NEXT GENERATION CLASSES

G-2 Sanjay Nagar & VVIP Assets,Raj Nagar, Gzb

UNIT – 1 (Numbers, Quantification and Numerical Applications)
1. Modulo Arithmetic – 𝑎 𝑚𝑜𝑑 𝑏 = 𝑟, where 𝑟 is the remainder when 𝑎 is divided by 𝑏
2. Congruence Modulo – If 𝑎 and 𝑏 are any two integers and 𝑛 is a positive integer such
that 𝑛/(𝑎 − 𝑏) ie., (𝑎 − 𝑏) is divisible by 𝑛, then 𝑎 is said to be congruent to 𝑏 modulo
𝑛 and written as
𝑎 ≡ 𝑏 (𝑚𝑜𝑑 𝑛) or 𝑎 − 𝑏 ≡ (𝑚𝑜𝑑 𝑛) or 𝑎 − 𝑏 = 𝑘𝑛 for some integer 𝑛
3. Properties of Congruences:
If 𝑎, 𝑏, 𝑐 are any integers and 𝑛 is a positive integer, then
(a) 𝑎 ≡ 𝑏 (𝑚𝑜𝑑 𝑛) ⟺ 𝑎 = 𝑏 + 𝑘𝑛 for some integer 𝑘
(b) 𝑎 ≡ 𝑏 (𝑚𝑜𝑑 𝑛) ⟺ 𝑎 and 𝑏 leave the same remainder when divided by 𝑛
(c) An integer is congruent to its remainder i.e, 𝑎 ≡ 𝑟 (𝑚𝑜𝑑 𝑛)
(d) Every integer is congruent to itself i.e, 𝑎 ≡ 𝑎 (𝑚𝑜𝑑 𝑛)
(e) If 𝑎 ≡ 𝑏 (𝑚𝑜𝑑 𝑛) then 𝑏 ≡ 𝑎 (𝑚𝑜𝑑 𝑛)
(f) If 𝑎 ≡ 𝑏 (𝑚𝑜𝑑 𝑛) then −𝑎 ≡ −𝑏 (𝑚𝑜𝑑 𝑛)
(g) If 𝑎 ≡ 𝑏 (𝑚𝑜𝑑 𝑛) and 𝑏 ≡ 𝑐 (𝑚𝑜𝑑 𝑛), then 𝑎 ≡ 𝑐 (𝑚𝑜𝑑 𝑛)
(h) (𝑎 + 𝑏)(𝑚𝑜𝑑 𝑛) ≡ 𝑎 (𝑚𝑜𝑑 𝑛) + 𝑏 (𝑚𝑜𝑑 𝑛)
(i) If 𝑎 ≡ 𝑏 (𝑚𝑜𝑑 𝑛), then (𝑎 + 𝑘) ≡ (𝑏 + 𝑘) (𝑚𝑜𝑑 𝑛), for some integer 𝑘
(j) If 𝑎 ≡ 𝑏 (𝑚𝑜𝑑 𝑛) and 𝑐 ≡ 𝑑 (𝑚𝑜𝑑 𝑛), then (𝑎 + 𝑐) ≡ (𝑏 + 𝑑) (𝑚𝑜𝑑 𝑛)
(k) If 𝑎 ≡ 𝑏 (𝑚𝑜𝑑 𝑛) and 𝑐 ≡ 𝑑 (𝑚𝑜𝑑 𝑛), then (𝑎 − 𝑐) ≡ (𝑏 − 𝑑) (𝑚𝑜𝑑 𝑛)
(l) 𝑎. 𝑏 (𝑚𝑜𝑑 𝑛) = 𝑎(𝑚𝑜𝑑 𝑛). 𝑏(𝑚𝑜𝑑 𝑛)
(m) If 𝑎 ≡ 𝑏 (𝑚𝑜𝑑 𝑛) and 𝑐 ≡ 𝑑 (𝑚𝑜𝑑 𝑛), then 𝑎𝑐 ≡ 𝑏𝑑 (𝑚𝑜𝑑 𝑛)
(n) If 𝑎 ≡ 𝑏 (𝑚𝑜𝑑 𝑛), then 𝑘𝑎 ≡ 𝑘𝑏 (𝑚𝑜𝑑 𝑛), for some integer 𝑘
(o) If 𝑎 ≡ 𝑏 (𝑚𝑜𝑑 𝑛), then 𝑎𝑘 ≡ 𝑏𝑘 (𝑚𝑜𝑑 𝑛), for some integer 𝑘
4. Alligation & Mixture:
If two ingredients are mixed together, then the rule of allegation is
𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑜𝑓 𝑐ℎ𝑒𝑝𝑎𝑒𝑟 𝑖𝑛𝑔𝑟𝑒𝑑𝑖𝑒𝑛𝑡 𝑐𝑜𝑠𝑡 𝑝𝑟𝑖𝑐𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑑𝑒𝑎𝑟𝑒𝑟 𝑖𝑛𝑔𝑟𝑒𝑑𝑖𝑒𝑛𝑡−𝑀𝑒𝑎𝑛 𝑃𝑟𝑖𝑐𝑒
=
𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑜𝑓 𝑑𝑒𝑎𝑟𝑒𝑟 𝑖𝑛𝑔𝑟𝑒𝑑𝑖𝑒𝑛𝑡 𝑀𝑒𝑎𝑛 𝑃𝑟𝑖𝑐𝑒−𝑐𝑜𝑠𝑡 𝑝𝑟𝑖𝑐𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑐ℎ𝑒𝑎𝑝𝑒𝑟 𝑖𝑛𝑔𝑟𝑒𝑑𝑖𝑒𝑛𝑡
𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑜𝑓 𝑐ℎ𝑒𝑝𝑎𝑒𝑟 𝑖𝑛𝑔𝑟𝑒𝑑𝑖𝑒𝑛𝑡 𝑑−𝑚
Or =
𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑜𝑓 𝑑𝑒𝑎𝑟𝑒𝑟 𝑖𝑛𝑔𝑟𝑒𝑑𝑖𝑒𝑛𝑡 𝑚−𝑐
5. Boats and Streams:
Upstream – If the boat rows/sails along the direction of the stream then it is said to move
downstream
Downstream – If the boat rows/sails in the direction opposite to that of the stream then
it is said to move upstream
If 𝑥 km/h is the speed of boat in still water and 𝑦 km/h is the speed of the stream, then
Speed of boat in upstream = (𝑥 − 𝑦) km/h
Speed of boat in downstream = (𝑥 + 𝑦) km/h
𝑑𝑜𝑤𝑛𝑠𝑡𝑟𝑒𝑎𝑚 𝑠𝑝𝑒𝑒𝑑 × 𝑢𝑝𝑠𝑡𝑟𝑒𝑎𝑚 𝑠𝑝𝑒𝑒𝑑
Average speed of boat =
𝑠𝑝𝑒𝑒𝑑 𝑖𝑛 𝑠𝑡𝑖𝑙𝑙 𝑤𝑎𝑡𝑒𝑟
6. Pipes and Cisterns:
(a) If two inlet pipes can fill a tank in 𝑥 and 𝑦 hours respectively, then time taken to fill
1 𝑥𝑦
the whole tank = 1 1 =
( + ) 𝑥+𝑦
𝑥 𝑦
(b) If three inlet pipes can fill a tank in 𝑥, 𝑦 and 𝑧 hours respectively, then time taken to
1 𝑥𝑦𝑧
fill the whole tank = 1 1 1 =
( 𝑥+ 𝑦 + 𝑧 ) 𝑥𝑦+𝑦𝑧+𝑧𝑥
 (c) If an inlet pipe can fill a tank in 𝑥 hours and an outlet pipe can empty a tank in 𝑦
1 𝑥𝑦
hours (𝑦 > 𝑥), then time taken to fill the whole tank = 1 1 =
( 𝑥− 𝑦 ) 𝑦−𝑥

(d) If an inlet pipe can fill a tank in 𝑥 hours and an outlet pipe can empty a tank in 𝑦
1 𝑦𝑥
hours (𝑥 > 𝑦), then time taken to empty the whole tank = 1 1 =
( − ) 𝑥−𝑦
𝑦 𝑥
(e) If two inlet pipes take 𝑥 and 𝑦 hours respectively to fill the tank and the third outlet
pipe takes 𝑧 hours to empty the tank and all three of them are opened together, then
1 𝑥𝑦𝑧
time taken to fill the whole tank = 1 1 1 =
(𝑥+𝑦−𝑧) 𝑦𝑧+𝑧𝑥−𝑥𝑦

7. Races and Games:

S. No. Statements Mathematical Interpretations

1 A beats B by 𝑡 seconds A finishes the race 𝑡 seconds before B
finishes
2 A beats B by 𝑥 metres A reaches the finishing point and B is 𝑥
metres behind A
3 A beats B by 25 m or 7 seconds B covers a distance of 25 m in 7 seconds
4 A gives B a start of 𝑡 seconds A starts 𝑡 seconds after B starts from the
same starting point
5 A gives B a start of 𝑥 metres While A starts from the starting point, B
starts 𝑥 metres ahead of the same starting
point at the same time
6 Game of 100 A game of 100 means that the person
among the participants who scores 100
points first is the winner
7 A beats B by 20 points A scores 100 points and B scores 80 points
8 In a game of 100, A can give B While A need to score 100 points, B needs
20 points to score only (100-20) = 80 points

8. Numerical Inequalities:
If 𝑎, 𝑏, 𝑐 are real numbers, then
(a) If 𝑎 > 𝑏 and 𝑏 > 𝑐 then 𝑎 > 𝑐
(b) If 𝑎 < 𝑏 and 𝑏 < 𝑐 then 𝑎 < 𝑐
(c) If 𝑎 > 𝑏 then 𝑎 + 𝑐 > 𝑏 + 𝑐
(d) If 𝑎 > 𝑏 then 𝑎 − 𝑐 > 𝑏 − 𝑐
(e) If 𝑎 > 𝑏 and 𝑝 > 0 then 𝑝𝑎 > 𝑝𝑏
𝑎 𝑏
(f) If 𝑎 > 𝑏 and 𝑝 > 0 then >
𝑝 𝑝
1 1
(g) If 𝑎 > 𝑏 then <
𝑎 𝑏
(h) If 𝑎, 𝑏 are positive real numbers such that 𝑎 < 𝑏 and if 𝑛 is any positive rational
1 1
number then (i) 𝑎𝑛 < 𝑏 𝑛 (ii) 𝑎−𝑛 > 𝑏 −𝑛 (iii) 𝑎𝑛 < 𝑏𝑛
(i) For any real number 𝑎, −|𝑎| ≤ 𝑎 ≤ |𝑎|
(j) Types of Intervals
➢ Closed Interval: 𝑎 ≤ 𝑥 ≤ 𝑏 written as [𝑎, 𝑏]
➢ Open Interval: 𝑎 < 𝑥 < 𝑏 written as (𝑎, 𝑏)
 ➢ Semi-closed or Semi-open Interval: 𝑎 < 𝑥 ≤ 𝑏 written as (𝑎, 𝑏] or 𝑎 ≤ 𝑥 < 𝑏
written as [𝑎, 𝑏)
➢ Set of real numbers 𝑥 satisfying 𝑥 < 𝑎 and 𝑥 > 𝑎 are written as (−∞, 𝑎) and
(𝑎, ∞) respectively.
➢ Set of real numbers 𝑥 satisfying 𝑥 ≤ 𝑎 and 𝑥 ≥ 𝑎 are written as (−∞, 𝑎] and
[𝑎, ∞) respectively.
➢ |𝑥| ≤ 𝑎 ⟹ −𝑎 ≤ 𝑥 ≤ 𝑎
➢ |𝑥| ≥ 𝑎 ⟹ 𝑥 ≤ −𝑎, 𝑥 ≥ 𝑎

