = 2

CA HARDIK MISHRA 13
 CMA FOUNDATION MATHEMATICS AND STATISTICS

CHAPTER 7 – PERMUTATION AND COMBINATION

Principles of
counting

Multiplication Addition Rule

Rule (and) (or)

Multiplication Rule (AND → Multiply): If one thing can be done in ‘m’ ways and when it has
been done, another thing can be done in ‘n’ different ways then the total number of ways of
doing both the things simultaneously = m × n

Addition Rule (OR → Add): If two alternative jobs can be done in ‘m’ and ‘n’ way respectively
then either of the two jobs can be done in (m+n) ways

Factorial: It is written as n! or Ln

Permutations: It is the ways of arranging or selecting things from a group of things with due
regard being paid to order of the arrangement or selection.

Formula: nPr = n! / (n-r)!

Circular permutation: The number of circular permutations of n different things chosen all at
a time is (n–1)!

number of ways of arranging n persons along a round table so that no person has the same
two neighbours is ½*(𝒏 − 𝟏)!

the number of necklaces formed with n beads of different colours ½*(𝒏 − 𝟏)!

Combinations: The number of ways in which smaller or equal number of things are arranged
or selected from a collection of things where the order of selection or arrangement is not
important, are called combinations.

Formula: nCr = n! / r! (n-r)!

CA HARDIK MISHRA 14
 CMA FOUNDATION MATHEMATICS AND STATISTICS

CHAPTER 8 – QUADRATIC EQUATIONS

Type Linear equation Linear equation with 2 Quadratic Cubic equations
with one variable equations
variable
Equations ax + b = 0 ax + by + c = 0 where ax2 + bx + c = 0 ax3+bx2+cx+d=0
Where a and b a, b and c are Where a, b and
are constant constant c are constant
Degree 1 1 2 3
Roots 1 1 for x and 1 for y 2(alpha, beta) 3
Method for - 1.Cross multiplication 1.Formula 1.Trial error
solution 2.Elimination method 2.Trial and
error
Formula - Two equations are −𝑏 ± √𝑏 2 − 4𝑎𝑐 -
required to solve the 2𝑎
equations Sridhar Acharya’s
simultaneously Formula
Sum of roots 𝛼+𝛽 =−
𝑏
𝑎

Product of 𝑐
𝛼×𝛽 =
roots 𝑎

Formula to 𝑥2 − (sum of roots) 𝑥 + Product of Roots = 0

form a
quadratic
equation
Nature of Conditions Nature of roots
roots b2- ac = 0 Real and equal roots
b2- ac > 0 Real and unequal
2
b - ac < 0 Imaginary
b2- ac is a perfect square Real unequal and rational
b2- ac > 0 but not perfect square Real, unequal and irrational
Irrational If one root is (m+√𝑛), the other root will be (m-√𝑛)
roots

CA HARDIK MISHRA 15
 CMA FOUNDATION MATHEMATICS AND STATISTICS

CHAPTER 9 – MEASURE OF CENTRAL TENDENCY

Central Tendency: Central Tendency is the tendency of a given set of observations to cluster
around a single central or middle value and the single value that represents the given set of
observations is described as a measure of central tendency or, location, or average.

Definition of A.M. Sum of observation divided by number of observations.

Formula to find x̅ Individual Discrete Continuous
Direct method ∑𝑋 ∑ 𝑓𝑋 ∑ 𝑓𝑚
𝑁 𝑓 𝑓
Short cut method ∑𝑑 ∑ 𝑓𝑑 ∑ 𝑓𝑑
𝐴+ 𝐴+ 𝐴+
𝑁 𝑓 𝑓
Step deviation ∑ 𝑑𝐼 ∑ 𝑓𝑑 𝐼 ∑ 𝑓𝑑 𝐼
𝐴+ ×𝐶 𝐴+ ×𝐶 𝐴+ ×𝐶
method 𝑁 𝑁 𝑁
Properties of AM ❖ If all the observations are constant, AM is also constant.
❖ The algebraic sum of deviations of a set of observations
from their AM is zero.
❖ AM is affected both due to change of origin(+,-) and scale(×,÷).
Combined mean X̅1,2 =
x̅1 𝑁1 +x̅2 𝑁2
𝑁1 + 𝑁2

