ISOM111 Business Statistics

Exercise for Tutorial Set 6 Suggested Solution

1a i) Prob(get B)=0.1(10)=1.1 >1, Probability cant be bigger than 1
ii) Probability cant be negative
iii)P(Attend)=1-P(Not Attend)=1-.31=.69.59
b Mutually Exclusive
c Fund A: P(Return>20%)=0.5;
Fund B: P(Return>20%)<0.5
Fund C: P(Return>20%)>0.5
Choose Fund C
d Case1 : 1(Mode) ; Case2 : 2(Median) ; Case3 : 3(Mean)
e

P(A)=P(AB) + P(AB)
P(A)=P(AB) + P(A|B)P(B)
P(A)=P(AB) + P(A|B)[1-P(B)]
5/12=1/8 + (7/12)[1-P(B)]
P(B)=1/2
a) P(AB) 0 Not Mutually Exclusive
b) P(A)P(B)=5/241/8=P(AB) Not independent
c)
X~Bin(25,0.5)
a) Pr( X 20) =0.002
=25x0.5,2=25x.5x.5=6.25=2.52
Y~N(12.5,2.52)
b) Pr( X 20) = Pr(Y 19.5) =0.0026

4 Let A be the random number of adequate car.

A~Bin(10,0.7)
a) P(A8)=P(A=8)+ P(A=9)+ P(A=10)=0.3828
Let D be the random number of dangerous car.
D~Bin(10,0.1)
b) P(D2)=P(D=0)+P(D=1)+P(D=2)=0.929
c) P(6 will have adequate tires, 3 will have worn tires, and 1 will have dangerous tires )
=(10C6)0.76 0.34 x (4C3) (2/3) 3 (1/3)1 = 0.0079
3 Let X be the random number of Speed.
X~N(,2)
P(X<85)=.95 &

P(X<55)=.1

By Normal Table, (85-)/ = 1.645 & (55-)/ = -1.282

After solving, =10.249, =68.12 ; then P(X>70)=0.428
The required proportion is 0.428.

5 a i)
Number of customers, x

Probability p(x)

0.15

0.34

0.27

0.14

0.1

x p(x)

0.34

0.54

0.42

0.4

0.34

1.08

1.26

1.6

x p(x)

Mean = x p(x)=1.7
standard deviation = x2 p(x) - Mean2 =1.39
a ii)
Waiting Time, t

12

Probability p(t)

0.15

0.34

0.27

0.14

0.1

t p(t)

0.68

1.62

1.26

1.2

Mean = t p(t)=4.76
b i) P(Leave immed.)=0.14+0.1=0.24
ii) P(there being more customers in the shop when she returns than on her first visit| Leave immed.)
=P(1st time x =3 & 2nd time x=4)/P(Leave immed.)
=(0.14)(0.1)/0.24 = 0.5833
Waiting Time, t

4.76

4.76

Probability p(t)

0.15

0.34

0.27

0.14

0.1

t p(t)

.68

1.62

0.6664

.476

Mean = t p(t) = 3.44

d) P(More then 3 visits)
=1-P(1st time OK)- P(1st time Not OK) P(2st time OK) - P(1st time Not OK) P(2st time Not OK)P(3rd time OK)
= 1-.76-(.24)(.76)- (.24) (.24) (.76)=0.0138
6
X~N(70,152) ; =P(X<85)=0.8413 = P(Victims | infected)
Y~N(100,102) ; =P(Y<85)=0.0668 = P(Victims | Not infected)
a P(Victims)=(5%)+(95%)=0.106. The required probability is 0.106
b R~Bin(10,0.106)
P(R2)=1-P(R=0)+ P(R=1)=0.2854. The required probability is .2854
c P(infected | Victims)= (5%)/ P(Victims) = 0.3986
d P(wrong classification)= (1-)(5%)+()(95%)=0.0714
7
(a) 0.6915, 0.6554 Choose brand A
(b) 1188
P(X<a)=0.1 X~N(1700,4002) ; a=1188
(c) 0.85722 (P(life<2000)=0.7733, X~Bin(50,0.7733) Pr(X>35)=.85722)
(d) 0.825
0.7*0.7734+0.3*0.9452
(e) 0.656
0.7*0.7734/0.825
8)
a) 0.125,0.125,0.625
b)0.375

9)
a) P(X1<1) = P( Z < -1.8) = 0.0359
b) P(X1<1| X2<1) = P(X1<1) = 0.0359 (Due to X1,X2 are independent)
c) Y~Bin(5,0.0359) P(Y=2) = (5C2) 0.03592(1-0.0359)3 = 0.01155
d) Let Y=

X1 + X 2 + X 3 + X 4 + X 5 5
5

E(Xi)=6.4, Var(Xi))=32=9
E(Y)
1
E ( X 1 + X 2 + X 3 + X 4 + X 5 5)
5
1
= [E ( X 1) + E ( X 2) + E ( X 3) + E ( X 4) + E ( X 5) 5] = 5.4
5
=

Var(Y)
1
Var ( X 1 + X 2 + X 3 + X 4 + X 5 5)
52
1
= [Var ( X 1) + Var ( X 2) + Var ( X 3 + Var ( X 4) + Var ( X 5) 0] = 1.8
25
=

CV(Y)=(1.8) / 5.4=0.248
10)
(a) Let H, A, & L be the events that the bank sells high-risk, average-risk and
low-risk mutual funds. Let R be the event of positive return.
P(H) = 0.25, P(A) = 0.5, P(L) = 0.25
P(R|H) = 0.2, P(R|A) = 0.15, P(R|L) = 0.1
P(R) = P(H)P(R|H) + P(A)P(R|A) + P(L)P(R|L) = 0.15
(b) P(H|R) = P(H)P(R|H) / P(R) = 0.33
(c) (i) Let X be the daily return of investing in a high-risk fund. X ~ N(0.05, 1.82)
P(X > 0) = P(Z > (0-0.05)/1.8)
= P(Z > -0.02778) (or P(Z > -0.03) )
= 0.51108
(or 0.512)
(ii)

P(X > b) = 0.98

P(Z > (b-0.05)/1.8) = 0.98
(b-0.05)/1.8 = -2.0538 (or -2.05)
b
= -3.6468 (or -3.64)
Therefore, the cut loss value b is -3.64%.