UNIT – 2 (Algebra)
1. Types of Matrices
(a) Column Matrix: A matrix is said to be a column matrix if it has only one column.
(b) Row Matrix: A matrix is said to be a row matrix if it has only one row.
(c) Square Matrix: A matrix in which the number of rows are equal to the number of
columns, is said to be a square matrix.
(d) Diagonal Matrix: A square matrix is said to be a diagonal matrix if all its non
diagonal elements are zero.
(e) Scalar Matrix: A diagonal matrix is said to be a scalar matrix if its diagonal
elements are equal.
(f) Identity Matrix: A square matrix in which elements in the diagonal are all 1 and
rest are all zero.
(g) Zero Matrix: A matrix is said to be zero matrix or null matrix if all its elements are
zero.
2. Properties of Matrix addition:
(a) Commutative Law: If A and B are two matrices of same order, then A+B=B+A
(b) Associative Law: If A, B and C are matrices of same order, then
A+(B+C) = (A+B)+C
(c) Existence of additive identity: If A is any matrix and O be a zero matrix, then A +
O = O + A, O is called the additive identity
(d) Existence of additive inverse: For any matrix A, A + (-A) = (-A) + A = O. -A is
called the additive inverse of A.
3. Properties of scalar multiplication: If A and B are two matrices of the same order and
𝑘 and 𝑙 are scalars, then
(a) 𝑘 (𝐴 + 𝐵 ) = 𝑘𝐴 + 𝑘𝐵
(b) (𝑘 + 𝑙)𝐴 = 𝑘𝐴 + 𝑙𝐴
4. Properties of Matrix multiplication:
(a) Commutative Law: 𝐴𝐵 ≠ 𝐵𝐴 for any two matrices A and B
(b) Associative Law: For any three matrices A, B and C (𝐴𝐵 )𝐶 = 𝐴(𝐵𝐶)
(c) Distributive law: For any three matrices A, B and C (i) 𝐴(𝐵 + 𝐶 ) = 𝐴𝐵 + 𝐴𝐶 and
(ii) (𝐴 + 𝐵 )𝐶 = 𝐴𝐶 + 𝐵𝐶
(d) Existence of multiplicative identity: For any square matrix A, there exist an
identity matrix of same order such that 𝐴𝐼 = 𝐼𝐴 = 𝐴
5. Properties of transpose of the matrices: For any matrices A and B of suitable orders,
(a) (𝐴′ )′ = 𝐴
(b) (𝑘𝐴)′ = 𝑘𝐴′
(c) (−𝐴)′ = −𝐴′
(d) (𝐴 + 𝐵 )′ = 𝐴′ + 𝐵′
 (e) (𝐴 − 𝐵 )′ = 𝐴′ − 𝐵′
(f) (𝐴𝐵 )′ = 𝐵′𝐴′
6. Symmetric and Skew Symmetric Matrices:
(a) Symmetric Matrix: A square matrix A is said to be symmetric if 𝐴′ = 𝐴
(b) Skew Symmetric Matrix: A square matrix A is said to be skew symmetric if 𝐴′ =
−𝐴. All the diagonal elements of a skew symmetric matrix are zero.
(c) Any square matrix can be expressed as the sum of a symmetric and a skew
1 1
symmetric matrix. 𝐴 = (𝐴 + 𝐴′ ) + (𝐴 − 𝐴′ ) for any square matrix 𝐴
2 2
7. If A and B are invertible matrices of same order then (𝐴𝐵)−1 = 𝐵 −1𝐴−1
8. Properties of Determinants:
(a) |𝐴′| = |𝐴|
(b) If any two rows (or columns) of a determinant are interchanged, then sign of
determinant changes.
(c) If any two rows (or columns) of a determinant are identical (all corresponding
elements are same), then value of determinant is zero.
9. Area of a triangle with vertices 𝐴(𝑥1 , 𝑦1 ), 𝐵 (𝑥2 , 𝑦2 ) and 𝐶 (𝑥3 , 𝑦3 ) is given by
𝑥 𝑦1 1
1 1
∆= |𝑥2 𝑦2 1|
2 𝑥 𝑦 1
3 3
Area of the triangle formed by three collinear points is zero.
10. Determinant of a matrix = sum of the product of elements of any row (or column) with
their corresponding cofactors.
11. If elements of a row (or column) are multiplied with cofactors of any other row (or
column), then their sum is zero.
12. 𝐴(𝑎𝑑𝑗𝐴) = (𝑎𝑑𝑗𝐴)𝐴 = |𝐴|𝐼
13. A square matrix A is said to be singular if |𝐴| = 0 and non-singular if |𝐴| ≠ 0
14. If A and B are non-singular matrices of the same order, then AB and BA are also non-
singular matrices of the same order.
15. |𝐴𝐵| = |𝐴||𝐵|
16. |𝐴𝑛 | = |𝐴|𝑛
17. |𝑘𝐴| = 𝑘 𝑛 |𝐴|
18. |𝑎𝑑𝑗𝐴| = |𝐴|𝑛−1
1
19. 𝐴−1 = | | 𝑎𝑑𝑗 𝐴
𝐴
20. (𝐴′ )−1 = (𝐴−1 )′
21. Consistent system A system of equations is said to be consistent if its solution (one or
more) exists.
22. Inconsistent system A system of equations is said to be inconsistent if its solution does
not exist.
23. If A is a non-singular matrix, then its inverse exists.
24. If A is a singular matrix, then |𝐴| = 0
In this case, we calculate (adj A) B.
If (𝑎𝑑𝑗 𝐴) 𝐵 ≠ 𝑂 , (𝑂 being zero matrix), then solution does not exist and the system
of equations is called inconsistent.
If (𝑎𝑑𝑗 𝐴) 𝐵 = 𝑂, then system may be either consistent or inconsistent according as
the system have either infinitely many solutions or no solution.
25. Consider the following system of linear equations in three variables 𝑥, 𝑦 and 𝑧
 𝑎1𝑥 + 𝑏1 𝑦 + 𝑐1𝑧 = 𝑑1
𝑎2 𝑥 + 𝑏2 𝑦 + 𝑐2𝑧 = 𝑑2
𝑎3 𝑥 + 𝑏3 𝑦 + 𝑐3𝑧 = 𝑑3
If the system of equations has a solution, whether unique or not, then it is said to be
consistent.
If the system of equations has no solution, then it is said to be inconsistent.
If a system of equations has an infinite number of solutions, then it is said to be
dependent.
If 𝑑1 = 𝑑2 = 𝑑3 = 0, then it is said to be homogeneous otherwise it is called non-
homogeneous.
26. Solution of System of Linear Equations:
(a) Matrix Method:
If the system of two linear equations in two unknowns be
𝑎1 𝑥 + 𝑏1 𝑦 = 𝑐1
𝑎2 𝑥 + 𝑏2 𝑦 = 𝑐2
𝑎 𝑏1 𝑥 𝑐1
Let 𝐴 = [ 1 ] , 𝑋 = [ 𝑦] , 𝐵 = 𝑐
𝑎2 𝑏2 2
−1
Then 𝑋 = 𝐴 𝐵
If the system of three linear equations in three unknowns be
𝑎1𝑥 + 𝑏1𝑦 + 𝑐1 𝑧 = 𝑑1
𝑎2 𝑥 + 𝑏2 𝑦 + 𝑐2 𝑧 = 𝑑2
𝑎3 𝑥 + 𝑏3 𝑦 + 𝑐3 𝑧 = 𝑑3

𝑎1 𝑏1 𝑐1 𝑥 𝑑1
Let 𝐴 = [𝑎2 𝑏2 𝑐2] , 𝑋 = [𝑦] , 𝐵 = [𝑑2]
𝑎3 𝑏3 𝑐3 𝑧 𝑑3
−1
Then 𝑋 = 𝐴 𝐵
(b) Cramer’s Rule:
If the system of two linear equations in two unknowns be
𝑎1 𝑥 + 𝑏1 𝑦 = 𝑐1
𝑎2 𝑥 + 𝑏2 𝑦 = 𝑐2
𝑎 𝑏1 𝑐 𝑏1 𝑎1 𝑐1
If 𝐷 = | 1 | , 𝐷1 = | 1 | , 𝐷2 = |𝑎 𝑐 |,
𝑎2 𝑏2 𝑐2 𝑏2 2 2
𝐷1 𝐷2
Then 𝑥 = , 𝑦 =
𝐷 𝐷
If the system of three linear equations in three unknowns be
𝑎1 𝑥 + 𝑏1 𝑦 + 𝑐1𝑧 = 𝑑1
𝑎2 𝑥 + 𝑏2 𝑦 + 𝑐2𝑧 = 𝑑2
𝑎3 𝑥 + 𝑏3 𝑦 + 𝑐3𝑧 = 𝑑3
𝑎1 𝑏1 𝑐1 𝑑1 𝑏1 𝑐1 𝑎1 𝑑1 𝑐1 𝑎1 𝑏1 𝑑1
If 𝐷 = |𝑎2 𝑏2 𝑐2| , 𝐷1 = |𝑑2 𝑏2 𝑐2| , 𝐷2 = |𝑎2 𝑑2 𝑐2| , 𝐷3 = |𝑎2 𝑏2 𝑑2 |
𝑎3 𝑏3 𝑐3 𝑑3 𝑏3 𝑐3 𝑎3 𝑑3 𝑐3 𝑎3 𝑏3 𝑑3
𝐷1 𝐷2 𝐷3
Then 𝑥 = , 𝑦 = , 𝑧 =
𝐷 𝐷 𝐷