Weighted mean X̅w =

∑ 𝑊𝑋
∑𝑊

Corrected mean Corrected X̅ = ∑ 𝑋 (Wrong value) + Correct value – Incorrect value

No. of terms

Geometric Mean For a given set of n positive observations, the geometric mean is
defined as the 𝑛th root of the product of the observations.

Formula: GM = (𝑥1 × 𝑥2 × 𝑥3 … × 𝑥n)1/n

❖ If all observations are constant GM is also constant

❖ 𝐺𝑀 𝑜𝑓 𝑥𝑦 = 𝐺𝑀 𝑜𝑓 𝑥 × 𝐺𝑀 𝑜𝑓 𝑦

𝑥 𝐺𝑀 𝑂𝐹 𝑥
❖ 𝐺𝑀 𝑜𝑓 =
𝑦 𝐺𝑀 𝑂𝐹 𝑦

❖ Use in case of Percentage and ratios

Harmonic Mean For a given set of non-zero observations, harmonic mean is defined
as the reciprocal of the AM of the reciprocals of the observation

𝑛
Formula: HM = 1
∑( )
𝑥
𝑛1 +𝑛2
Combined HM = 𝑛1 𝑛2
+
𝐻1 𝐻2
❖ If all observations are constant HM is also constant
❖ Use in case of rates like speed, hours per day, etc.
Relationship between General relationship When all When all observations
AM, GM and HM observations are are different
(GM2 = AM x HM) same
AM≥ GM ≥ HM AM = GM = HM AM > GM > HM

CA HARDIK MISHRA 16
 CMA FOUNDATION MATHEMATICS AND STATISTICS

Definition of Median Median is the positional value of the variable which divides the
distribution into two equal party, one part comprises all values
greater than equal to the median value and the other part
comprises all values less than or equal to it.
Formulas Used Individual series Discrete series Continuous series

Arrange the series in Find out the Find out the

ascending cumulative cumulative frequency
order/descending frequency first. first.
order first. 𝑁
M = Size of ( )th item
𝑁+1 th 2
M = Size of( )
𝑁+1 th 2
M=( ) item item This above formula
2
will give median class.
When N is odd The median is equal Then the value of
number the Median to the vale of X median will be
is equal to the corresponding to the calculated using the
respective value of cumulative below formula.
X. frequency falls as
𝑁+1 th 𝑁
against ( ) M = 𝐿1+ 2
−𝐶.𝑓.
×𝑖
2 𝑓
When the N is even number the median is equal to
𝑁 𝑁
Size of ( ) th item + Size of ( + 1)th item
2 2
2

Properties of Median ❖ Median is affected by both change of origin and scale

❖ For a set of observations, the sum of absolute deviations
is minimum, when the deviations are taken from the
median.

Partition values Values dividing a given set of observations into a number of equal
parts.

Formulas used Quartiles: Divides the data into 4 parts

Individual series Q1 (lower quartile) = size of (
𝑁+1
) th item
4

𝑁+1
Q2 (Median) = size of 2( ) th item
4

𝑁+1
Q3 (upper quartile) = size of 3( ) th item
4

The partition value of Q is equal to the corresponding value of X.

If the size is in fraction then the partition value of Q is found using the
below formula:
Size of lower side round off + decimal value (size of upper side round
off value- size of lower side round off value)

Example: for 2.25th item

Size of 2nd item + .25(size of 3rd item-size of 2nd item)
Discrete series Same formula as individual series
The partition value of Q is equal to the corresponding value of X
against cumulative frequency.

