CHRIST INSTITUTE OF MANAGEMENT, LAVASA

MID TRIMESTER EXAMINATION JULY 2016

I TRIMESTER - PGDM
Sub code: PGDM 104
Sub: Managerial Statistics

Max. Marks: 50.

Duration: 2 Hrs.

General Instructions:
1. Make sure that answers involving interpretations are to the point
2. For calculations involving probability density functions, probability tables will be provided to
you. Please do not write/mark on the probability tables. Hand them over to the invigilator after
use

SECTION A
Answer any three

(5 * 3 = 15 Marks)

1. A sample of 10 NCAA college basketball game scores provided the following data.
Winning Team
Arizona
Duke
Florida State
Kansas
Kentucky
Louisville
Oklahoma State
Purdue
Stanford
Wisconsin

Points
90
85
75
78
71
65
72
76
77
76

Losing Team
Oregon
Georgetown
Wake Forrest
Colorado
Notre Dame
Tennessee
Texas
Michigan State
Southern Cal
Illinois

Points
66
66
70
57
63
62
66
70
67
56

Winning
Margin
24
19
5
21
8
3
6
6
10
20

a. Assume that the points scored by the winning team for all NCAA games
follow a bell shaped distribution. Using the mean and the standard deviation
found estimate the percentage of all NCAA games in which the winning team
scores 84 or more points. Estimate the percentage of NCAAA fames in which
the winning team scores more than 90 points.
[2.5 marks]
Ans. z = 1.07 Approximatelyonestandarddeviationabovethemean.
Approximately68%ofthescoresarewithinonestandarddeviation.Thus,halfof(100
68),or16%,ofthegamesshouldhaveawinningscoreof84ormorepoints.
Z= 1.93
- Approximatelytwostandarddeviationsabovethemean.
Approximately95%ofthescoresarewithintwostandarddeviations.Thus,halfof(100
95),or2.5%,ofthegamesshouldhaveawinningscoreofmorethan90points.

b. Based on mean and standard deviation of winning margin. Are there any
outliers?
[2.5 marks]
Ans. Average = 12.2 ; standard deviation = 7.89 ; Largest
Margin = 24; z = 1.5; NO OUTLIERS

2. Users registered in Social networking sites receive friend suggestions. These suggestions
are made based on various details available about the users like common friends, friends
of common friends, current location, photo tags etc. About 85 percent of these friends
suggestions are accurate, in the sense that the person suggested as a friend by the social
networking site is actually a friend of the person to whom the suggestion is made. If a
random sample of 700 social networking site users are selected
a. What is the probability that the sample proportion will lie within five percent of
the population proportion who have actually experienced accurate friend
suggestions?
[3 marks]
Ans: p = .85
s= 700 ; p = .013
z = (.85-.80)/.013 =3.85 ; corresponding pr = .9990; z = (75-80)/.013 = -3.85 ;
corresponding pr = .001 so the probability that the sample proportion will lie
between 5 percent is .999-.001 = .998 or 99.8 percent
b. What is the probability that the sample proportion will be greater than 2 percent of
the population proportion?
[2 marks]
Ans: More than 2 percent of population proportion = .87
Z= (.87-.85)/.013 = 1.53 ; corresponding Pr= .9370; Probability of finding a
sample proportion more than 87% is .0630 or 6.3 percent.
3. Sparry Potter is known for his luck and skills in quidditch games at Fogwarts. Out of the
nine games he played so far he has managed to score in 6 of them. Sparry likes Unicorn
milk, and before a quidditch game he likes to have a bucket full of unicorn milk. Sparry
is erratic in milk consumption and data suggest that in the past 9 games he had taken milk
only in 4 of them. Sparry is contacted by MSK, the manufacturers and marketers of
Morlicks. Morlicks claim that the drink can make Sparry taller, sharper and stronger
which will help Sparry increase his scoring abilities in quidditch. To substantiate their
claim they provide scientific evidence stating someone who has taken Morlicks an hour
before the game has a 70 percent chance of scoring in the game. Sparry do not believe in
this so he is reluctant to take Morlicks before a game. However Hubeus Ragrid believes
this and decides to give Sparry Morlicks in Unicorn milk without his knowledge.
However he has no means of checking if Sparry actually drank the milk or not.

Assuming that Sparry has scored in the next game, what is the probability that Sparry had
taken Unicorn milk before the game?
[5 marks]
Ans:
Let A denote the probability that Sparry takes the milk
Let B denote the probability that Sparry scores in Quidditch
P(A) = .444 ; P(B) = .667 ; P(B|A) = .7
P(A|B) = P(A)* P(B|A)/P(B) = .465

4. Let us say that the probability of an economic decline in the year 2008 is 0.23. There is a
probability of 0.64 that the US will elect a republican president in the year 2008. If US
elects a republican president, there is a 0.35 probability of an economic decline. Let "D"
represent the event of an economic decline, and "R" represent the event of election of a
Republican president.
a.

Are "R" and "D" independent events?

b.

If events R and D are independent then P (D|R) = P (D); however they are not the same.
So they are not independent.
What is the probability of a Republican president and economic decline in the year
2008?
P(R D
= .224
[1 mark]

c.

d.

