Statistics for Business

(Time allowed: 30 minutes)

Please circle your selection for the questions below:
1. Managers study the number of days per month over the last year that employees in the payroll department
called in sick to determine the averages they can expect next year. Collecting the data and determining the
averages last year is an example of what type of statistics? Determining the averages they can expect next
year is an example of what type of statistics?
A. They are both examples of inferential statistics because averages are inferred in both instances
B. Inferential statistics; descriptive statistics.
C. They are both examples of descriptive statistics because they deal with analyzing data.
D. Descriptive statistics; inferential statistics.

2. The grades that a random sampling of students in the psychology degree program received over the last
decade of "Abnormal Psychology" classes are an example of what statistical concept?
A. The grades are an example of a parameter.
B. The grades are an example of a sample.
C. The grades are an example of a population.
D. The grades are an example of a statistic.

3. The first quartile of a set of data is 45; the second quartile is 65 and the third quartile is 85.Which of the
following best describes the shape of this distribution?
A. Skewed left B. Skewed right C. Symmetric D. None of the above

4. Which of the following statements is false?
A. If we find the deviation of each value from the median, the sum of these deviations is always zero.
B. The interquartile range is the difference between the first and third quartile
C. The median and the second quartile is the same.
D. The standard deviation is the positive square root of the variance

5. The average score for a class of 30 students was 70. The twenty male students in the class averaged 65.
Find the average score for the female students
A 95 B 80 C Not enough information given D 85 E 90

6. Calculate the median value of the following eight numbers: 14, 48, 34, 50, 10, 24, 11, 32, 20.
Re-arrange 10,11,14,20,24,32,34,48,50
A. 20 B. 22 C. 24. D. 24.4

7. Which of the following is an example of inferential statistics?
A. The average price of gasoline in a large, urban city was found during the week of December.
B. A circle graph depicts the type of cancer treated by a certain hospital.
C. On this graph, 2% of patients were treated for kidney cancer and 19% were treated for breast cancer.
D. A bar graph depicts the grade distribution of an undergraduate statistics class.
E. A sample of 36 oranges was selected from the population of all oranges from a certain orange grove in
Florida. The mean weight of this sample of 36 oranges was found and used to estimate the mean weight of
oranges from this particular grove.


8. Referring to Table 2-1, suppose a cumulative relative frequency distribution for the number of payoff
demand notices received by the escrow company is constructed with a first class of 10 but less than 15. The
cumulative percentage frequency of the 20, but less than 25 class would be
A 24% B. 44% C. 64% D. 84% E. 100%

9. Which statement is false? Explain.
A. If = 52 and = 15, then X = 81 would be an outlier.
B. If the data are from a normal population, about 68% of the X values will be within .
C. If = 640 and = 128 then the coefficient of variation is 20 percent.

10. So far this year, stock A has had a mean price of $6.58 per share with a standard deviation of $1.88,
while stock B has had a mean price of $10.57 per share with a standard deviation of $3.02. Which stock is
more volatile?
A. Stock A B. Stock B They are the same.

11. The sum of the relative frequencies for all classes in a histogram always equals
A. the number of classes.
B. the class width.
C. the total of all the frequencies.
D. one.

12. Which of the following statements about shapes of histograms is true?
A. A histogram is said to be symmetric if, when we draw a vertical line down the center of the histogram,
the two sides are identical in shape and size.
B. A negatively skewed histogram is one with a long tail extending to the left.
C. A positively skewed histogram is one with a long tail extending to the right.
D. All of these choices are true.

13. What values are displayed on a cumulative relative frequency distribution?
A. The number of observations that fall into each class interval.
B. The proportion of observations that fall into each class interval.
C. The number of observations that fall below each class interval.
D. The proportion of observations that fall below each class interval.

14. Which of the following describes a positive linear relationship between X and Y?
A. As the X values increase, the Y values increase in a linear manner.
B. As the X values decrease, the Y values decrease in a linear manner.
C. The X and Y values move uphill together in a linear manner.
D. All of these choices are true.

15. When extreme values are present in a set of data, which of the following descriptive summary measures
are most appropriate?
A. Coefficient of variation and range
B. Mean and standard deviation
C. Interquartile range and median
D. Variance and interquartile range

16. In a perfectly symmetric distribution, which of the following statements is false?
A. The distance from Q
1
to Q
2
equals to the distance from Q
2
to Q
3

B. The distance from the smallest observation to Q
1
is the same as the distance from Q
3
to the largest
observation
C. The distance from the smallest observation to Q
2
is the same as the distance from Q
2
to the largest
observation
D. The distance from Q
1
to Q
3
is half of the distance from the smallest to the largest observation

17. Assuming a linear relationship between X and Y, if the coefficient of correlation (r) equals 0.80, this
means that:
A. there is very weak correlation.
B. the slope b
1
is = 0.80.
C. the value of X is always greater than the value of Y.
D. None of these choices are true.

18. If two events are collectively exhaustive, what is the probability that one or the other occurs?
A. 0.00 B. 0.50 C. 1.00 D. Cannot be determined from the
information given

19. If A and B are mutually exclusive events, with P(A) = 0.20 and P(B) = 0.30, then the probability that
both events will occur simultaneously is:
A. 0.50
B. 0.06
C. 0
D. None of these choices.

20. Suppose a basketball player is an excellent free throw (shots awarded when a player is fouled) shooter
and makes 80% of his free throws (or he has an 80% chance of making a single free throw). Assume that
free throw shots are independent of one another. Suppose this player gets to shoot four free throws. Find the
probability that he makes four consecutive free throws. 0.8^4
A. 0.5904 B. 0.9984 C. 0.0016 D. 0.4096

21. If events A and B are independent and P(A) = .6 and P(B) = .4, which of the following is correct? Pa
+Pb - Pab
A. P(A and B) = 0; B. P(A or B) = .24; C. P(A or B) = .76; D. P(A and B) = 1.00

22. Independent events A and B would be consistent with which of the following statements:
A. P (A) = .5, P (B) = .4, P (A B) = .3 B. P (A) = .4, P (B) = .3, P (A B) = .5
C. P (A) = .3, P (B) = .5, P (A B) = .4 D. P (A) = .4, P (B) = .5, P (A B) = .2

23. Investing is a game of chance. Suppose there is a 40% chance that a risky stock investment will end up
in a total loss of your investment. Because the rewards are so high, you decide to invest in four independent
risky stocks. Find the probability that at least one of your investments becomes a total loss.
probability of total loss of one risky investment = 0.4, you take 4 risky investments, each with a
probability of total loss of 0.4 , since the probability of total loss of each investment is 0.4, then the
probability that the investment will not be a total loss is 1 0.4 = .6, the probability that none of the 4
investments will be a total loss is .6^4 = 0.1296., the probability that at least one of these investments
will be a total loss is 1 - .6^4. , that probability would be 0.8704
A. 0.8704 B. 0.9744 C. 0.0256 D. 0.40

24. The probability that house sales will increase in the next 6 months is estimated to be 0.25. The
probability that the interest rates on housing loans will go up is estimated to be 0.7. The probability that
house sales and interest rates will go up during the next 6 months is estimated to be 0.20.
The probability of an increase in house sales and not an increase in interest rates is

A 0.2 B. 0.05 C. 0.25 D. 0.5

25. If the events A and B are independent with P(A) = 0.30 and P(B) = 0.40, then the probability that both
events will occur simultaneously is:
A. 0 B. 0.12 C. 0.70 D. Not enough information to tell.