UNIT – 3 (Calculus)
1. Differentiation:
 𝑑
(a) (𝑐𝑜𝑛𝑠𝑡𝑎𝑛𝑡) = 0
𝑑𝑥
𝑑
(b) (𝑥 𝑛 ) = 𝑛𝑥 𝑛−1
𝑑𝑥
𝑑
(c) (𝑠𝑖𝑛𝑥 ) = 𝑐𝑜𝑠𝑥
𝑑𝑥
𝑑
(d) (𝑐𝑜𝑠𝑥 ) = −𝑠𝑖𝑛𝑥
𝑑𝑥
𝑑
(e) (𝑡𝑎𝑛𝑥 ) = 𝑠𝑒𝑐 2𝑥
𝑑𝑥
𝑑
(f) (𝑐𝑜𝑠𝑒𝑐𝑥 ) = −𝑐𝑜𝑠𝑒𝑐𝑥 𝑐𝑜𝑡𝑥
𝑑𝑥
𝑑
(g) (𝑠𝑒𝑐𝑥 ) = 𝑠𝑒𝑐𝑥 𝑡𝑎𝑛𝑥
𝑑𝑥
𝑑
(h) (𝑐𝑜𝑡𝑥 ) = −𝑐𝑜𝑠𝑒𝑐 2𝑥
𝑑𝑥
𝑑
(i) (𝑒 𝑥 ) = 𝑒 𝑥
𝑑𝑥
𝑑 1
(j) (𝑙𝑜𝑔𝑥 ) =
𝑑𝑥 𝑥
𝑑 𝑥) 𝑥
(k) (𝑎 = 𝑎 𝑙𝑜𝑔𝑎
𝑑𝑥
(l) Derivative of the sum (or difference) of two function is the sum( or difference) of
the derivatives of the functions.
𝑑 𝑑 𝑑
[𝑓 (𝑥 ) ± 𝑔(𝑥 )] = 𝑓 (𝑥 ) ± 𝑔(𝑥)
𝑑𝑥 𝑑𝑥 𝑑𝑥
𝑑 𝑑 𝑑
Or [𝑢 ± 𝑣 ] = (𝑢) ± (𝑣)
𝑑𝑥 𝑑𝑥 𝑑𝑥
(m) Derivative of the product of two functions is given by the following product rule
𝑑 𝑑 𝑑
[𝑓 (𝑥 ). 𝑔(𝑥 )] = 𝑔(𝑥 ) 𝑓 (𝑥 ) + 𝑓 (𝑥 ). 𝑔(𝑥)
𝑑𝑥 𝑑𝑥 𝑑𝑥
𝑑 𝑑 𝑑
Or [𝑢. 𝑣 ] = 𝑔(𝑥 ) 𝑢 + 𝑓 (𝑥 ). 𝑣
𝑑𝑥 𝑑𝑥 𝑑𝑥

This is referred to as Leibnitz Rule for the product of two functions.

(n) Derivative of quotient of two functions is given by the following quotient rule
(wherever the denominator is non-zero)
𝑑 𝑑
𝑑 𝑓 (𝑥 ) 𝑔(𝑥 ). 𝑓 (𝑥 ) − 𝑓 (𝑥 ). 𝑔(𝑥)
[ ]= 𝑑𝑥 𝑑𝑥
𝑑𝑥 𝑔(𝑥 ) (𝑔(𝑥 ))2
𝑑 𝑑
𝑑 𝑢 𝑣. 𝑢−𝑢. 𝑣
𝑑𝑥 𝑑𝑥
Or [ ]=
𝑑𝑥 𝑣 (𝑣)2
𝑑
(o) Chain Rule - (𝑓(𝑔(𝑥 )) = 𝑓′(𝑔(𝑥 )) × 𝑔′(𝑥)
𝑑𝑥
(p) Higher Order Derivative:
If 𝑦 = 𝑓(𝑥)
𝑑𝑦
Then 𝑦 ′ = 𝑓 ′ (𝑥 ) =
𝑑𝑥
𝑑 𝑑𝑦 𝑑2 𝑦
𝑦 ′′ = 𝑓 ′′ (𝑥 ) = ( )=
𝑑𝑥 𝑑𝑥 𝑑𝑥 2
𝑑 𝑑2 𝑦 𝑑3 𝑦
𝑦 ′′′ = 𝑓 ′′′ (𝑥 ) = ( 2 ) = 3 and so on.
𝑑𝑥 𝑑𝑥 𝑑𝑥
(q) Derivatives of functions in parametric form:
 A relation between x and y can be expressible in the form x = f(t) and y = g(t) is a
parametric form representation with parameter as t.
𝑑𝑦⁄
𝑑𝑦 𝑑𝑡
=
𝑑𝑥 𝑑𝑥⁄
𝑑𝑡
𝑑 𝑑𝑦
2
𝑑 𝑦 𝑑 𝑑𝑦 ( )
𝑑𝑡 𝑑𝑥
= ( )=
𝑑𝑥 2 𝑑𝑥 𝑑𝑥 𝑑𝑥
𝑑𝑡
2. Properties of Logarithms:
log 𝑝
(a) log 𝑎 𝑝 = 𝑏
log𝑏 𝑎
(b) log 𝑏 𝑝𝑞 = log 𝑏 𝑝 + log 𝑏 𝑞
𝑝
(c) log 𝑏 = log 𝑏 𝑝 − log 𝑏 𝑞
𝑞
(d) log 𝑏 𝑝𝑛 = 𝑛 log 𝑏 𝑝
3. Application of derivatives:
𝑑𝑦
(a) Rate of Change – For the function 𝑦 = 𝑓(𝑥), or 𝑓′(𝑥) represents the rate of
𝑑𝑥
change of 𝑦 with respect to 𝑥
(b) Increasing and Decreasing Functions –
Steps to check whether the given function 𝑦 = 𝑓(𝑥) is strictly increasing or
decreasing
(i) Find 𝑓′(𝑥)
(ii) Put 𝑓 ′ (𝑥 ) = 0 to find the critical points (the values of 𝑥 where 𝑓 ′ (𝑥 ) = 0)
(iii) 𝑓 is strictly increasing in [𝑎, 𝑏] if 𝑓 ′ (𝑥 ) > 0 for each 𝑥 ∈ (𝑎, 𝑏)
𝑓 is strictly decreasing in [𝑎, 𝑏] if 𝑓 ′ (𝑥 ) < 0 for each 𝑥 ∈ (𝑎, 𝑏)
𝑓 is constant function in [𝑎, 𝑏] if 𝑓 ′ (𝑥 ) = 0 for each 𝑥 ∈ (𝑎, 𝑏)
(c) Tangents and Normals –
Slope of the tangent to the curve 𝑦 = 𝑓(𝑥) at the point (𝑥0 , 𝑦0 ) is given by
𝑑𝑦
] = 𝑓′(𝑥0 )
𝑑𝑥 (𝑥0 ,𝑦0 )
Equation of the tangent to the curve 𝑦 = 𝑓(𝑥) at the point (𝑥0 , 𝑦0 ) is given by
𝑦 − 𝑦0 = 𝑓′(𝑥0 ) (𝑥 − 𝑥0 )
1
Slope of the normal to the curve 𝑦 = 𝑓(𝑥) at the point (𝑥0 , 𝑦0 ) is given by −
𝑓′(𝑥0 )
Equation of the normal to the curve 𝑦 = 𝑓(𝑥) at the point (𝑥0 , 𝑦0 ) is given by
1
𝑦 − 𝑦0 = − (𝑥 − 𝑥0 )
𝑓′(𝑥0 )

(d) Maxima and Minima –

First Derivative Test – Let f be a function defined on an open interval I. Let f be
continuous at a critical point c in I. Then
(i) If f ′(x) changes sign from positive to negative as x increases through c, i.e., if f ′(x)
> 0 at every point sufficiently close to and to the left of c, and f ′(x) < 0 at every point
sufficiently close to and to the right of c, then c is a point of local maxima.
(ii) If f ′(x) changes sign from negative to positive as x increases through c, i.e., if f ′(x)
< 0 at every point sufficiently close to and to the left of c, and f ′(x) > 0 at every point
sufficiently close to and to the right of c, then c is a point of local minima.
 (iii) If f ′(x) does not change sign as x increases through c, then c is neither a point of
local maxima nor a point of local minima. Infact, such a point is called point of inflection
Second Derivative Test – Let f be a function defined on an interval I and c ∈ I. Let f
be twice differentiable at c. Then
(i) x = c is a point of local maxima if f (c) = 0 and f ″(c) < 0 The value f (c) is local
maximum value of f .
(ii) x = c is a point of local minima if f ′(c) = 0 and f ″(c) > 0 In this case, f (c) is local
minimum value of f .
(iii) The test fails if f ′(c) = 0 and f ″(c) = 0. In this case, we go back to the first derivative
test and find whether c is a point of local maxima, local minima or a point of inflexion.

(e) Marginal cost and Marginal revenue

𝐶(𝑥)
Average Cost (AC)= , where 𝐶 (𝑥 ) is the cost function
𝑥
𝑅(𝑥)
Average Revenue (AR)= , where 𝑅 (𝑥 ) is the revenue function and 𝑅 (𝑥 ) = 𝑝𝑥
𝑥
Profit Function 𝑃 (𝑥 ) = 𝑅 (𝑥 ) − 𝐶(𝑥)
𝑑𝐶
Marginal Cost = 𝑀𝐶 =
𝑑𝑥
𝑑(𝐴𝐶)
Marginal Average Cost = 𝑀𝐴𝐶 =
𝑑𝑥
1
Marginal Average Cost = (𝑀𝐶 − 𝐴𝐶)
𝑥
𝑑𝑅
Marginal Revenue = 𝑀𝑅 =
𝑑𝑥