CA HARDIK MISHRA 17
 CMA FOUNDATION MATHEMATICS AND STATISTICS

Continuous series Q1 (lower quartile) = size of ( ) th item

𝑁
4
𝑁
Q2 (Median) = size of 2( ) th item
4
𝑁
Q3 (upper quartile) = size of 3( ) th item
4

The partition value of Q is found using the formula given below by

taking the value of the class as per the above formulas:
𝑁 𝑁 𝑁
−𝐶.𝑓. 2( )−𝐶.𝑓. 3( )−𝐶.𝑓.
Q1 = 𝐿1+ 4 × 𝑖 Q2 = 𝐿1+ 4
× 𝑖 Q3 = 𝐿1+ 4
×𝑖
𝑓 𝑓 𝑓

Deciles: Divides the series into 10 equal parts

All formulas are same as quartiles just replace 4 with 10.
Percentiles: Divides the series into 100 equal parts
All formulas are same as the quartiles just replace 4 with 100.
Particulars Quartiles Deciles Percentiles
No. of equal parts 4 10 100
No. of partition values 3 9 99
Denoted by Q1, Q2, Q3 D1, D2, D3 P1, P2, P3
Meaning of Mode Mode is the most frequently observed data value.
Mode can be uni-modal, bi-modal or multi-modal
Formula Individual series: By inspection method
Discrete series: By inspection method
Continuous series: By inspection the highest repeating class is
selected then apply the below formula
𝑓1−𝑓0
Z = 𝐿1 + ×𝑖
2𝑓1−𝑓0−𝑓2
Relationship between For a moderately skewed distribution,
mean, median and 𝑀𝑒𝑎𝑛 – 𝑀𝑜𝑑𝑒 = 3 × (𝑀𝑒𝑎𝑛 – 𝑀𝑒𝑑𝑖𝑎𝑛)
mode i.e. for a asymmetrical distribution
mode = 3median – 2mean
Standard results
Best Measure Overall AM
Best Measure for Open End Class Median
Based on all observations AM, GM, HM
Based on 50% values Median
Not affected by Sampling fluctuations Median
Rigidly defined, easy to comprehend AM, Median, GM, HM
No Mathematical Property Mode
Moct is a measure of which order 1st order
The sum of deviation of nay variable Minimum
about mean is always
Pooled mean is also called Grouped mean
For qualitative data best measure is Median
Mode can be located using graph Histogram
Median can be located using graph Ogive
Mathematical averages AM, GM, HM
Positional averages Median, mode
Index number calculation GM is best
I.Q. can be calculated using Median
Difficult to compute GM

CA HARDIK MISHRA 18
 CMA FOUNDATION MATHEMATICS AND STATISTICS

Called ratio averages AM & GM

Question based on All the measures of central tendency is affected by scale as well as
equations origin.
Y = a+bx
Here, a shows the origin
b shows the scale
Given Mean, median and mode of x
Mean of y = a + b(mean of x)
Median of y = a + b(median of x)
Mode of y = a + b(mode of x)

CA HARDIK MISHRA 19
 CMA FOUNDATION MATHEMATICS AND STATISTICS

CHAPTER 10 - DISPERSION
Meaning of Dispersion Dispersion for a given set of observations may be defined as the
amount of deviation of the observations, usually, from an
appropriate measure of central tendency
Types of Dispersion Absolute Dispersion: These are with units and not useful for
comparison of two variables with different units. Example: Range,
Mean Deviation, Standard Deviation, Quartile Deviation
Relative Dispersion: These are unit free measures and useful for
comparison of two variables with different units. Example:
Coefficient of Range, Coefficient of Mean Deviation, Coefficient of
variation, Coefficient of Quartile Deviation.
Formulas used Individual Discrete Continuous
Range R=L–S R=L–S R=L–S
(Consider the L = Upper limit of last
Values From X) class interval.
S = Lower limit of
first class interval.
Coefficient of Range C.R. =
𝐿−𝑆
C.R. =
𝐿−𝑆
C.R. =
𝐿−𝑆
𝐿+𝑆 𝐿+𝑆 𝐿+𝑆

