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%

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.
IQR = Q3 – Q2 => 12-5=7 (approx.)
IQR is like the mid-spread of the data, which lies at 7, in the above case.

Questions referred to from Aczel A., Sounderpandian J., Complete Business Statistics (7ed.)
 (ii) What can we say about the skewness of this dataset?
The Data is right Skewed (+Skew)
(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?
There would be no outlier towards right

3.

Answer the following three questions based on the histogram above.

(i) Where would the mode of this dataset lie?
In Between 4 & 8
(ii) Comment on the skewness of the dataset.
The Data is skewed towards right which is a positive skew
(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.
Histogram helps in finding out mode, skewness, and kurtosis. Boxplot is used to find IQR
and outliers.
Both have an outlier at 25.
Both are positively skewed

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.)

Probability of an event, (calls getting misdirected) E = 1 /200 = 0.005

Probability of call not misdirecting = 1 - (1/200) => 199/200 = 0.995
Probability of at least one of five is wrong number
1– Probability of at least one of five is not wrong number
=> 1-(1-0.005) ^5
=>0.024

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?
THe Most likely outcome of business venture is 2000 since probability is highest with 0.3
(ii) Is the venture likely to be successful? Explain
P(x=1000) + P(x=2000) + P(x=3000) = 0.2+0.3+0.1 = 0.6
The venture is more likely to be successful
(iii) What is the long-term average earning of business ventures of this kind? Explain
(-2000)(0.1) + (-1000)(0.1) + (0) (0.2) + (1000)(0.2) + (2000) (0.3) + (3000) (0.1) = 800
(iv) What is the good measure of the risk involved in a venture of this kind? Compute this
measure
Risk involved in venture here is the standard deviation, Which is 1089.98

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