4. Integration:
𝑥 𝑛+1
(a) ∫ 𝑥 𝑛 𝑑𝑥 = +𝐶
𝑛+1
1
(b) ∫ 𝑑𝑥 = log|𝑥| + 𝐶
𝑥
𝑎𝑥
(c) ∫ 𝑎𝑥 𝑑𝑥 = +𝐶
log 𝑎
(d) ∫ 𝑒 𝑥 𝑑𝑥 = 𝑒 + 𝐶 𝑥
1 1
(e) ∫ 2 𝑑𝑥 = − + 𝐶
𝑥 𝑥
1
(f) ∫ 𝑑𝑥 = 2√𝑥 + 𝐶
√𝑥
1 1 𝑥−𝑎
(g) ∫ 𝑑𝑥 = log | |+𝐶
𝑥 2 −𝑎 2 2𝑎 𝑥+𝑎
1 1 𝑎+𝑥
(h) ∫ 𝑑𝑥 = log | |+𝐶
𝑎2 −𝑥2 2𝑎 𝑎−𝑥
1
(i) ∫ 2 2 𝑑𝑥 = log|𝑥 + √𝑥 2 − 𝑎2 | + 𝐶
√𝑥 −𝑎
1
(j) ∫ 2 2 𝑑𝑥 = log|𝑥 + √𝑥 2 + 𝑎2 | + 𝐶
√𝑥 +𝑎
𝑥 𝑎2
(k) ∫ √𝑥 2 − 𝑎2 𝑑𝑥 = √𝑥 2 − 𝑎2 − log|𝑥 + √𝑥 2 − 𝑎2 | + 𝐶
2 2
𝑥 𝑎2
(l) ∫ √𝑥 2 + 𝑎2 𝑑𝑥 = √𝑥 2 + 𝑎2 + log|𝑥 + √𝑥 2 + 𝑎2 | + 𝐶
2 2
(m) Integration by Parts:
𝑑𝑢
∫ 𝑢𝑣 𝑑𝑥 = 𝑢 ∫ 𝑣 𝑑𝑥 − ∫ {𝑑𝑥 ∫ 𝑣 𝑑𝑥} 𝑑𝑥
i.e. (first function) x (integral of second function) – integral of {(derivative of first
function) x (integral of second function)}
 We can choose the first function as the function which comes first in the word
ILATE, where I stands for inverse trigonometric functions, L for logarithmic
functions, A for algebraic functions, T for trigonometric functions and E for
exponential function.
(n) ∫[𝑓 (𝑥 ) + 𝑓′(𝑥)]𝑒 𝑥 𝑑𝑥 = 𝑒 𝑥 𝑓(𝑥 ) + 𝐶
𝑃(𝑥)
(o) Integration by Partial fraction of Rational Function of the form
𝑄(𝑥)
If degree of 𝑃(𝑥 ) ≥ degree of𝑄(𝑥), then divide 𝑃(𝑥 ) by 𝑄 (𝑥 )
S. No. Form Partial Fraction
(i) 𝑝𝑥 + 𝑞 𝐴 𝐵
+
(𝑥 − 𝑎)(𝑥 − 𝑏) 𝑥−𝑎 𝑥−𝑏
(ii) 𝑝𝑥 + 𝑞 𝐴 𝐵
+
(𝑥 − 𝑎)2 𝑥 − 𝑎 (𝑥 − 𝑎)2
(iii) 𝑝𝑥 2 + 𝑞𝑥 + 𝑟 𝐴 𝐵 𝐶
+ +
(𝑥 − 𝑎)(𝑥 − 𝑏)(𝑥 − 𝑐) 𝑥−𝑎 𝑥−𝑏 𝑥−𝑐
(iv) 𝑝𝑥 2 + 𝑞𝑥 + 𝑟 𝐴 𝐵 𝐶
+ +
(𝑥 − 𝑎)2 (𝑥 − 𝑏) 𝑥 − 𝑎 (𝑥 − 𝑎)2 𝑥 − 𝑏
(v) 𝑝𝑥 2 + 𝑞𝑥 + 𝑟 𝐴 𝐵𝑥 + 𝐶
+ 2
(𝑥 − 𝑎)(𝑥 2 + 𝑏𝑥 + 𝑐) 𝑥 − 𝑎 𝑥 + 𝑏𝑥 + 𝑐

𝑑𝑥 𝑑𝑥
(p) For Integrals of the form ∫ 2 or ∫ use completing the square
𝑎𝑥 +𝑏𝑥+𝑐 √𝑎𝑥 2 +𝑏𝑥+𝑐
method and applying formulae (g) to (j) above
𝑝𝑥+𝑞 𝑝𝑥+𝑞
(q) For Integrals of the form ∫ 2 𝑑𝑥 or ∫ 𝑑𝑥, write
𝑎𝑥 +𝑏𝑥+𝑐 √𝑎𝑥 2 +𝑏𝑥+𝑐
𝑑
𝑝𝑥 + 𝑞 = 𝐴 (𝑎𝑥 2 + 𝑏𝑥 + 𝑐 ) + 𝐵 where A and B are determined by comparing
𝑑𝑥
coefficients on both sides.
(r) Properties of Indefinite Integral:
𝑑
(i) ∫ 𝑓(𝑥) 𝑑𝑥 = 𝑓(𝑥)
𝑑𝑥
(ii) ∫ 𝑘𝑓 (𝑥 )𝑑𝑥 = 𝑘 ∫ 𝑓(𝑥) 𝑑𝑥
(iii) ∫[𝑓 (𝑥 ) + 𝑔(𝑥 )]𝑑𝑥 = ∫ 𝑓(𝑥) 𝑑𝑥 + ∫ 𝑔(𝑥) 𝑑𝑥
(iv) ∫[𝑓 (𝑥 ) − 𝑔(𝑥 )]𝑑𝑥 = ∫ 𝑓(𝑥) 𝑑𝑥 − ∫ 𝑔(𝑥) 𝑑𝑥
(𝑓(𝑥))𝑛+1
(s) ∫(𝑓 (𝑥 ))𝑛 𝑓 ′ (𝑥 )𝑑𝑥 = + 𝐶, 𝑛 ≠ −1
𝑛+1
𝑓′(𝑥)
(t) ∫ 𝑑𝑥 = log|𝑓(𝑥)| + 𝐶
𝑓(𝑥)
(u) Definite Integral and its properties: Let 𝑓 be a continuous function of 𝑥 defined
𝑑
on the closed interval [𝑎, 𝑏] and let 𝐹 be another function such that 𝐹 (𝑥 ) = 𝑓(𝑥)
𝑑𝑥
𝑏
for all 𝑥 in the domain of 𝑓, then ∫𝑎 𝑓 (𝑥 )𝑑𝑥 = 𝐹 (𝑏) − 𝐹(𝑎)
𝑏 𝑏
(i) ∫𝑎 𝑓(𝑥 )𝑑𝑥 = ∫𝑎 𝑓 (𝑡)𝑑𝑡
𝑏 𝑎
(ii) ∫𝑎 𝑓 (𝑥 )𝑑𝑥 = − ∫𝑏 𝑓 (𝑥 )𝑑𝑥
𝑏 𝑐 𝑏
(iii) ∫𝑎 𝑓 (𝑥 )𝑑𝑥 = ∫𝑎 𝑓 (𝑥 )𝑑𝑥 + ∫𝑐 𝑓 (𝑥 )𝑑𝑥 where 𝑎 < 𝑐 < 𝑏
𝑏 𝑏
(iv) ∫𝑎 𝑓 (𝑥 )𝑑𝑥 = ∫𝑎 𝑓 (𝑎 + 𝑏 − 𝑥 )𝑑𝑥
𝑎 𝑎
(v) ∫0 𝑓(𝑥 )𝑑𝑥 = ∫0 𝑓 (𝑎 − 𝑥 )𝑑𝑥
 𝑎 𝑎
(vi) ∫−𝑎 𝑓 (𝑥 )𝑑𝑥 = 2 ∫0 𝑓 (𝑥 )𝑑𝑥 if 𝑓 (−𝑥 ) = 𝑓(𝑥) i.e, 𝑓 is an even function
0 if 𝑓 (−𝑥 ) = −𝑓(𝑥) i.e, 𝑓 is an odd function
2𝑎 𝑎
(vii) ∫0 𝑓 (𝑥 )𝑑𝑥 = 2 ∫0 𝑓(𝑥 )𝑑𝑥 if 𝑓 (2𝑎 − 𝑥 ) = 𝑓(𝑥)
0 if 𝑓 (2𝑎 − 𝑥 ) = −𝑓(𝑥) i.e, 𝑓 is an odd function

(v) Consumer Surplus is the gain made by consumers when they purchase an item
from the market at a lower price rather than the price they would have been willing
to pay for it.
𝑥
𝐶𝑆 = ∫0 0 𝐷 (𝑥 )𝑑𝑥 − 𝑥0 × 𝑝0 , 𝐷 (𝑥 ) is the demand
function

Producer Surplus is the gain made by producers

when they sell an item from the market at a higher
price rather than the price they would have been
willing to sell it.
𝑥
𝑃𝑆 = 𝑥0 × 𝑝0 − ∫0 0 𝑆(𝑥 )𝑑𝑥 −, 𝑆(𝑥 ) is the supply function

Equilibrium Point – The intersection of a demand and supply curve is known as

the equilibrium point. It is the point where market equilibrium is attained and occurs
at the price where the quantity demanded is equal to the quantity supplied.

5. Differential Equations:
(a) Order and Degree of a differential equation – The order of a differential equation
is the order of the highest order derivative of the dependent variable with respect to
independent variable appearing in the equation. If each term involving derivatives
of a differential equation is a polynomial (or can be expressed as a polynomial) then
the highest exponent of the highest order derivative is called the degree of the
differential equation.
(b) General and Particular Solution – The solution which contains as many arbitrary
constants as the order of the differential equation is called the general solution of
the differential equation.
The solution free from arbitrary constants i.e., the solution obtained from the general
solution by giving particular values to the arbitrary constants is called a particular
solution of the differential equation. Thus a particular solution is free from
arbitrary constant.
(c) The formation of differential equation means to form a differential equation by
eliminating arbitrary constants from the given equation. The given equation is to be
differentiated with respect 𝑥 successively as many times as the number of arbitrary
constants.
(d) Solution of Differential Equation by Variable Separable – Differential equations
𝑑𝑦
of the type = 𝑓 (𝑥 )𝑔(𝑦), 𝑔(𝑦) ≠ 0 can be solved as
𝑑𝑥
𝑑𝑦
∫ = ∫ 𝑓 (𝑥 )𝑑𝑥 + 𝐶
𝑔(𝑦)
 UNIT – 4 (Probability Distributions)

1. Random Variable – A random variable is simply a variable whose values are

determined by the outcomes of a random experiment i.e., to each outcome of the
experiment of a sample space S, there corresponds.
(a) Discrete Random Variable – A random variable is said to be discrete if it takes
only a finite number of values.
(b) Continuous Random Variable – A random variable is said to be continuous if it
assumes any possible value between certain limits. In such a case it takes any value
in an interval.
2. Probability Distribution of Random Variable: If a random variable 𝑋 assumes values
𝑥1 , 𝑥2 , … , 𝑥𝑛 with respective probabilities 𝑝1 , 𝑝2 , … , 𝑝𝑛 such that
(a) 0 < 𝑝𝑖 ≤ 1 for 𝑖 = 1,2, … , 𝑛
(b) 𝑝1 + 𝑝2 + ⋯ + 𝑝𝑛 = 1
Then the random variable 𝑋 possesses the following distribution:
𝑋 𝑥1 𝑥2 𝑥3 … 𝑥𝑛
𝑃(𝑋) 𝑝1 𝑝2 𝑝3 … 𝑝𝑛
If 𝑥𝑖 is one of the possible values of a random variable 𝑋, then the probability that 𝑋
takes value 𝑥𝑖 is always non-zero i.e., 𝑃(𝑋 = 𝑥𝑖 ) ≠ 0

The Mathematical expectation 𝐸(𝑋) or 𝑋̅ of a random variable is generally called the

Mean of the random variable and is given by
𝑛

𝑋̅(𝑜𝑟 𝜇) = ∑ 𝑝𝑖 𝑥𝑖
𝑖=1
Variance of probability distribution is given by
𝑛 𝑛 2

𝑉𝑎𝑟 (𝑋)(𝑜𝑟 𝜎 2 ) = ∑ 𝑝𝑖 𝑥𝑖 2 − (∑ 𝑝𝑖 𝑥𝑖 )
𝑖=1 𝑖=1
𝑜𝑟 𝐸 (𝑋 2 ) − [𝐸 (𝑋)]2
𝑛 𝑛 2

𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝐷𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 = √𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒 = √∑ 𝑝𝑖 𝑥𝑖 2 − (∑ 𝑝𝑖 𝑥𝑖 )

𝑖=1 𝑖=1
3. Bernoulli Trials – Trials of a random experiment are called Bernoulli trials, if they
satisfy the following conditions:
(a) There should be a finite number of trials.
(b) The trials should be independent.
(c) Each trial has exactly two outcomes: success or failure.
(d) The probability of success remains the same in each trial.