Inter quartile range Q 3 – Q1 Q 3 – Q1 Q 3 – Q1

Quartile deviation Q 3 − Q1 Q 3 − Q1 Q 3 − Q1
2 2 2
Coefficient of Quartile Q 3 − Q1 Q 3 − Q1 Q 3 − Q1
deviation Q 3 + Q1 Q 3 + Q1 Q 3 + Q1
Mean Deviation M.D.x̅ =
∑|D|
M.D.x̅ =
∑ 𝑓| D |
M.D.x̅ =
∑ 𝑓| D |
N 𝑓 𝑓

∑| D | ∑ 𝑓| D | ∑ 𝑓| D |
M.D.M = M.D.M = M.D.M =
N 𝑓 𝑓

Coefficient of mean C.M.D.X̅ =

𝑀.𝐷.𝑥 ̅
C.M.D.X̅ =
𝑀.𝐷.𝑥 ̅
C.M.D.X̅ =
𝑀.𝐷.𝑥 ̅
𝑋̅ 𝑋̅ 𝑋̅
Deviation
𝑀.𝐷.𝑀 𝑀.𝐷.𝑀 𝑀.𝐷.𝑀
C.M.D.M = C.M.D.M = C.M.D.M =
𝑀 𝑀 𝑀

Standard deviation Direct method Direct method Direct method

∑ 𝑑2 ∑ 𝑓𝑑 2 ∑ 𝑓𝑑 2
√ √ √
𝑁 ∑𝑓 ∑𝑓
Shortcut Method Shortcut Method Shortcut Method
2 2 2
∑ 𝑑2 ∑𝑑 ∑ 𝑓𝑑 2 ∑ 𝑓𝑑 ∑ 𝑓𝑑 2 ∑ 𝑓𝑑
√ −( ) √ −( ) √ −( )
𝑁 𝑁 ∑𝑓 ∑𝑓 ∑𝑓 ∑𝑓
Step deviation Step deviation Step deviation method
method method 2
∑ 𝑓𝑑 𝐼 2 ∑ 𝑓𝑑 𝐼
𝐼2 2 𝐼2 2 √ −( )
∑𝑑 ∑ 𝑑𝐼 ∑ 𝑓𝑑 ∑ 𝑓𝑑 𝐼 ∑𝑓 ∑𝑓
√ −( ) √ −( )
𝑁 𝑁 ∑𝑓 ∑𝑓
Coefficient of standard C.S.D =
𝑆.𝐷.
C.S.D =
𝑆.𝐷.
C.S.D =
𝑆.𝐷.
𝑋̅ 𝑋̅ 𝑋̅
deviation
Combined standard
N1 σ12 + N2 σ22 + N1 d12 + N2 d22
deviation √
N1 + N2
d1 = X̅ 1 – X̅1,2 d2 = X̅ 2 – X̅1,2

CA HARDIK MISHRA 20
 CMA FOUNDATION MATHEMATICS AND STATISTICS

S.D. of first n natural

n2 − 1
numbers √
12
Variances Variance = (S.D.)2 Variance = (S.D.)2 Variance = (S.D.)2
Coefficient of variances C.V. =
𝑆.𝐷.
× 100 C.V. =
𝑆.𝐷.
× 100 C.V. =
𝑆.𝐷.
× 100
𝑋̅ 𝑋̅ 𝑋̅
Question based on Dispersion is affected by scale (×,÷) only not by origin (+,-).
equations Equation: y = a + bx
Here, a represents origin
b represents scale
Range, quartile deviation, mean deviation, standard deviation of x
is given then
Range of y = |b| × Range of x
Quartile deviation of y = |b| × Quartile deviation of x
Mean deviation of y = |b| × Mean deviation of x
Standard deviation of y = |b| × Standard deviation of x

Variance of x is given and variance is y is to be found:

Then first find out standard deviation of x
find out standard deviation of y
find out variance of y

Relationship between 4S.D. = 5M.D. = 6Q.D.

