BSII – Assignment 2

Poisson Distribution
Q1) Phone calls arrive at the reservation desk for Regional Airways at a rate
of 60 per hour.

a) Compute the probability of receiving three calls in a 5-minute interval

(assume arrivals follow a Poisson distribution).

b) Compute the probability of receiving exactly 10 calls in a 15-minute

interval.

Q2) A Poisson variable is such that \(P(X = 5) = 0.20 \times P(X = 4)\).
Calculate P(2<=x<=5)

Q3) Customer arrivals at a bank are random and independent; the probability
of an arrival in any one-minute period is the same as the probability of an arrival
in any other one-minute period.

Answer the following questions, assuming a mean arrival rate of three

customers per minute.

a. What is the probability of exactly three arrivals in a one-minute period?

b. What is the probability of at least three arrivals in a one-minute period?

Binomial Distribution
Q1) In San Francisco, 20% of workers take public transportation daily.

i) In a sample of 10 workers, what is the probability that exactly three

workers take public transportation? Use the **binomial probability formula**.

ii) In a sample of 10 workers, what is the probability that at least three

workers take public transportation?

Q2) Find the mean and standard deviation of the following binomial distribution:
\(n = 10\), \(p = 0.20\)

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Normal Distribution
Q1) The time taken to assemble a car at a certain plant follows a normal
distribution with a mean of 20 hours and a standard deviation of 2 hours.
a) Calculate the probability that a car is assembled in less than 19.5
hours.
b) Calculate the probability that a car is assembled between 20 and 22
hours.
Given:
- \(P(Z < -0.25) = 0.4013\)
- \(P(Z < 1) = 0.8413\)

Q2) The mean hourly pay rate for financial managers in the East North
Central region is $32.62, and the standard deviation is $2.32. Assume that pay
rates are normally distributed.
a. What is the probability a financial manager earns between $30 and $35
per hour?
b. How high must the hourly rate be to put a financial manager in the top
10% with respect to pay?
c. For a randomly selected financial manager, what is the probability the
manager earned less than $28 per hour?

Sampling Distribution
Q1) At KIIT University, the historical mean of scholarship examination scores for
first-year applications is 900. A historical population standard deviation σ = 180
is assumed known. Each year, the assistant dean uses a sample of applications to
determine if the mean score for new irst-year applications has changed.

i) State the null and alternative hypotheses regarding the mean

examination score.
ii) What is the 95% confidence interval estimate of the population mean
examination score if a sample of 200 applications provides a sample mean
of 935?
iii) What is the p-value, and how is it calculated for a two-tail test?
iV) Use the p-value to test the hypothesis in the above problem. Assume
\(\alpha = 0.05\).

Q2) Dalal Street traders were awaiting the RBI release of January non-farm job
numbers. The consensus estimate among economists was for 250,000 new jobs. A

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sample of 20 economists provided a sample mean of 266,000 with a sample
standard deviation of 24,000.
a) Conduct a hypothesis test to determine whether the sample supports a
statistically significant increase in the consensus estimate.
b) Test the hypothesis at a 0.01 significance level.

Q3) A sample survey of 54 discount brokers showed that the mean price charged
for a trade of 100 shares at $50 per share was $33.77. Assume a known
population standard deviation of $15.
a) Calculate the margin of error for a 95% confidence interval.
b) Develop a 95% confidence interval for the mean price charged by
discount brokers.

Q4) The average standard deviation for the annual return of large-cap stock
mutual funds is 18.2%. The sample standard deviation based on a sample size of
36 for the P-mutual fund is 22.2%.
i) Construct a hypothesis test to determine if the standard deviation for
the fund is greater than the average.
ii) Use a 0.05 significance level to draw your conclusion.

Q5) Most individuals are aware that the average annual repair cost for an
automobile depends on the age of the automobile. A researcher wants to find out
whether the variance in annual repair costs also increases with age. A sample of
26 automobiles, 4 years old, showed a sample standard deviation of $170, and a
sample of 25 automobiles, 2 years old, showed a sample standard deviation of
$100.
a) State the null and alternative hypotheses that the variance in annual
repair costs is larger for the older automobiles.
b) At a 0.01 level of significance, test whether the variance for the older
automobiles is higher. Use the **F-test** and calculate the p-value. Discuss the
reasonableness of your findings.
Explain the condition under which **t-distributions** are used, and
describe the properties of the t-distribution.

Variance
Q1) Two factories A and B, produce the same electronic component. A quality
control manager wants to determine if there is a significant difference in
variability between the two plants' production times.

**Plant A:**

- \( n1 = 16 \)
- \( s1^2 = 25 \)

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 **Plant B:**

- \( n2 = 21 \)
- \( s2^2 = 16 \)
Conduct an F-test at a 0.05 significance level to determine if the
variability in production time differs significantly between the two plants.

Simple Linear Regression

**Q1** The following data were collected on the height (inches) and weight
(pounds) of women swimmers:
Height: 68, 64, 62, 65, 66
Weight: 132, 108, 102, 115, 128
i) What does the scatter diagram indicate about the relationship between
height and weight? Draw the scatter plot.
ii) Approximate the relationship by drawing a straight line through the
data and develop the estimated regression equation by computing the values of
b0 and b1.
iii) Calculate R^2.

Q2) Given the following data:

\(x_i\): 3, 8, 10, 14, 23
\(y_i\): 8, 19, 11, 27, 25
a) Estimate the regression equation of \(y\) on \(x\).
b) Calculate the percentage of the total sum of squares that is accounted
for by the estimated regression equation.
c) Determine the value of the sample correlation coefficient.

Misc topics
Q)
i) Explain the difference between **discrete** and **continuous**
probability distributions. Provide an example of each type.
ii) Explain the **Chi-Square statistic**, and where it is used.
iii) Explain the **F-statistic** and describe situations where it is used.
Provide an example.
iv) State the formula and explain the difference between **point
estimation** and **confidence intervals**.
v) Explain the differences between covariance and correlation. Clearly
identify the benefit of using correlation over covariance, and provide an example
of when correlation is useful.

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Q
i) Define **Type I** and **Type II errors**.
ii) Provide an example of each error in the context of hypothesis testing.
Iii) Explain what is meant by **BLUE** (Best Linear Unbiased Estimator).

Q
i) What is a hypothesis? Explain with an example the difference between a
one-tailed and two-tailed hypothesis test.
ii) What are the z-values corresponding to 90%, 95%, and 99% confidence
intervals?

Q) Explain the following

a. What are the 3 properties of point estimation, explain any one
property.
b. What are the other important sampling methods (besides simple random
sampling)? explain any 1 method in not more than 100 words.