Important: In each question the alternatives are as per our original ordering, before the permutation

done during the examination.

INDIAN INSTITUTE OF MANAGEMENT CALCUTTA

Statistics for Management End-term Examination October 28, 2020
Full Marks: 45 Answer ALL 15 questions Time: 60 minutes

Answer all 15 questions, each carrying 3 marks. For each question, choose the alternative that comes
nearest to or best describes your answer. You will get 3 for the right choice, and 0 for a wrong choice
or not making any choice. There is no negative marking.

Directions for questions 1-6

A psychological trait, X, influencing consumer behavior, is studied at several locations, all with large
populations. Independence across people may be assumed.

1. At location I, the distribution of X is continuous uniform on [-3m, m] where m (> 0) is unknown. A

random sample of six people from this location yields the X-values 7, 10, -33, -21, 2 and 8. The
maximum likelihood estimate of m is nearest to
A) 8 B) 9 C) 10 D) 11 E) 12

2. At location II, X is discrete with possible values 1, 2,…, N, each with probability 1/N. Here N is
either 3 or 5. If X denotes the X-value of a randomly chosen person from this location, and T = cX + d
is an unbiased estimator of 1/N, where c and d are constants, then the value of d is nearest to
A) 0 B) 0.5 C) 0.6 D) -0.5 E) -0.6

3. At location III, X has the Poisson distribution with unknown expectation m (> 0). If among 100
people chosen randomly from this location, 75 have positive X-values, then the maximum likelihood
estimate of m is nearest to
A) 1.31 B) 1.33 C) 1.35 D) 1.37 E) 1.39

4. At location IV, X equals 0 or 1, with respective probabilities (2+m)/(5+4m) and (3+3m)/(5+4m),

where the only possible values of m are -0.5, -0.3, 0 and 10. Ten people are chosen randomly from this
location. If X equals 1 for seven of them, and X equals 0 for the remaining three, then the maximum
likelihood estimate of m is nearest to
A) -0.5 B) 0 C) 0.7 D) 2.5 E) 10

5. At location V, X has the exponential distribution with unknown expectation m (> 0). If X denotes
the X-value of a randomly chosen person from this location, and T = cX + 1 is an estimator of m,
where c is a constant, then the value of c that minimizes the mean squared error of T when m =2 is
nearest to
A) 0.25 B) 0.5 C) 1 D) 1.25 E) 2

6. At location VI, the distribution of X is continuous uniform on [-m, m], where m (> 0) is unknown. If
X denotes the X-value of a randomly chosen person from this location, then the confidence coefficient
of the confidence interval [(40/41)|X|, 8|X|] for m is nearest to
A) 0.82 B) 0.84 C) 0.86 D) 0.88 E) 0.9

Directions for questions 7-8

In a production process, consider a quality characteristic Y having the Poisson distribution with
unknown mean m (> 0). In order to test the null hypothesis m = 1 against the alternative m > 1, one
item is first drawn at random. The null hypothesis is rejected if its Y-value is greater than 2, and
accepted if its Y-value is less than 2. If its Y-value is 2, then one more item is drawn at random. The
null hypothesis is accepted if this newly drawn item has Y-value less than 3, and rejected otherwise.

7. The probability of type 1 error is nearest to

A) 0.14 B) 0.12 C) 0.1 D) 0.08 E) 0.06

8. The probability of type 2 error, when m =3, is nearest to

A) 0.35 B) 0.3 C) 0.25 D) 0.2 E) 0.15

9. Consider a die with faces 1, 2,…, 6. To test the null hypothesis that it is fair against the
alternative that it is loaded in favor of the larger numbers, the die is rolled twice. The null
hypothesis is rejected if the total score exceeds 9, and accepted otherwise. If in reality the die has
probabilities 0.1, 0.1, 0.1, 0.1, 0.3 and 0.3 for the faces 1, 2, 3, 4, 5 and 6, respectively, then the
probability of rejecting the null hypothesis is nearest to
A) 0.40 B) 0.42 C) 0.44 D) 0.46 E) 0.48

10. Consider the following graph of residuals versus observation number of demand observed
weekly over a certain time period, where the residuals were obtained from a simple linear
regression model with observation number as the explanatory variable.