S.D., M.D., Q.D.
Standard Results Dispersion is an measure of 2nd order
Mean deviation is based on Absolute measure only
Measure of dispersion with some Standard deviation
mathematical properties
For any two number S.D. is always Half of range
Standard deviation formula when
∑ 𝑋2
mean is given √ − (𝑋 ̅)2
𝑁
Sum of deviation from median The least
ignoring +,- sign is always
Greatest use in quality control Range
Most useful among all deviations Standard deviation
When all the values are equal variance Zero
and standard deviation
Coefficient of variance given by Karl pearson
For value lie close to the means S.D. is Small
Least affected by sampling Standard deviation
fluctuations
Used to find pooled measure of Standard deviation
dispersion
Has some desirable mathematical Standard deviation
properties
Best Measure – Overall SD Standard deviation
Best Measure for Open End Class Quartile deviation
Quickest to compute Range
Not based on all observations Range
Difficult to comprehend and less Mean deviation
Mathematical

CA HARDIK MISHRA 21
 CMA FOUNDATION MATHEMATICS AND STATISTICS

Rigidly defined Mean deviation, S.D.,

Q.D.
Not affected by Sampling fluctuations Quartile deviation
Graphical calculation of dispersion Lorenz curve
Meaning of Skewness skewness is the measure of how much the probability
distribution of a random variable deviates from the normal
distribution.
Graphical
representation of
skewness

Mode>median>mean mean=median=mode mean>median>mode

Coefficient of skewness Q3+Q1 > 2Q2 (positively skewed)
Q3+Q1 < 2Q2 (negatively skewed)
Q3+Q1 = 2Q2 (No skewness)
Absolute measures of Absolute skewness SK = X̅ – Mode
skewness Absolute skewness SK = X̅ – Median
Absolute skewness SK = Median – Mode
Relative measures of (a) The Karl Pearson’s Coefficient of skewness =
̅ −𝑍
Χ
𝜎
skewness ̅ −𝑀)
3(Χ
OR, =
𝜎
𝑄3 +𝑄1 −2𝑀
(b) The Bowley’s Coefficient of skewness =
𝑄3 −𝑄1
𝑃10 +𝑃90 −2𝑀
(c) The Kelly’s Coefficient of skewness =
𝑃90 −𝑃10
(d) Measure of skewness Based on Moments.

CA HARDIK MISHRA 22
 CMA FOUNDATION MATHEMATICS AND STATISTICS

CHAPTER 11 – CORRELATION AND REGRESSION

Meaning of correlation While studying two variables at the same time, if it is found that
the change in one variable leads to change in the other variable
either directly or inversely, then the two variables are known to
be associated or correlated.
Types of correlation Positive correlation: Variables travel in same Direction
Negative correlation: Variables travel in Opposite Direction
No correlation: No relationship exists.
Degree of correlation Degree Positive Negative
Perfect +1 -1
High +0.75 to +1 -0.75 to -1
Moderate +0.25 to +0.75 -0.25 to -0.75
Low 0 to +0.25 0 to -0.25
No correlation 0 0
Calculation of correlation
Scatter diagram Only the direction of travel of correlation is determined

Karl Pearson’s rxy =

𝐶𝑜𝑣 (𝑥,𝑦)
Cov(x,y) =
∑ 𝑥𝑦
x = X-𝑋̅ y = Y-𝑌̅
𝜎𝑥 𝜎𝑦 𝑁
(Product moment)
∑ 𝑥𝑦 𝑁 ∑ 𝑋𝑌−(∑ 𝑋 ∑ 𝑌)
rxy = rxy =
√∑ 𝑥 2 ×∑ 𝑦 2 √𝑁 ∑ 𝑋 2 −(∑ 𝑋)2 ×√𝑁 ∑ 𝑌 2 −(∑ 𝑌)2