4. Binomial Distribution – It is a particular type of discrete probability distribution.

A binomial distribution with n-Bernoulli trials and probability of success in each trial
as 𝑝, is denoted by 𝐵(𝑛, 𝑝).
 In Binomial distribution, the probability of x successes 𝑃(𝑋 = 𝑟) is denoted by 𝑃(𝑟)
and is given by
𝑃(𝑋 = 𝑟) = 𝑛𝐶 𝑟 𝑝𝑟 𝑞 𝑛−𝑟 , 𝑟 = 0,1, … , 𝑛 (𝑞 = 1 − 𝑝)
𝑃(𝑥) is called the probability function of the Binomial distribution.
Mean of the Binomial Distribution = 𝑛𝑝
Variance of the Binomial Distribution = 𝑛𝑝𝑞
Standard deviation of the Binomial Distribution = √𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒 = √𝑛𝑝𝑞
5. Poisson Distribution – Poisson distribution is limiting case of binomial distribution,
when
(a) The number of trials is very large i.e., 𝑛 → ∞
(b) The probability of success is very small i.e., 𝑝 → 0
(c) But the mean of success is finite say 𝑚 i.e., 𝑛 → ∞, 𝑝 → 0 such that 𝑛𝑝 = 𝑚 (say)
For a Poisson distribution,
−𝑚
𝑚𝑟
𝑃 (𝑋 = 𝑟) = 𝑒 , 𝑟 = 0,1,2, … , ∞
𝑟!
𝑚 is called the parameter of the Poisson distribution and 𝑒=2.7183
∞ ∞ 𝑟 ∞
−𝑚
𝑚 −𝑚
𝑚𝑟
∑ 𝑃(𝑋 = 𝑟) = ∑ 𝑒 =𝑒 ∑ = 𝑒 −𝑚 𝑒 𝑚 = 𝑒 0 = 1
𝑟! 𝑟!
𝑟=0 𝑟=0 𝑟=0
Hence Poisson distribution is a probability distribution.
Mean of the Poisson distribution = Variance of the Poisson distribution = 𝑚
𝑚
Recurrence formula: 𝑃(𝑟 + 1) = . 𝑃(𝑟)
𝑟+1
6. Normal Distribution – If 𝑓 (𝑥 ) is a continuous function of any real number 𝑥 such that
𝑓 (𝑥 )𝑑𝑥 represents the probability that the random variable 𝑋 falls in the interval
𝑑𝑥 𝑑𝑥
[𝑥 − , 𝑥 + ], then 𝑓(𝑥 ) is known as the probability density function of ransom
2 2
variable 𝑋.
If 𝑓(𝑥) is the probability density function of a random variable 𝑋, then
(i) 𝑓(𝑥 ) ≥ 0
∞
(ii) ∫−∞ 𝑓 (𝑥 )𝑑𝑥 = 1
(iii) Probability that the random variable 𝑋 lies between 𝑎 and 𝑏 is given by the area
bounded by the curve, 𝑥-axis and the coordinates 𝑥 = 𝑎 and 𝑥 = 𝑏 i.e.,
𝑏
𝑃 (𝑎 ≤ 𝑥 ≤ 𝑏) = ∫ 𝑓 (𝑥 )𝑑𝑥
𝑎
The normal distribution is a continuous distribution and is a limiting case of the
binomial distribution under the following conditions:
(i) 𝑛, the number of trials is indefinitely large i.e., 𝑛 → ∞
(ii) neither 𝑝 nor 𝑞 is very small.
A continuous random variable 𝑋 is said to have a normal distribution if its probability
density function is given by
1 1 𝑥−𝜇 2
𝑓 (𝑥 ) = . 𝑒 2 𝜎 ) , −∞ < 𝑥 < ∞, −∞ < 𝜇 < ∞, 𝜎 > 0
− (
𝜎√2𝜋
Where 𝜇 and 𝜎 are the mean and standard deviation of the distribution.
𝜇 and 𝜎 are known as the parameters of the normal distribution and 𝑥 is called the
normal variate.
Properties of Normal Distribution: The curve 𝑦 = 𝑓 (𝑥 ) given above is known as normal
curve and has the following properties:
(a) The curve is bell shaped and is symmetrical about the line 𝑥 = 𝜇 i.e., the curve is
symmetrical about the mean
∞
(b) The area bounded by the curve and 𝑥 −axis is one unit i.e., ∫−∞ 𝑓 (𝑥 )𝑑𝑥 = 1
(c) The probability that 𝑥 lies between 𝑎 and 𝑏 is equal to the area bounded by the curve,
𝑏
𝑥-axis and the ordinates 𝑥 = 𝑎 and 𝑥 = 𝑏, i.e., 𝑃 (𝑎 < 𝑥 < 𝑏) = ∫𝑎 𝑓 (𝑥 )𝑑𝑥
(d) Mean, Median and Mode of the normal distribution coincide.

(e) As 𝑥 increases numerically, 𝑓 (𝑥 )decreases rapidly and the maximum value of 𝑓(𝑥 )
occurs at 𝑥 = 𝜇
(f) The area under the normal curve is distributed as follows:
(i) 𝜇 ± 𝜎 covers 68.27% area i.e., 𝑃 (𝜇 − 𝜎 < 𝑥 < 𝜇 + 𝜎) = 0.6827
(ii) 𝜇 ± 2𝜎 covers 95.45% area i.e., 𝑃(𝜇 − 2𝜎 < 𝑥 < 𝜇 + 2𝜎) = 0.9545
(iii) 𝜇 ± 3𝜎 covers 99.73% area i.e., 𝑃 (𝜇 − 3𝜎 < 𝑥 < 𝜇 + 3𝜎) = 0.9973
(iv) 𝑥-axis is the tangent to the curve at 𝑥 = ±∞

𝑋−𝜇
Standard Normal Distribution – 𝑍 = is called Standard normal variable. The
𝜎
mean and standard deviation of the variable 𝑍 are 0 and 1 respectively. In terms of 𝑍,
the probability density function of 𝑥 reduces to
1 2
1
∅(𝑍) = . 𝑒 −2𝑍 , −∞ < 𝑍 < ∞,
√2𝜋
𝑍
𝑃 (0 ≤ 𝑍 ≤ 𝑍1 ) = ∫0 1 ∅(𝑍) 𝑑𝑍
 Since the normal curve is symmetrical about mean and mean of standard normal variate
is 0, therefore the standard normal curve is symmetrical about the line 𝑍 = 0 and hence
0 ∞

∫ 𝑓 (𝑥 )𝑑𝑥 = ∫ 𝑓 (𝑥 )𝑑𝑥 = 0.5

−∞ 0
𝑖. 𝑒. , 𝑃 (𝑍 ≤ 0) = 𝑃(𝑍 ≥ 0) = 0.5
Steps to find the probability that a normal variate 𝑋 lies between 𝑋1 and 𝑋2
𝑋−𝜇
(i) Define the standard normal variate 𝑍 = , where 𝜇 and 𝜎 are mean and standard
𝜎
deviation of the given normal variate 𝑋
(ii) Find the values of 𝑍, corresponding to 𝑋 = 𝑋1 and 𝑋 = 𝑋2 . Let these values of 𝑍 be
𝑍1 and 𝑍2 respectively.
(iii) The required probability that 𝑋 lies between 𝑋1 and 𝑋2 is given by
𝑃(𝑋1 ≤ 𝑋 ≤ 𝑋2 ) = 𝑃((𝑍1 ≤ 𝑋 ≤ 𝑍2 )
(iv) Compute 𝑃((𝑍1 ≤ 𝑋 ≤ 𝑍2 ) to obtain the required probability.
Properties of Standard normal variable:
1 2
1 ∞ −2𝑍
(i) ∫ 𝑒 𝑑𝑍 = 1
√2𝜋 −∞
(ii) 𝑃(−𝑍) = 1 − 𝑃(𝑍)

UNIT – 5 (Inferential Statistics)

1. Population – In Statistics, population is defined as an aggregate or collection of objects
(living or non-living), experiments, observations, events etc. The population may be of
two types:
(a) Existent Population – The population of concrete objects is called the existent
population. For example, number of persons living in a city, maximum temperature
of each day in a particular year etc.
(b) Hypothetical Population – The population which does not consist of concrete
objects or is a collection of all possible ways in which a specified event can happen
is called hypothetical population. For example, when we throw a die, each throw is
an individual event and we can construct a population by throwing the die n number
of times and recording the results.
On the basis of size of population, population is of two types:
(a) Finite Population – Population consisting of a finite (countable) number of
individuals, objects, events etc. is called finite population. For example, students
getting sixty percent or above marks in a school, number of cars in a town etc.
(b) Infinite Population – Population consisting of an infinite number of individuals,
objects, events etc. is called an infinite population. For example, stars in a milky
way, number of plants in a city etc.
2. Sample – A sample is a smaller group of members of a population selected to represent
the population.
3. Sampling – Sampling is simply the process of learning about the population on the
basis of a sample drawn from it. It includes three steps:
(a) Selecting the sample
(b) Collecting the information about the sample
(c) Making an inference about the population
4. Types of sampling –
There are mainly two types of sampling:
(a) Probability sampling
(b) Non-probability sampling
(a) Probability sampling: In this type of sampling the selection of members from the
population is random such that each member of the population has an equal chance
of being selected. This method is also known as random sampling.
There are mainly four types of probability sampling.
(i) Simple random sampling: In a simple random sampling every member of the
population has an equal chance of being selected. This is one of the most common
method of sampling. Example: There are 1000 employees in a company A, you want to
select a simple random sample of 100 employees. You assign a number to every
employee in the company from 1 to 1000 and select randomly 100 numbers.
(ii) Systematic sampling: Systematic sampling is similar to simple random sampling
but is slightly easier to conduct. Every member of the population is assigned a number
but instead of randomly selecting numbers, the numbers are chosen at regular intervals.
Example: Out of 1000 employees of company A, you want to select a sample of 100
employees. All employees of the company are arranged in alphabetical order and
assigned a number 1 to 1000. You randomly select a number 4 from first 10 numbers
and then every 10th person in the list is selected i.e. 4, 14, 24, ... and end
up with sample of 100 members.
(iii) Stratified sampling: In stratified sampling the population is divided into
subgroups called strata based on the relevant characteristic e.g. gender, age, income
profession etc. The members from each subgroup are selected using simple random or
systematic sampling.
Example: There are 700 male employees and 300 female employees in company A, you
want to select a sample of 100 employees reflecting gender balance of the company.
Divide the employees into subgroups male and female employees. Select 70 male
employees and 30 female employees using simple random or systematic sampling.
(iv) Cluster sampling: Cluster sampling also divides the population into subgroups but
each subgroup has similar characteristics of the whole population. This method is useful
when population is dispersed.
Example: Suppose company A has its branches in 15 cities. You want to select a sample
of 100 employees. It is difficult to select members from each branch. So first select any
5 branches and then select 20 members from each selected branch.
(b) Non-probability sampling: In this type of sampling the selection of members from
the population is non-random and each member has not equal chance of being
selected. This type of sampling is easier and cheaper to access. You cannot use it to
make valid statistical inferences about the population.
There are mainly four types of non-probability sampling.
(i) Convenience sampling: In convenience sampling the members are selected which
are most convenient for researcher i.e. members which are easily accessible to the
researcher.
Example: Suppose you are researching about the services providing by the university
to the hostel students. You may ask your fellow students to complete a survey. This is
the most convenient way of gathering data.
(ii) Voluntary response sampling: It is similar to convenience sampling. In this
sampling method people who are themselves ready to conduct the survey. Collect
the sample data.
 Example: Suppose you announced about the survey of hostel facilities. Some students
volunteer themselves to collect the sample data.
(iii) Judgement sampling: This type of sampling is based on the opinion of an expert.
It is also called purposive sampling. However, the quality of the sample results depends
on the judgement of the person selecting the sample.
Example: You can see the selection procedure of all the reality shows. e.g. Indian idol
in which some participates are selected by the experts among the thousands of
applicants.
(iv) Snowball sampling: In this sampling method, we first select some persons, then
with the help of selected persons we select some more and this process continues to
collect the sample. It is same as a snowball increases in size as it rolls down.
Example: Suppose you are researching about the child labours of your city. You meet
one child labour and he/she puts you in contact of other child labours.
5. Difference between Population and Sample:

Population Sample
Population is a large collection of Sample is a subset of the population. It
statistical individuals having same consists of members drawn from the
characteristic. population.
A population may be finite or infinite. Sample is finite.
A survey done on the total population is A survey done on a sample of the
precise and accurate. population is not very accurate.
Population focusses on the identification Sample focusses on drawing inference
of the characteristic. about the population.

6. Parameter and Statistic –

Parameter: A measurable characteristic of a population is called parameter. e.g.
Population mean (µ), population variance (σ²), population standard deviation (σ) etc.
A parameter is used to describe the entire population.
For example, we want to know the average length of a house sparrow. This is a
parameter because it states the average length of whole population of house sparrows.
Statistic: A measurable characteristic of a sample is called statistic. For example,
sample mean (𝑥̅ ), sample variance (𝑠 2 ), sample standard deviation (s) etc.
For example: We catch 100 house sparrows and measure their length. The mean length
of 100 sparrows is a statistic which can be used to make an inference about the length
of the entire house sparrow population.

SAMPLING FLUCTUATIONS OR SAMPLING ERROR

The differences or discrepancies observed between the parameter and statistic value or
between the statistic values of different samples are called sampling fluctuations or
sampling errors. These errors can be minimised by increasing sample size and adopting
proper sampling techniques.
SAMPLING DISTRIBUTION
Sampling distribution is a series of all possible samples of a certain size and their
statistic like, mean, variance, standard deviation etc., which may be obtained from finite
or infinite population
 If we select a number of independent random samples of a definite size from a
population and calculate some statistic such as mean, variance, standard deviation etc.
of the samples, we get a series of values of that statistic. The values so obtained can be
tabulated in the form of a frequency distribution or probability distribution. This
distribution is called sampling distribution of the statistic under consideration.
7. Statistical Inference – Statistical inference is a process through which inferences about
obtained from the sample. the population are made based on informations
There are mainly three types of statistical inferences:
(i) Point Estimation
(ii) Interval Estimation
(iii) Hypothesis testing
8. Point Estimation
In statistics, point estimation involves the use of sample data to calculate a single value
of an unknown population parameter. Single value of sample data is known as point
estimate of corresponding population parameter.
For example, sample mean is a point estimate of population mean µ, sample proportion
p is a point estimate of population proportion p.
∑𝑥
Sample Mean = 𝑥̅ = 𝑖
𝑛
𝑥
Sample Proportion(probability) = 𝑝̅ =
𝑛
∑(𝑥𝑖 −𝑥̅ )2
Sample Standard deviation = 𝑠 = √
𝑛−1
9. Interval Estimation
In interval estimation we find two numbers using sample statistic between which a
population parameter lie. For example 𝑎 < 𝜇 < 𝑏 is an interval estimate of the
population mean 𝜇.
Confidence Interval
A confidence interval is a range of values, derived from sample statistic which is likely
to contain the value of an unknown population parameter.
A confidence interval consists of three parts:
1. Confidence level
2. Sample statistic
3. Margin of error
1. Confidence level: The confidence level describes the uncertainty of a sampling
method i.e. the probability part of a confidence interval is called confidence level.
Confidence level written in decimal is called confidence coefficient.
For example: Suppose we collect some samples from a given population and compute
confidence interval for each sample. A 95% confidence level means that 95% of the
interval contain the true population parameter. Here confidence level is 95% and
confidence coefficient is 0.95.
2. Sample statistic: It is sample statistic for which the estimation of population
parameter is done.
3. Margin of error: In a confidence interval, the range of values, above and below the
sample statistic is called margin of error.
For example: Suppose a news channel conducted an exit poll and reports that candidate
X will receive 40% of the vote. The channel claimed that exit poll had a 5% margin of
 error and confidence level is 90%. It means channel is 90% confident that candidate X
will get between 35% and 45% of the vote.
The interval estimation of population mean is given by the formula
𝜇 = 𝑥̅ ± margin of error
Where 𝑥̅ = sample mean and 𝜇 = population mean
Calculation of margin of error
𝜎
Margin of error = 𝑍𝛼⁄2 .
√𝑛
Where (1 − 𝛼) is called confidence coefficient and 𝑍𝛼⁄2is the 𝑍 value providing an area
𝛼
of in the upper tail of the standard normal probability distribution.
2
The values of 𝑍𝛼⁄2 for most commonly used confidence levels is given below:
Confidence Interval 𝛼 𝛼 𝑍𝛼⁄2
2
90% 0.10 0.05 1.645
95% 0.05 0.025 1.960
99% 0.01 0.005 2.576

Interval Estimation of population Proportion

The interval estimate of population proportion is given by the following formula:
𝑝 = 𝑝̅ ± margin of error
Where 𝑝̅ = sample of proportion and 𝑝 = population proportion
𝑝̅ (1−𝑝̅)
Margin of error = 𝑍𝛼⁄2 √
𝑛
10. Central Limit Theorem – The central limit theorem explains the relationship between
the shape of the population distribution and sampling distribution.
Central limit theorem states that if from a population having mean µ and standard
deviation σ, a large number of random samples are drawn, then the distribution of
sample means will be approximately normally distributed.
11. Hypothesis Testing – A statistical hypothesis is an assumption or statement about the
value of a population parameter which may be true or false. Such assumptions are made
before any final decision is taken about the population on the basis of sample
information.
Types of Hypothesis:
(a) Null Hypothesis
(b) Alternate Hypothesis

Null hypothesis suggests that there is no significant difference between sample statistic
and the corresponding population parameter value or between two sample statistics. A
null hypothesis is denoted by 𝐻0 . For example, if we want to test whether the sample
with mean µ, may be regarded as drawn from the population having mean 𝜇, then we
set a null hypothesis (𝐻0 ) that difference between the population mean and sample mean
is negligible or not significant. Thus, our null hypothesis is 𝐻0 : 𝜇 = 𝜇0 (i.e. the mean
of the population = mean of the sample).
The rejection of the null hypothesis indicates that there is a significant difference
between the means and acceptance of null hypothesis indicates that the difference
between the means is not significant.
 Alternative Hypothesis
Any hypothesis which contradicts the null hypothesis 𝐻0 is called alternative
hypothesis. It is denoted by 𝐻𝛼 . The two hypothesis 𝐻0 and 𝐻𝛼 are such that if one is
accepted, the other is rejected and vice-versa.
For example, if null hypothesis Ho is : 𝜇 = 𝜇0 , then alternative hypothesis may be
(i) 𝐻𝛼 : 𝜇 ≠ 𝜇0 (i.e., 𝜇 > 𝜇0 or 𝜇 < 𝜇0 )
(ii) 𝐻𝛼 : 𝜇 > 𝜇0
(iii) 𝐻𝛼 : 𝜇 < 𝜇0

Errors in Testing of Hypothesis

There are primarily two kinds of errors:
Type I error
Type II error
Type I errors are made when we reject the null hypothesis in testing a procedure,
although it is true. The probability of making such type of errors is usually denoted by
Greek letter 𝛼
Type II errors are made when we accept the null hypothesis in testing a procedure,
although it is false. The probability of making such type of errors is usually denoted by
Greek letter β
𝐻0 𝐴𝑐𝑐𝑒𝑝𝑡𝑒𝑑 𝐻0 𝑅𝑒𝑗𝑒𝑐𝑡𝑒𝑑
𝐻0 𝑖𝑠 𝑡𝑟𝑢𝑒 No error (correct decision) Type I error
𝐻0 𝑖𝑠 𝑓𝑎𝑙𝑠𝑒 Type II error No error (correct decision)

12. Tailed Tests of hypothesis:

One Tailed and Two tailed Tests:
The alternative hypothesis in (i) above i.e., 𝐻𝛼 : 𝜇 ≠ 𝜇0 (i.e., 𝜇 > 𝜇0 or 𝜇 < 𝜇0) is called
a two tailed alternative (both right and left tail)
The alternative hypothesis in (ii) above i.e., 𝐻𝛼 : 𝜇 > 𝜇0 is called a right tailed
alternative.
The alternative hypothesis in (ii) above i.e., 𝐻𝛼 : 𝜇 < 𝜇0 is called a left tailed alternative.
The set of values for the test statistic 𝑍 at which the null hypothesis 𝐻0 is rejected is
known as the critical region or rejection region.
(h) In a two tailed test, there are two critical regions at 𝛼 level of significance and these
lie equally in both the tails of the sampling distribution of means.