[1 mark]

If we experience an economic decline in the year 2008, what is the probability that
there will a Republican president?
[1 mark]
P(R|D) = .973
What is the probability of economic decline or a Republican president in the year
2008?
[2marks]
P(D R = P(D)+P(R)- P(D R

= .64+.23-.224 =.646

SECTION B
Answer any two

(10 * 2 = 20 Marks)

5. A survey showed that 8 percent of internet users age 18 and above report keeping a blog.
Referencing to the 18-29 age group as young adults, the survey showed that for
bloggers 54 percent are young adults, and for non bloggers 24 percent are young adults.
a. Develop a joint probability table for these data with two rows ( bloggers, non
bloggers and two columns young adults and older adults)
[ 3 marks]
b. What is the probability that an internet user is a young adult ?
[ 2 marks]
c. What is the probability that an internet user keeps a blog and is also a young
adult?
[2 marks]
d. Suppose that in a follow up phone survey we contact someone who is 24 years
old. What is the probability that the person keeps a blog ?
[3 marks]
Let: B=blogger
Bc=nonblogger
Y=youngadult(1829)
Yc=olderadult

Given: P(B)=.08P(Y|B)=.54P(Y|Bc)=.24
P (Y B)
P (B)

P(Y|B)=

P(YB)=P(Y|B)P(B)=(.54)(.08)=.0432
P(Y Bc )
P(Bc )

P(Y|Bc)=

P(YBc)=P(Y|Bc)P(Bc)=(.24)(.92)=.2208

Young
Adult

OlderAdult

Total

Blogger

.0432

.0368

.08

Non
Blogger

.2208

.6992

.92

.2640

.7360

1.00

Total:

b. P(Y)=P(BY)+P(BcY)=.0432+.2208=.2640

c. P(YC)=.0432

P (B Y) .0432

.1636
P (Y)
.2640

d.

P(B|Y)=

6. For borrowers with good credit scores, the mean debt for revolving and installment
accounts is $ 15,015. Assume that the standard deviation is $3,540 and that debt amounts
are normally distributed.
a. What is the probability that the debt for a borrowe with good credit is more than
$18,000?
[2.5 marks]
b. What is the probability that the debt for a borrower with good credit is between
$12,000 and $ 18,000?
[2.5 marks]
c. What is the probability that the debt for a borrower with good credit is less than
$10,000?
[2.5 marks]
d. What is the probability that the debt for a borrower with good credit is no more
than $14,000?
[2.5 marks]
Letx=debtamount

=15,015,=3540

a.

18, 000 15, 015

.84
3540

P(x>18,000)=1P(z.84)=1.7995=.2005
b.. At18,000,z=.84frompart(a)

At12,000,

12, 000 15, 015

.85
3540

P(12,000<x<18,000)=P(.85<z<.84)=.7995.1977=.6018
z

c.

10, 000 15, 015

1.42
3540

P(x<10,000)=P(z<1.42)=.0778

d.

14, 000 15, 015

.29
3540

7. Ekant is a resort hotel in Lavasa. Because of the good food and ambience the hotel
witnesses good number of tourist inflow throughout the year, especially on weekends
and holidays. Assume Ekant the number of people who come to have food in a week is
normally distributed with a mean of 658.
a. Suppose you learn that on 3 percent of the weeks , 610 or fewer people came to
Ekant for having food. What is the standard deviation of the number of people
who come to Ekant to have food?
[ 3 marks]
b. On any given week, what is the probability that between 600 and 700 people
visit Ekant for food?
[ 3 marks]
c. How many people would visit Ekant on the busiest 3 percent of the weeks in a
year?
[4 marks]
=658

a. z = -1.88 cuts off .03 in the lower tail

So,
z 1.88

610 658

610 658
25.5319
1.88
z

x 700 658

1.65

25.5319

x 600 659

2.31

25.5319

b. At700,

At600,

P(600<x<700)=P(2.31<z<1.65)=.9505.0104=.9401

c. z=1.88cutsoffapproximately.03intheuppertail
x=658+1.88(25.5319)=706.
Onthebusiest3%ofweeks706ormorepeoplewillvisitEkant.

SECTION C
Compulsory Question

(15 * 1= 15 Marks)

8. Iyer and Paul Associates manages the asset of 20,000 HNI (High Net worth Individuals),
whose net worth is $ 1 million or more. However the downturn in 2008 had eroded the
net worth of their clients. To know the extent of damage they conducted a survey of 1800
HNIs.
a. A survey reported that 35 percent of the respondents lost 25 percent or more of
their portfolio. Develop a 95 percent confidence interval for the proportion of
wealthy people who lost 25 percent or more of their value during the downturn.
[3
marks]
Ans:

Margin of Error = 1.96*.011242

Confidence interval = 1.96*.011242 .35 ; .327 to .372

Ans:

Ans:

b. The survey reported that 18 percent of the respondents feel they have to save
more for retirement to make up for what they lost. Develop a 95 percent
confidence interval for the population proportion.
[2 marks]
Margin of Error = 1.96*0.009055
Confidence interval = 1.96*0.009055 .18 ; 0.170945 to 0.189055

c. Five percent of the respondents gave $25,000 or more to charity over the previous
year. Develop a 95 percent confidence interval for the population proportion who
gave $ 25,000 or more to charity.
[3 marks]
Margin of Error = 1.96 *0.004773
Confidence interval =1.96 *0.00513 .05 ; 0.0399 to 0.06
d. Compare the margin of error for the interval estimates in parts (a), (b) and (c).
Comment on how the margin of error is related to population.
[ 3.5 marks]
p

Ans: Themarginoferrordecreasesas getssmaller.

e. When the same sample is being used to estimate a variety of proportions, which
of the proportions should be used to choose the planning value p*? Why do you
think p*=.5 is often used in these cases?
[3.5 marks]
Ans: Ifthemarginoferrorforalloftheintervalestimatesmustbelessthanagivenvalue(say.03),an

estimateofthelargestproportionshouldbeusedasaplanningvalueIfthemarginoferrorforallofthe
intervalestimatesmustbelessthanagivenvalue(say.03),anestimateofthelargestproportionshould
p* .50

beusedasaplanningvalue.Using
asaplanningvalueguaranteesthatthemarginoferrorforall
theintervalestimateswillbesmallenough.