∑ 𝑥2 ∑ 𝑋2 ∑ 𝑦2 ∑ 𝑌2
𝜎𝑥 = √ OR √ − (𝑋̅ )2 𝜎𝑦 = √ OR √ − (𝑌̅)2
𝑁 𝑁 𝑁 𝑁

Standard results It is a unit-free measurement

Value of r lies from -1 to +1 both inclusive
Change of Origin No impact
Change of Scale No impact
Effected by sign of scale
Direction as well as strength of correlation.
Best Method – Most accurate

CA HARDIK MISHRA 23
 CMA FOUNDATION MATHEMATICS AND STATISTICS

Spearmen Rank When ranks are When ranks are not When ranks are
correlation given given repeated
rk = 1 – 6
∑ 𝐷2 Firstly find out the
𝑁3 −𝑁
ranks according to
the marks given.
1 1 1
6(∑ 𝐷2 +12(𝑚13 −𝑚1 )+12(𝑚23 −𝑚2 )+⋯+12(𝑚𝑛
3 −𝑚 )
𝑛
rk = 1 –
𝑁3 −𝑁

Properties Useful for attributes.

Best measure for qualitative data.

Coefficient of A very simple and casual method of finding correlation when we

concurrent deviations are not serious about the magnitude of the two variables is the
application of concurrent deviations.
Formula (2𝑐−𝑚)
rc = + ñ m=N-1
𝑚
c = No. of positive signs in the product of
deviation column.
If (2c–m) > 0, we take the positive sign both inside and outside
if (2c–m) < 0, we are to consider the negative sign both inside
and outside
Practice question
(concurrent deviation)

Equations based Correlation is not effected by origin as well as scale but it does
questions effected by the sign of scale.
y = a+bx
u = a+vx
The correlation is effected by sign of “b” and “d”
ruv = rxy × sign of scale of x and y
Coefficient of Coefficient of determination = r2
determination and non- Coefficient of non determination = 1 – r2
determination Here r = correlation.
Probable error Probable error = 0.6745 x (1-r2) standard error = 1 – r2
√n √n
r < 6 x probable error (not significant)
r ≥ 6 x probable error (significant) n = No. of items
Probable error = 2 of standard error
3
Cyclic Order If two variables shows a linear relationship then being a straight
line we need to find out whether it is increasing or decreasing.
r = 1 (scale is greater than 0 and it is increasing)
r = -1 (scale is less than 0 and it is decreasing)
rxy x rxu = ruy
Meaning of Regression Estimation of one variable for a given value of another variable
on the basis of an average mathematical relationship between
the two variables.
Regression Equations X on Y (x depends on y) Y on X (y depends on x)