Residual vs Observation Number
8

0
0 50 100 150 200
‐2

‐4

‐6

‐8

For the above graph, proportion of values in the list {5.00, 1.75, 1.85, 4.25, 3.25, 3.75, 2.15, 1.90}
that seem reasonable values of the Durbin-Watson statistic, is nearest to
A) 0.125 B) 0.25 C) 0.375 D) 0.5 E) 0.625

11. A sample of 10 adults reported the number of hours they spent on the internet in the previous
month as follows: 12, 5, 33, 14, 8, 0, 9, 22, 0, 7. Let TM denote the trimmed mean calculated
by trimming 20% of the smallest and 20% of the largest values. Then the TM multiplied by the
mode of the above data is given by, upto 1st decimal place
A) 10.0 B) 11.0 C) 8.5 D) 2.5 E) None of the other alternatives

12. A sample of 10 adults reported the number of hours they spent on the internet in the previous
month as follows: 12, 5, 33, 14, 8, 0, 9, 22, 0, 7. Calculate the quartiles as defined in class.
Then, the IQR divided by the Median of the above data, is nearest to
A) 2.50 B) 1.38 C) 2.69 D) 3.60 E) 1.32

13. The salary (in appropriate units of money) of an employee (Y) of a certain company is found to
depend upon the number of months of his/her experience (X). Suppose data on eight employees of
this company are as given below:
sum of Y_i = 2320, sum of X_i = 352, sum of Y_i squares = 726632, sum of X_i squares = 16482,
sum product of X_i and Y_i = 108992.
Determine y-intercept of the best fitting line and it is nearest to
A) 7.20 B) 15.76 C) 15.82 D) 38.84 E) -12.97
14. The salary (in appropriate units of money) of an employee (Y) of a certain company is found to
depend upon the number of months of his/her experience (X). Suppose data on eight employees of
this company are as given below:
sum of Y_i = 2320, sum of X_i = 352, sum of Y_i squares = 726632, sum of X_i squares = 16482,
sum product of X_i and Y_i = 108992.
Calculate an estimate of regression error variance sigma-square in the simple linear regression
model, as discussed in class, and it is nearest to
A) 942.22 B) 929.27 C) 829.84 D) 838.84 E) 918.88

15. An investor invests 10%, 20%, 30% and 40% of his total investment in a mutual fund at
different time periods at prices (per unit-share of the mutual fund) 10, 8, 6 and 4 dollars
respectively. Then the ‘average’ price per unit the investor X paid is nearest to
A) 5.22 B) 6.99 C) 5.23 D) 5.32 E) 5.99

Solutions

Qu 1-5
1. From -3m ≤ -33 < 10 ≤ m, the answer is 11, i.e., D.
2. E(T) = c(population mean) + d = c{(N+1)/2}+d. This equals 1/N for N = 3 and 5, if and only if 2c+d
= 1/3 and 3c+d = 1/5, i.e., c = -2/15, d = 3/5 (=0.6). Thus, the answer is C.
3. Solving exp(-m) = 0.25, the answer is 1.3863, i.e., E.
4. The likelihood function is proportional to L = (p^7)((1-p)^3), with p = (3+3m)/(5+4m). At m =
-0.5, -0.3, 0 and 10, L equals 9.7656e-004, 0.0014, 0.0018 and 0.0022, respectively. Hence, the
answer is 10, i.e., E.
Wrong calculation: Estimate p by sample proportion 0.7, and then find m from (3+3m)/(5+4m) =
0.7, i.e., m =2.5.
5. MSE(T) = V(T) + {E(T)}^2 = (c^2)(m^2) + (cm+1-m)^2, which equals 4(c^2) + (2c-1)^2 when
m =2. This is minimum at c = 0.25, i.e., A.
6. P[(40/41)|X| < m < 8|X|] = P[m/8 < |X| < (41/40)m] = P(m/8 < |X| < m) = 7/8 = 0.875, i.e., D.
Wrong calculation: P[m/8 < |X| < (41/40)m] = (41/40) – (1/8) = 0.9.

Qu 7-8
Let Y1 be the Y-value of the first item and Y2 be the Y-value of the second item when it is drawn.
Then P(null hypothesis is accepted) = P(Y1 = 0 or 1) + P(Y1 = 2)P(Y2 = 0, 1 or 2)
= exp(-m)*(1+m) + exp(-2*m)*(0.5)*(m^2)*(1+m+(0.5)*(m^2)) = L(m), say.
7. 1 – L(1) = 1 – 0.9049 = 0.0951, i.e., C.
8. L(3) = 0.2940, i.e., B.

Qu 9 P(null hypothesis is rejected) = P(46) + P(55) + P(64) + P(56) + P(65) + P(66)

=0.03 + 0.09 + 0.03 + 0.09 + 0.09 +0.09 = 0.42, i.e., B.

Correct alternatives (as per our original arrangement of the alternatives):

1 2 3 4 5 6 7 8 9
D C E E A D C B B

Answers to Qu 10-14:
10. (Ans D, 0.5) 11. (Ans E, calculated value is 0) 12. (Ans B, 1.441176)
13. (Ans C, -15.96) 14. (Ans A, 961.3119) 15. (Ans D, 5.40541)