(ii) In a right tailed test, the critical region at 𝛼 level of significance lies entirely in the
right tail of the sampling distribution of means.
(iii) In a left tailed test, the critical region at 𝛼 level of significance lies entirely in the
left tail of the sampling distribution of means.
13. t-Test
A t-test is a statistical test that is used to compare the means of two groups, which may
be related in certain features. It is often used hypothesis testing.
There are mainly two types of t-tests:
(i) One sample t-test
(ii) Two sample t-test
(iii) Paired t-test

One Sample t-test

If {𝑥1 , 𝑥2 , … , 𝑥𝑛 } is any random sample of size 𝑛 drawn from a normal population with
mean 𝜇 and variance 𝜎 2 , then the test statistic 𝑡 is defined by
𝑥̅ − 𝜇
𝑡=
𝑆
√𝑛
1 𝑛
Where 𝑥̅ = ∑𝑖=1 𝑥𝑖 is the sample mean.
𝑛
1
2
And 𝑆 = ∑𝑛 (𝑥 − 𝑥̅ )2 is the unbiased estimate of population variance 𝜎 2
𝑛−1 𝑖=1 𝑖
If 𝑠 2 is the sample variance, then
𝑛
1
𝑠2 = ∑(𝑥𝑖 − 𝑥̅ )2
𝑛−1
𝑖=1
𝑆2 𝑛 𝑆2 𝑠2
= ⟹ =
𝑠2 𝑛 − 1 𝑛 𝑛−1
𝑆 𝑠
=
√𝑛 √𝑛 − 1
𝑥̅ −𝜇 𝑥̅ −𝜇
Thus, the test statistic 𝑡 = 𝑆 can also be defined as 𝑡 = 𝑠
√𝑛 √𝑛−1
TEST OF SIGNIFICANCE OF THE DIFFERENCE BETWEEN MEAN OF A
RANDOM SAMPLE AND POPULATION MEAN
Consider that a small random sample {𝑥1 , 𝑥2 , … , 𝑥𝑛 } with sample size 𝑛 and mean 𝑥̅ is
drawn from a normal population. To determine if there is a significant difference
between the sample mean and the hypothetical value of population mean, when
population standard deviation (𝜎) is not known, we proceed as follows:
(a) Define the null hypothesis 𝐻0 : There is no significant difference between the
sample mean (𝑥̅ ) and the population mean (𝜇)
And the alternative hypothesis 𝐻𝛼 : There is a significant difference between the
sample mean (𝑥̅ ) and the population mean (𝜇)
 𝑥̅ −𝜇
(b) Calculate the test statistic 𝑡 by using 𝑡 = 𝑠 , where 𝑥̅ = sample mean,
√𝑛−1
𝜇 =population mean (or hypothetical mean of population), 𝑠 =sample standard
deviation, 𝑛 =sample size
(c) Find the value of |𝑡| and compare this value of 𝑡 with 𝑣 = (𝑛 − 1) degrees of
freedom at 𝛼 level of significance i.e., 𝑡𝑣 (𝛼)
• If the calculated value of |𝑡| < table value of 𝑡𝑣 (𝛼), then accept the null
hypothesis 𝐻0 (i.e., difference is not significant) at 𝛼 level of significance.
• If the calculated value of |𝑡| > table value of 𝑡𝑣 (𝛼), then reject the null
hypothesis 𝐻0 and accept the alternative hypothesis 𝐻𝛼 (i.e., difference is
significant) at 𝛼 level of significance.
Two Sample t-test
In statistical hypothesis testing In statistical hypothesis testing, a two sample t-test is a
test performed on the data of two random samples, each independently obtained from a
different given population. The purpose of the test is to determine whether the
difference between the means of these two populations is statistically significant.
In two sample t-test, we find the difference between two population means, when the
two Population standard deviations σ₁ and σ₂ are unknown.
The test statistics for two sample t-test is given by
(̅̅̅ 𝑥2 ) − 𝐷0
𝑥1 − ̅̅̅
𝑡=
2 2
√ 𝑆1 𝑆2
+
𝑛1 𝑛2
Where ̅̅̅ 𝑥2 = difference between two sample means
𝑥1 − ̅̅̅
𝐷0 =Hypothesized value of difference between two population means
𝑆1 and 𝑆2 are sample standard deviations; 𝑛1 and 𝑛2 are sample sizes.
The degree of freedom for two sample t-test is given by
2
𝑆2 𝑆 2
( 1 + 2 )
𝑛1 𝑛2
𝑑𝑓 = 2 2
1 𝑆 2 1 𝑆 2
( 1 ) + ( 2 )
𝑛1 − 1 𝑛1 𝑛2 − 1 𝑛2
TEST OF SIGNIFICANCE OF THE DIFFERENCE BETWEEN THE MEANS OF
TWO INDEPENDENT RANDOM SAMPLES
Let the two independent random samples {𝑥1, 𝑥2 , … , 𝑥𝑛 } and {𝑦1 , 𝑦2 , … , 𝑦𝑛 } of sizes
𝑛1 and 𝑛2 with means 𝑥̅ and 𝑦̅ and standard deviation 𝑠1 and 𝑠2 respectively, be drawn
from a sample normal population. To determine if there is a significant difference
between the two sample means 𝑥̅ and 𝑦̅, we proceed as follows:
(a) Define the null hypothesis 𝐻0 : There is no significant difference between the
means of two samples
And the alternative hypothesis 𝐻𝛼 : There is a significant difference between the
means of two samples
 𝑥̅ −𝑦̅ 𝑥̅ −𝑦̅ 𝑛1 𝑛2
(b) Calculate the test statistic 𝑡 by using 𝑡 = , or √𝑛 +𝑛 where
𝑆√ +
1 1 𝑆 1 2
𝑛1 𝑛2

𝑛1 𝑠1 2 +𝑛2 𝑠2 2
𝑆(combined standard deviation) = √
𝑛1 +𝑛2 −2

Here the test statistic 𝑡 follows students’s 𝑡-distribution with 𝑣 = 𝑛1 + 𝑛2 − 2

degrees of freedom
(c) Find the value of |𝑡| and compare this value of 𝑡 with 𝑣 = 𝑛1 + 𝑛2 − 2 degrees of
freedom at 𝛼 level of significance i.e., 𝑡𝑣 (𝛼)
• If the calculated value of |𝑡| < table value of 𝑡𝑣 (𝛼), then accept the null
hypothesis 𝐻0 (i.e., difference between the mean of two samples is not
significant) at 𝛼 level of significance.
• If the calculated value of |𝑡| > table value of 𝑡𝑣 (𝛼), then reject the null
hypothesis 𝐻0 and accept the alternative hypothesis 𝐻𝛼 (i.e., difference
between the mean of two samples is significant) at 𝛼 level of significance.

UNIT – 6 (Time Based Data)

1. Time Series – Time series is an arrangement of statistical data in accordance with the
time of its occurrence. Thus, data which are collected, observed or recorded at
successive intervals of time are known as Time Series.
2. Components of Time Series
(a) Secular trend
(b) Seasonal Variations
(c) Cyclical Variations
(d) Irregular Variations

(a) Secular trend – Secular Trend, also briefly called trend is the basic tendency of a
series to grow or decline over a period of time. The concept of trend does not include
short-time oscillations, but it studies movements over a long time. Thus, secular
trend is a long-term trend and shows the direction of the series over a long period of
time. Data regarding National income, Capital formation, etc. are few examples of
secular trend.
Secular trend is of two types:
(i) Linear trend or straight-line trend
(ii) Non-Linear Trend or Parabolic trend
(b) Seasonal Variations – Seasonal variations are periodic patterns of movement in a
time series. Such variations are considered to be a type of cycle which completes
itself within a period of a year and then continues in repetition of this basic pattern.
Due to natural factors and man-made conventions, most businesses or economic
activities change in a systematic order during the seasons of the year.
For example, from the data of monthly sales of a soft drink company, we can observe
that the sales are very high during the months of May to September and less during
November to January and moderate during February to April.
There are two important features of seasonal variations:
(i) They occur year after year within a fixed period
 (ii) They increase or decrease in the same proportion.

(c) Cyclical Variations – Many economic time series have a tendency to follow a cycle
considering the periods of;
(i) Prosperity
(ii) Decline
(iii) Depression
(iv) Recovery

The variations in a time series which operate themselves over a span of more than
one year are called cyclic variations. For example, rise and fall of share market.

(d) Irregular Variations – In a time series, the irregular variations are those variations
which cannot be predicted in advance. The irregular variations occur due to
unpredictable causes such as strikes, accidents, wars, natural calamities and outbreak
of pandemics etc.
Seasonal Variations and Cyclical variations are also known as short-time
oscillations.

3. Methods of Measuring Trend – Following are some of the important methods of

measuring the trend:
(a) Freehand Curve Method or Graphic method
(b) Moving Average Method
(c) Method of Least Squares

(a) Freehand Curve Method or Graphic method – This is the simplest method of
measuring trend. In this method, the time series is plotted on a graph paper. If
{(𝑡𝑖 , 𝑥𝑖 ); 1,2, … , 𝑛} is the time series, then the values of time are plotted on 𝑥 −axis
and values of variable 𝑥 are plotted on 𝑦 −axis. These points are joined by straight
lines to obtain a graph of actual time series data. A smooth trend line (curve) is then
drawn through the plotted points such that it is almost in the middle of the original
points.
(b) Moving Average Method –
Case I: When the moving average period is odd
Let {(𝑡𝑖 , 𝑥𝑖 ); 1,2, … , 𝑛} be the given time series
Here 𝑥1 , 𝑥2 , … , 𝑥𝑛 are the values of the variable 𝑥 corresponding to the time periods
𝑡1, 𝑡2 , … , 𝑡𝑛 respectively.
Let 𝑚 be the period of moving average, where 𝑚 is an odd number. Then moving
averages of order 𝑚 are defined as
 𝑥1 + 𝑥2 + … , +𝑥𝑚 𝑥2 + 𝑥3 + … , +𝑥𝑚+1
, , … . 𝑎𝑛𝑑 𝑠𝑜 𝑜𝑛
𝑚 𝑚
Thus 3 yearly moving averages will be
𝑥1 + 𝑥2 + 𝑥3 𝑥2 + 𝑥3 + 𝑥4
, , ….
3 3
5 yearly moving averages will be
𝑥1 + 𝑥2 + 𝑥3 + 𝑥4 + 𝑥5 𝑥2 + 𝑥3 + 𝑥4 + 𝑥5 + 𝑥6 𝑥3 + 𝑥4 + 𝑥5 + 𝑥6 + 𝑥7
, , ,…
5 5 5
7 yearly moving averages will be
𝑥1 + 𝑥2 + 𝑥3 + 𝑥4 + 𝑥5 + 𝑥6 + 𝑥7 𝑥2 + 𝑥3 + 𝑥4 + 𝑥5 + 𝑥6 + 𝑥7 + 𝑥8
, ,…
7 7
Case I: When the moving average period is even
If the period of the moving average is even, the moving totals and the moving
averages are placed in the centre of these values but they do not correspond to any
of the given time points. To synchronise them with the given data, centered moving
averages are computed by taking a two period averages of the moving averages and
are placed between the corresponding time points.
For example, if the period is 4 years, then the moving averages are:
𝑥1 + 𝑥2 + 𝑥3 + 𝑥4 𝑥2 + 𝑥3 + 𝑥4 + 𝑥5 𝑥3 + 𝑥4 + 𝑥5 + 𝑥6
, , ,…
4 4 4
These are placed against the middle of second and third, third and fourth time points
respectively and so on. Then the centered moving averages i.e.,
𝑥1 + 𝑥2 𝑥2 + 𝑥3 𝑥3 + 𝑥4
, , ,…
2 2 2
Are placed against 3rd , 4th , 5th ,…. time points.
(c) Method of Least Squares – This method determines the position of the trend lone
of the given time series. The trend line is called Line of Best Fit.
In this method, the trend is expressed in the form of a Mathematical expression in
terms of the time variable. By this method, a trend line is fitted to data in such a
manner that the following two conditions are satisfied:
(i) The sum of the deviations of 𝑦 from their corresponding trend value is zero
i.e., ∑(𝑦 − 𝑦𝑐 ) = 0
(ii) The sum of squares of the deviations of the values of 𝑦 from their corresponding
trend values is least i.e., ∑(𝑦 − 𝑦𝑐 )2 is least.
The straight-line trend is represented by the equation:
𝑦𝑐 = 𝑎 + 𝑏𝑥
Where 𝑦𝑐 =trend values of 𝑦, 𝑥 = deviation of time 𝑡 from origin and 𝑎 𝑎𝑛𝑑 𝑏 are
constants.
𝑎 is the 𝑦 −intercept or the computed trend value of the variable 𝑦 when 𝑥 = 0 and
𝑏 represents the slope of the trend line or the amount of change in variable 𝑦 that is
associated with a change of one unit in 𝑥 variable.
The values of 𝑎 and 𝑏 can be obtained by solving the two equations:
∑ 𝑦 = 𝑛𝑎 + 𝑏 ∑ 𝑥

