Probability

Problem-1
The following crosstabulation shows household income by educational level of
the head of household (Statistical Abstract of the United States, 2008).
 Possible Questions
a. Develop a joint probability table.

b. What is the probability of a head of household not being a high school

graduate?

c. What is the probability of a head of household having a bachelor’s degree or

more education?

d. What is the probability of a household headed by someone with a bachelor’s

degree earning $100,000 or more?

e. What is the probability of a household having income below $25,000?

f. What is the probability of a household headed by someone with a bachelor’s

degree earning less than $25,000?

g. Is household income independent of educational level?

 Problem-2
 An MBA new-matriculants survey provided the following data for 2018
students
 Possible Questions
a. For a randomly selected MBA student, prepare a joint probability table for the
experiment consisting of observing the student’s age and whether the student
applied to one or more schools.

b. What is the probability that a randomly selected applicant is 23 or under?

c. What is the probability that a randomly selected applicant is older than 26?

d. What is the probability that a randomly selected applicant applied to more

than one school?
a. Given that a person applied to more than one school, what is the probability
that the person is 24–26 years old?

b. Given that a person is in the 36-and-over age group, what is the probability
that the person applied to more than one school?

c. What is the probability that a person is 24–26 years old or applied to more than
one school?

d. Suppose a person is known to have applied to only one school. What is the
probability that the person is 31 or more years old?

e. Is the number of schools applied to independent of age? Explain.

 Stock Market
 Use the bivariate frequency table and answer the following questions. The
data pertains to prices of a stock and a random sample of 400 days prices
have been drawn.

Decision
Sell Buy Neutral Total

Change
Increase 50 35 40 125

Decrease 45 65 40 150

No change 40 60 25 125

Total 135 160 105 400

 Possible Questions
 The chances of selling the stock are high. Is it true? Justify

 The chances of being neutral when then is an increase is high? Is it true?

Justify.

 What are the chances that a randomly selected customer prefers to sell
given that there is an increase?

 Given that there is no change, which decision has got higher chance?

 What is your suggestion to an investor?