X-𝑋̅ = bxy (Y-𝑌̅) (Y-𝑌̅) = byx X-𝑋̅

bxy = Regression coefficient x byx = Regression coefficient y on
on y x

CA HARDIK MISHRA 24
 CMA FOUNDATION MATHEMATICS AND STATISTICS

y = a+bx x = a+by
here, b = regression coefficients here, b = regression coefficients
a and b = regression a and b = regression parameters
parameters byx =
𝑁 ∑ 𝑋𝑌− ∑ 𝑋 ∑ 𝑌
𝑁 ∑ 𝑋𝑌− ∑ 𝑋 ∑ 𝑌 𝑁 ∑ 𝑋 2 −(∑ 𝑋)2
bxy =
𝑁 ∑ 𝑌 2 −(∑ 𝑌)2
𝑆.𝐷.𝑜𝑓 𝑌
byx = r ×
𝑆.𝐷.𝑜𝑓 𝑋 𝑆.𝐷 𝑜𝑓 𝑋
bxy = r ×
𝑆.𝐷 𝑜𝑓 𝑌
𝐶𝑜𝑣(𝑥,𝑦)
byx =
𝐶𝑜𝑣(𝑥,𝑦) (𝑆.𝐷.𝑜𝑓 𝑋)2
bxy =
(𝑆.𝐷.𝑜𝑓 𝑌)2
Properties of regression Regression is not effected by origin(+,-) but it does effected by
scale(×,÷)
bVU = bYX x MY
MX
bUV = bXY x MX
MY
The intersection points of regression lines are their means.
If the two regression lines are coinciding and identical then r
= ±1
When the regression lines are perpendicular then r = 0
Relationship between r = ±√±𝑏𝑥𝑦 × ±𝑏𝑦𝑥
correlation and The sign of bxy, byx and r is going to be same in 100% cases.
regression

CA HARDIK MISHRA 25
 CMA FOUNDATION MATHEMATICS AND STATISTICS

CHAPTER 12 - PROBABILITY
Random Experiment: An experiment is defined to be random if the results of the experiment
depend on chance only. For example, if a coin is tossed, then we get two outcomes—Head (H)
and Tail (T).

Events: The results or outcomes of a random experiment are known as events. Sometimes
events may be combination of outcomes. The events are of two types:

(i) Simple or Elementary - An event is known to be simple if it cannot be decomposed into

further events. Tossing a coin once provides us two simple events namely Head and Tail.

(ii) Composite or Compound - A composite event is one that can be decomposed into two or
more events. Getting a head when a coin is tossed twice is an example of composite event as
it can be split into the events HT and TH which are both elementary events.

Mutually Exclusive Events or Incompatible Events: When occurrence of one such event implies
the non-occurrence of the other events of the set. (Dono sath me kabhi nahi ho sakte)

Exhaustive Events: The total number of possible outcomes of a random experiment is called
exhaustive events. The group of events is exhaustive, as there is no other possible outcome.
Thus tossing a coin, the possible outcome are head or tail ; exhaustive events are two.

exhaustive number of case is 2n.

Equally Likely Events or Mutually Symmetric Events or Equi-Probable Events: When two or
more events are said to be equally likely if the chance of their happening is equal.

Sample space: The set or aggregate of all possible outcomes is known as sample space. For
example, when we roll a die, the possible outcomes are 1, 2, 3, 4, 5, and 6 ; one and only one
face come upwards.

Independent Events: A set of events is said to be independent, if the occurrence of any one of
them does not, in any way, affect the Occurrence of any other in the set. For instance, when
we toss a coin twice, the result of the second toss will in no way be affected by the result of
the first toss.

Dependent Events: If the occurrence of one event affects the happening of the other events,
then they are said to be dependent events.

Complementary Events: The complement of an events, means non-occurrence of A and is

denoted by A. A contains those points of the sample space which do not belong to A.

Favourable Cases: The number of outcomes which result in the happening of a desired event
are called favourable cases to the event.

Classical Approach (Priori Probability)

P = No. of favourable cases

Total number of equally likely cases
Axiomatic Approach of Probability: (based on sets theory)

P(AUB) = P(A)+P(B) [for mutually exclusive events]

P(AUB) = P(A) + P(B) - P(A∩B) [for non-mutually exclusive series]

P(A∩B) = P(A) x P(B) [for independent evens]

CA HARDIK MISHRA 26
 CMA FOUNDATION MATHEMATICS AND STATISTICS

P(A/B) = P(A∩B) OR P(B/A) = P(A∩B)

P(B) P(A)
And = ∩ Or = U

Odds in probability of a particular event, means the ratio between the number of favourable
outcomes to the number of unfavourable outcomes.

Odds in favour:

Odds in favour of a particular event are given by Number of favourable outcomes to Number
of unfavourable outcomes.