∑ 𝑥𝑦 = 𝑎 ∑ 𝑥 + 𝑏 ∑ 𝑥 2
By the method of least squares, we can calculate straight line trend by two methods
(i) Direct method – This method is used when ∑ 𝑥 is not equal to zero
 (ii) Short-cut Method – In this method, sum of the deviations must always be zero
i.e., ∑ 𝑥 = 0

UNIT – 7 (Financial Mathematics)

1. Perpetuity – An annuity in which the payments continue forever is called perpetual
annuity or perpetuity.
The perpetuities are basically of two types:
(a) Perpetuity payable at the end of each payment period – Present value of
perpetuity is given by
𝑅
𝑃=
𝑖
Where R is the value of each instalment payable at the end of each period, 𝑖 is the
interest per rupee per payment period.
(b) Perpetuity payable at the beginning of each payment period – Present value of
perpetuity is given by
𝑅
𝑃=𝑅+
𝑖
𝑟×𝑚
𝑖= , 𝑚 is compounding factor
100
𝑚 = 1 for yearly, 2 for half yearly or semi-annually, 4 for quarterly, 12 for monthly.
𝑟 is rate of interest
2. Sinking Fund – Sinking fund is an annuity created for accumulating money over a
period of time, which can be used for paying off a loan or for replacement of some asset
or some other financial obligation at some future designated date, by paying through
regular equal payments at compound interest.
If R is the money set aside in each payment interval, 𝑖 is the interest per period and 𝑛 is
the number of periodic payments, then the amount S in the sinking fund at any time is
given by
(1 + 𝑖)𝑛 − 1
𝑆 = 𝑅[ ]
𝑖

3. Equidated Monthly Instalment (EMI) – EMI is a fixed payment made by a borrower

to a lender on a specified date of each month.
EMI can be calculated by following two methods
(a) Flat Rate Method
(b) Reducing Balance Method

1
(a) Flat Rate Method – 𝐸𝑀𝐼 = 𝑃 (𝑖 + )
𝑛
Where P = Principal amount
𝑖 = rate of interest per rupee per month
𝑛 = number of monthly instalments
𝑃𝑖(1+𝑖)𝑛 𝑃𝑖
(b) Reducing Balance Method – 𝐸𝑀𝐼 = or 𝐸𝑀𝐼 =
(1+𝑖)𝑛 −1 1−(1+𝑖)−𝑛
4. Amortization of Loans – Amortization refers to the process of paying off a loan
through a scheduled, pre-determined sequence of equal payments that includes
(a) Interest on the outstanding loan and
 (b) Repayment of part of loan i.e., principal

𝐸𝑀𝐼[(1+𝑖)𝑛−𝑘+1−1]
Principal outstanding at the beginning of kth period =
𝑖(1+𝑖)𝑛−𝑘+1
𝐸𝑀𝐼[(1+𝑖)𝑛−𝑘+1−1]
Interest paid in kth payment =
(1+𝑖)𝑛−𝑘+1
Principal paid in kth payment = 𝐸𝑀𝐼 − Interest paid in kth period
Total Interest paid = 𝑛 × 𝐸𝑀𝐼 − 𝑃
5. Rate of Return – The rate of return is defined as the measure of gain or loss as a
percentage of investment over a certain time period.
There are two types of returns on investment
(a) Nominal rate of return
(b) Real rate of return

(a) Nominal rate of return – The rate of return earned on an investment before taking
into consideration the factors which affect the rate such as inflation, taxes, expenses,
deductions etc. is called nominal rate of return.
𝑉𝑓 −𝑉𝑖
Nominal rate of return = 𝑅 = × 100
𝑉𝑖
𝑉𝑓 =Final value of investment
𝑉𝑖 =Initial value of investment
(b) Real rate of Return – The actual rate of return earned on an investment after taking
into consideration the factors which affect the rate such as inflation, taxes, expenses
etc. is called the real rate of return.
Real rate of return = Nominal rate of return – Factors affecting the rate
6. Effective Rate of Return – Effective rate of return is the real rate of return obtained on
an investment, discounting all the factors affecting rate of return. The factors which
affect the rate of return are:
(a) Price at which the investment is made
(b) Nominal and Effective rate of interest
The effective rate of interest is defined as the rate which when compounded annually
gives the same amount of interest as a nominal rate compounded several times each
year.
If the nominal rate is 𝑟% compounded 𝑘 times in a year, then the effective rate of
interest 𝑟 is given by
𝑟 𝑘
𝑟𝑒 = (1 + ) −1
100𝑘
7. Compound Annual Growth Rate (CAGR) – CAGR refers to the mean annual growth
of the investment over a specific duration.
1
𝑉𝑓 𝑛
𝑖 = ( ) −1
𝑉𝑖
Where 𝑖 =compounded annual growth rate (CAGR) in %,
𝑉𝑓 =final value of investment,
𝑉𝑖 =initial value of investment
8. Depreciation – The actual decrease in the fair/monetary value of an asset due to use,
wear and tear, maintenance etc. is called depreciation.
 Straight Line or Linear depreciation method –
𝐶−𝑆
Annual depreciation of the asset = 𝐷 =
𝑛
Where 𝐶 =original value/cost of the asset
𝑆 =scrap value of the asset
𝑛 =Useful life of the asset
𝐷
Depreciation Rate = × 100
𝐶−𝑆

UNIT – 8 (Linear programming Problem)

1. Linear programming is a method for determining optimum values of a linear function
subject to constraints expressed as linear equations or inequalities.
2. Types of LPP – Three classical Linera programming problems are
(a) Manufacturing problems
(b) Diet problems
(c) Transportation problems
3. Terms related to LPP
(a) Objective function – The linear function 𝑍 = 𝑎𝑥 + 𝑏𝑦 where 𝑎 and 𝑏 are constants,
which has to be maximised or minimized is called a linear objective function.
Variables 𝑥 and 𝑦 are called the decision variables.
(b) Constraints – The linear inequalities or equations or restrictions on the variables of
a linear programming problem are called constraints. The conditions 𝑥 ≥ 0, 𝑦 ≥ 0
are called non-negative restrictions.
(c) Optimisation Problems – A problem which seeks to maximise or minimise a linear
function (say of two variables x and y) subject to certain constraints as determined
by a set of linear inequalities is called an optimisation problem. Linear
programming problems are special type of optimisation problems.
(d) Feasible Region – The common region determined by all the constraints including
non-negative constraints 𝑥, 𝑦 ≥ 0 of a linear programming problem is called the
feasible region (or solution region). The region other than feasible region is called
an infeasible region.
(e) Feasible Solutions – Points within and on the boundary of the feasible region
represent feasible solutions of the constraints. Any point outside the feasible region
is called an infeasible solution.
(f) Optimal Solution – Any point in the feasible region that gives the optimal value
(maximum or minimum) of the objective function is called an optimal solution.
4. Mathematical Formulation of Linear Programming Problem –
(a) Identify the objective function and express it as a linear function of the decision
variables
(b) After expressing the objective function as a linear function of the decision variables,
find the type of optimization (maximization or minimization) and identify the type
of objective function.
(c) Identify the set of constraints stated in terms of decision variables and express them
as linear inequations.
(d) Add the non-negative restrictions on the decision variables.
5. Graphical Method of Solving a Linear Programming problem –
(a) Corner Point Method – This method comprises of the following steps:
 (i) Find the feasible region of the linear programming problem and determine its
corner points (vertices) either by inspection or by solving the two equations of the
lines intersecting at that point.
(ii) Evaluate the objective function 𝑍 = 𝑎𝑥 + 𝑏𝑦 at each corner point. Let M and
m, respectively denote the largest and smallest values of these points.
(iii) When the feasible region is bounded, M and m are the maximum and minimum
values of Z.
(iv) In case, the feasible region is unbounded, we have:
• M is the maximum value of Z, if the open half plane determined by 𝑎𝑥 +
𝑏𝑦 > 𝑀 has no point in common with the feasible region. Otherwise, Z has
no maximum value.
• Similarly, m is the minimum value of Z, if the open half plane determined by
𝑎𝑥 + 𝑏𝑦 < 𝑚 has no point in common with the feasible region. Otherwise,
Z has no minimum value.
(b) Iso-profit or Iso-cost Method – This method comprises of the following steps:
(i) Obtain the feasible region by applying steps (i) to (iv) of corner point method
above.
(ii) Obtain the coordinates of the corner points (vertices) of the feasible region.
(iii) Give some convenient value to Z (say 𝑍1 ) and draw the graph of the line
obtained in 𝑥𝑦 −plane.
(iv) If the objective function is of maximization, then draw lines parallel to the
above line (in the upward direction) and obtain a line which is farthest from the
origin and had at least one point common to the feasible region. This common point
will give the maximum value of the objective function.
(v) If the objective function is of minimization, then draw lines parallel to the above
line (in the downward direction) and obtain a line which is nearest from the origin
and had at least one point common to the feasible region. This common point will
give the minimum value of the objective function.

Prepared By:
Mr. Ashish
kushwaha