FACULTY OF COMMERCE AND LAW

DEPARTMENT OF BANKING AND FINANCE

ASSIGNMENT FOR JANUARY TO JUNE 2020 SEMESTER
BUSINESS STATISTICS II BBFH107
INTAKE 34 , PART 1, SEMESTER 2

ASSIGNMENT 2

Instructions to Students

1. Solutions to this assignment should be uploaded on MyVista in pdf or word.

2. Solutions can either be typed or hand written. If hand written, solutions should be
scanned as a single continuous document and converted to pdf.

3. Ensure that the correct assignment is uploaded.

Question 1
(a) Distinguish between the following terms:
i. Type I error and type II error [2 marks]
ii. Power of a test and significance level [2 marks]

(b) Rank marshals are reported to be earning an average of $200 per day. You believe this
figure is too high. A random sample of 100 rank marshals is interviewed and it is found
that the weekly average is $210 with a standard deviation of $20. Test the claim at 10%
level of significance. [7 marks]

1
Question 2

An investor believes that the most successful retail businesses in Zimbabwe are those located
near College campuses. The manager of a certain retail outlet collected the following data for use
in determining the relationship between sales and student enrolment:
Enrolment(000) 5 7 10 10 13 15 15 16 19 20
Quarterly Sales ($000) 24 31 52 46 59 63 65 74 80 80

a) Construct a scatter plot of the data and comment on the distribution. [5 marks]
b) Estimate the Ordinary Least Squares regression equation for the data. [6 marks]
c) Determine the quarterly sales for a retail outlet located near a campus with an enrolment of
14 000 students. [3 marks]
d) Calculate the coefficient of determination and interpret it. [5 marks]

Question 3
(a) Explain any four challenges that are encountered in the construction of indices. [8 marks]
(b) The table below shows two products, A and B and corresponding quantities consumed at
the given prices over a 2 year period:

Year 2017 2017 2018 2018

Product 𝑃0 𝑄0 𝑃𝑛 𝑄𝑛
A 8 2 000 10 1 800
B 10 5 000 8 6 000

Using 2017 as the base year, determine:

i) The price index of product A and interpret it. [3 marks]
ii) The value index of A and B. Explain your answer. [3 marks]
iii) Fisher’s price index and interpret your answer. [6 marks]