P(A) = Number of favourable outcomes

Number of unfavourable outcomes
Odds against:

Odds against is given by Number of unfavourable outcomes to number of favourable

outcomes.

P(A) = Number of unfavourable outcomes

Number of favourable outcomes

Bayes theorem, in simple words, determines the conditional probability of an event A given
that event B has already occurred.

P(A|B) = P(B|A)*P(A)
P(B)

CA HARDIK MISHRA 27
 CMA FOUNDATION MATHEMATICS AND STATISTICS

CHAPTER 13 – INDEX NUMBERS AND TIME SERIES

INDEX NUMBER

Index number is a single ratio (usually in percentage) which measures the combined (i.e.
averaged) change of several variables between two different times, places or situations.

The statement that the index number of wholesale prices in an economy for year 2020 was
250 compared to 2010 means that there was a net increase in the price of wholesale
commodities in that economy to the extent of 150 percent.

In comparing the prices of 2020 with the price of 2010, Year 2010 is taken as the Base year.
The price at the base year is taken as 100 and the price at 2020, called Current year, is
expressed as a percentage of the price of the base year. Thus if p1 is the price of 2020 and p0
is the price of 2010 then we can form an index number, named Price Index as

P1 ÷ P2 x 100 = Current price ÷ Base price x 100

There are various kinds of index numbers. These are broadly

(a) Price Index

(b) Quantity Index

(c) Value Index

(d) Diffusion Index

(e) Others

Methods of computation of index numbers:

Name of method Formula

Price Index: Aggregative or Average method
Simple average or simple P01 = Σ P1 x 100
aggregative Σ P0
Weighted aggregative method P01 = Σ P1W x 100
Σ P0W
Laspeyres’s method P01 = Σ P1q0 x 100
Σ P0q0
Paasche’s method P01 = Σ P1q1 x 100
Σ P0q1

CA HARDIK MISHRA 28
 CMA FOUNDATION MATHEMATICS AND STATISTICS

Fisher’s method √𝐿𝑎𝑠𝑝𝑒𝑦𝑟𝑒𝑠 × 𝑃𝑎𝑎𝑠𝑐ℎ𝑒

Bowley’s method Laspeyres + Paasche x 100
2
Price Index: Average of relatives method
Price relatives of a commodity Price of the commodity in the current year x 100
Price of the commodity in the base year
Simple average of relatives Using AM P01 = 1/n = Σ (P1/P0 x 100)
index
Using GM P01 = Antilog [Σ Log (P)/n]
Weighted AM of Relatives Index P01 = Σ Pw = Σ [(P1/P0 x 100)w]
Σw Σw
Quantity Index: Aggregative or average method
Simple Aggregative Q01 = Σ q1 x 100
Σ q0
Laspeyres Q01 = Σ q1P0 x 100
Σ q0P0
Paasche Q01 = Σ q1P1 x 100
Σ q0P1
Fisher √𝐿𝑎𝑠𝑝𝑒𝑦𝑟𝑒𝑠 × 𝑃𝑎𝑎𝑠𝑐ℎ𝑒
Quantity Index: Average of relatives method
Simple average of relatives Using AM Q01 = Σ Q/n = 1/n = Σ (q1/q0 x 100)
index
Using GM Q01 = Antilog [Σ Log Q/n]
Weighted AM of Relatives Index Q01 = Σ Qw = Σ [(q1/q0 x 100)w]
Σw Σw
General Index from group indices
General Index Σ wl
Σw
I = Group Index, w = group weight

Abbreviations:

P01 = Price index Number for the current year 1 w.r.t the base year 0

P1 = Price for the current period

P0 = Price for the base period

W = Weight attached to different commodities

q0 = Quantity of base period

q1 = Quantity of current period

P = Price relative = P1/P0 x 100

n = number of commodities

Q = Quantity relative = q1/q0 x 100

CA HARDIK MISHRA 29