Solutions to Chapter 2.

Chapter 2: # 2.3, 2.4, 2.7, 2.12, 2.15, 2.16, 2.17, 2.19, 2.20, 2.23, 2.26, 2.27, 2.30, 2.37
2.3

a.
b.
c.

CPI percentage growth forecasts: 3.0, 3.1, 3.4, 3.4, 3.5, 3.6, 3.7, 3.7, 3.7, 3.9
x 35
x i
3.5
n 10
Compute the sample mean
3.5 3.6
3.55
2
Compute the sample median = middlemost observation:
Mode = most frequently occurring observation = 3.7

2.4
Department store % increase in dollar sales: 2.9, 3.1, 3.7, 4.3, 5.9, 6.8, 7.0, 7.3, 8.2, 10.2
x 59.4
x i
5.94
n
10
a.
Mean
5.9 6.8
6.35
2
b.
Median = middlemost observation:
c.
The distribution is relatively symmetric since the mean of 5.94 is relatively close to the median
of 6.35. Since the mean is slightly less than the median, the distribution is slightly skewed to the left.
2.7
Find the measures of central tendency for the number of defects in a sample of 50 radios
0(12) 1(15) 2(17) 3(6)
50
Mean number of defects =
= 1.34 defects per radio
Median = 1 (middlemost observation in the ordered array), Mode = 2 (most frequently
occurring observation)
2.12
The variance and standard deviation are
( xi x ) 2 36 5.143
s2
n 1
7
and

s = 2.268

2.15
The time that a sample of employees took to complete a task

a.
b.
c.
d.

Variable
Ex2.15

N
24

N*
0

Variable
Ex2.15

Q1
17.00

Mean
28.96
Median
27.00

SE Mean
2.77
Q3
39.25

TrMean
28.05
Maximum
66.00

Mean = 28.96
Standard deviation = 13.57
Five number summary = 12, 17, 27, 39.25, 66
CV = 46.86

StDev
13.57
IQR
22.25

Variance
184.13

CoefVar
46.86

Minimum
12.00

2.16

Q3 = 73.75
a. IQR = 24.25; Q1 = 49.5;
b. 8th decile = 80th percentile = 18.4th observation = 76 + 0.4(79-76) = 77.2
c. 92nd percentile = 21.26th observation = 83 + 0.16(87-83) = 83.64
2.17
Mean = 75, variance = 25
a.
Use Chebychevs theorem. +/- 2 standard deviations: proportion must be at least
100[1 (1/ k 2 )]% = 100[1 (1/ 22 )]% = at least 75%
b.
Use the empirical rule. +/- 2 standard deviations: Approximately 95% of the observations are
within 2 standard deviations from the mean
2.19
Mound shaped data with mean of 450 and variance of 625.
a.
Greater than 425? Since approximately 68% of the observations are within 1 standard deviation
from the mean, approximately 84% of the observations will be greater than 425.
b.
Less than 500? Approximately 97.5% of the observations will be less than 500.
c.
Greater than 525? Since all or almost all of the distribution is within 3 standard deviations from
the mean, approximately 0% of the observations will be greater than 525.
2.20
Compare the annual % returns of stocks vs. U.S. Treasury bills
Variable
Stocks_Ex2.20
TBills_Ex2.20

N
7
7

N*
0
0

Mean
8.16
5.786

Variable
Stocks_Ex2.20
TBills_Ex2.20

Q1
-14.70
4.400

SE Mean
8.43
0.556

Median
14.30
5.800

TrMean
*
*

Q3
23.80
6.900

Maximum
37.20
8.000

StDev
22.30
1.471
Range
63.70
4.200

Variance
497.39
2.165

CoefVar
273.41
25.43

Minimum
-26.50
3.800

IQR
38.50
2.500

a.

Compare the means of the populations

x 57.12
xi 40.502 5.786
stocks i
8.16 Tbills
N
7
N
7
The mean annual % return on stocks is higher than the return for U.S. Treasury bills
b. Compare the standard deviations of the populations

(x )

stocks

= 20.648

(4.0 8.16) (14.3 8.16) (19 8.16) ( 14.7 8.16) ( 26.5 8.16) (37.2 8.16) (23.8 8.16)
2

(x )

Tbills 2

=1.362

(6.5 5.8) (4.4 5.8) (3.8 5.8) (6.9 5.8) (8.0 5.8) (5.8 5.8) (5.1 5.8)
2

The variability of the U.S. Treasury bills is much smaller than the return on stocks.

2.23
Test scores of 40 students
Variable
N
Mean
Scores
40 77.55
Variable
Scores
a.
b.
c.
d.

Minimum
54.00

Median
79.00

Maximum
98.00

TrMean
77.75
Q1
68.00

StDev SE Mean
12.27
1.94

Q3
88.75

Mean grade = 77.55

Standard deviation = 12.27
Coefficient of variation = s / x = 12.27 / 77.55 = .15822 or 15.822%
IQR = (88.75 68.0) = 20.75. This is the range of the middle 50% of the data

2.26
x

a. mean without the weights

b. weighted mean
wi
xi
8
3
6
2
5
24

xi 21

4.2
n
5

wi xi

4.6
3.2
5.4
2.6
5.2

36.8
9.6
32.4
5.2
26.0
110.0

w x
w

i i

110
4.583
24

2.27
a. Calculate the sample mean of the frequency distribution for n = 40
mi
f i mi
Class
0-4
5-9
10-14
15-19
20-24

2
7
12
17
22

fm

5
8
11
9
7
40

observations

10
56
132
153
154
505

505
12.625
n
40
b. calculate the sample variance and sample standard deviation
mi
f i m i ( mi x ) ( mi x ) 2 f i ( mi x ) 2
x

Class
0-4
5-9
10-14
15-19
20-24

2
7
12
17
22

5
8
11
9
7
40

10
56
132
153
154
505

-10.625
-5.625
-0.625
4.375
9.375

112.8906
31.64063
0.390625
19.14063
87.89063

564.4531
253.125
4.296875
172.2656
615.2344
1609.375

2.30
Based on a sample of n = 50:
f i mi
mi
0
1
2
3
4
5
6
Sum

21
13
5
4
2
3
2
50

0
13
10
12
8
15
12
70

( mi x )

( mi x ) 2

f i ( mi x ) 2

-1.4
-0.4
0.6
1.6
2.6
3.6
4.6

1.96
0.16
0.36
2.56
6.76
12.96
21.16

41.16
2.08
1.8
10.24
13.52
38.88
42.32
150

X
a.
b.

fm
i

Sample mean number of claims per day =

=70/50 = 1.40
2
fi (mi x ) 150 3.0612
s2
n 1
49
Sample variance =
Sample standard deviation = s =

s 2 = 1.7496

2.37
a. compute the sample covariance
xi
y i ( xi x ) ( xi x ) 2
6
7
8
9
10
40

80
60
70
40
0
250

-2
-1
0
1
2
0

x = 8.00 y = 50.00

C ov( x, y )

( y i y ) ( y i y ) 2 ( xi x ) ( y i y )
4
1
0
1
4
10

s x2

= 2.5

sx

= 1.5811

( x x )( y y ) 180 45
i

n 1

b. compute the sample correlation coefficient

C ov( x, y )
45
rxy

.90
sx s y
(1.58114)(31.6228)

30
10
20
-10
-50
0

900
100
400
100
2500
4000

s y2

=1000
=31.623

-60
-10
0
-10
-100
-180
Cov(x,y) = -45