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Set+1 Descriptive+statistics+Probability SOLUTIONS NAVIN

This document discusses topics related to descriptive statistics and probability. It includes examples of calculating measures of central tendency, standard deviation, and variance from a dataset. It also discusses identifying outliers from a boxplot. Additional questions cover interpreting boxplots and histograms, calculating probabilities from sample distributions, and measuring risk based on the probabilities of outcomes from a venture.

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Yera Navin Kumar
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2K views

Set+1 Descriptive+statistics+Probability SOLUTIONS NAVIN

This document discusses topics related to descriptive statistics and probability. It includes examples of calculating measures of central tendency, standard deviation, and variance from a dataset. It also discusses identifying outliers from a boxplot. Additional questions cover interpreting boxplots and histograms, calculating probabilities from sample distributions, and measuring risk based on the probabilities of outcomes from a venture.

Uploaded by

Yera Navin Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Topics: Descriptive Statistics and Probability

1. Look at the data given below. Plot the data, find the outliers and find out 𝜇, 𝜎, 𝜎 2

Name of company Measure X


Allied Signal 24.23%
Bankers Trust 25.53%
General Mills 25.41%
ITT Industries 24.14%
J.P.Morgan & Co. 29.62%
Lehman Brothers 28.25%
Marriott 25.81%
MCI 24.39%
Merrill Lynch 40.26%
Microsoft 32.95%
Morgan Stanley 91.36%
Sun Microsystems 25.99%
Travelers 39.42%
US Airways 26.71%
Warner-Lambert 35.00%

R CODE: (Copied Data to Excel and saved as Assignment.xls


Data1 = Assignment1 #Saved dataset in excel and imported
boxplot(Data1$`Measure X`) #Plotting boxplot to view outliers
IQR = IQR(Data1$`Measure X`) #Calculating IQR
Q = as.numeric(quantile(Data1$`Measure X`)) #For Calculating Q1,and Q3
Q1 = Q[2]
Q3 = Q[4]
l = length(Data1$`Measure X`)
v = Data1$`Measure X`
i=1
while(i<l)
{
if(v[i] > (Q3+1.5*IQR))
print(v[i]) #0.9136
i=i+1
}
mean = mean(Data1$`Measure X`)
std = sd(Data1$`Measure X`)
var = var(Data1$`Measure X`)
cat("Mean =",mean,"Standard Deviation=",std,"Variance=",var) #Printing Multiple Outputs

#Mean = 0.3762933 Standard Deviation= 0.2245065 Variance= 0.05040318 Outlier


= 0.9136

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)
2.

Answer the following three questions based on the box-plot above.


(i) What is inter-quartile range of this dataset? (please approximate the numbers) In one
line, explain what this value implies.
ANS: IQR = 12-5 = 7, this represents the range which contains 50% of the data points.
(ii) What can we say about the skewness of this dataset?
ANS: Right skewed
(iii) If it was found that the data point with the value 25 is actually 2.5, how would the new
box-plot be affected?
ANS: 2.5 will be not considered an outlier. The boxplot will start from 0 and send at 20 in
representation.

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)
3.

Answer the following three questions based on the histogram above.


(i) Where would the mode of this dataset lie?
ANS – Mode lies between 4 and 8
(ii) Comment on the skewness of the dataset.
ANS – Dataset is right skewed
(iii) Suppose that the above histogram and the box-plot in question 2 are plotted for the
same dataset. Explain how these graphs complement each other in providing
information about any dataset.
ANS –
Median in boxplot and Mode in histogram
Histogram provides the frequency distribution so we can see how many times each data
point is occurring however boxplot provides the quantile distribution i.e. 50% data lies
between 5 and 12.
Boxplot provides whisker length to identify outliers, no information from histogram. We
can only guess looking at the gap that 25 may be an outlier.

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)
4. AT&T was running commercials in 1990 aimed at luring back customers who had switched to
one of the other long-distance phone service providers. One such commercial shows a
businessman trying to reach Phoenix and mistakenly getting Fiji, where a half-naked native on a
beach responds incomprehensibly in Polynesian. When asked about this advertisement, AT&T
admitted that the portrayed incident did not actually take place but added that this was an
enactment of something that “could happen.” Suppose that one in 200 long-distance telephone
calls is misdirected. What is the probability that at least one in five attempted telephone calls
reaches the wrong number? (Assume independence of attempts.)

P = 0.028 (Using MonteCarlo Simulation for 1000 occurances)

R CODE:
d = rep(c("MISS","NO_MISS"),times=c(1,199)) #Creating a sample dataset of 200 outcomes, with
only 1 event of Mis-routing
#event = sample(d,5,replace=TRUE) #Sample of 5 call scenarios
event_1000_rep = replicate(1000,sample(d,5,replace=TRUE)) #Repeating experiment 1000
times
i=1
z=0
while(i<=1000)
{
if("MISS" %in% event_1000_rep[,i]) #Checking if we have even one MISS among the 5 calls
z=z+1
i=i+1
}

p = z/1000
cat("Probability",p)

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)
5. Returns on a certain business venture, to the nearest $1,000, are known to follow the following
probability distribution
x P(x)
-2,000 0.1
-1,000 0.1
0 0.2
1000 0.2
2000 0.3
3000 0.1

(i) What is the most likely monetary outcome of the business venture?
ANS: Max. P = 0.3 for P(2000). So most likely outcome is 2000

(ii) Is the venture likely to be successful? Explain


ANS: P(x>0) = 0.6, implies there is a 60% chance that the venture would yield profits or greater
than expected returns. P(Incurring losses) is only 0.2. So the venture is likely to be successful.

(iii) What is the long-term average earning of business ventures of this kind? Explain
ANS: Weighted average = x*P(x) = 800. This means the average expected earnings over a long
period of time would be 800(including all losses and gains over the period of time)
(iv) What is the good measure of the risk involved in a venture of this kind? Compute this
measure
ANS: P(loss) = P(x= -2000)+P(x=-1000)=0.2. So the risk associated with this venture is 20%.

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)

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