Assignment 1

1. The “expense ratio” is a measure of the cost of managing portfolios. Investors prefer a low
expense ratio, all else equal. The following are the expense ratios of 23 stock funds and 21
bond funds that your company is managing. Can you list the top 10 funds for which the cost
of managing will be the highest?

Stock funds Bond Funds

1.12 1.96
1.44 0.51
1.27 1.12
1.75 0.64
0.99 0.69
1.45 0.20
1.19 1.44
1.22 0.68
0.99 0.40
3.18 0.94
1.21 0.75
1.89 1.77
0.60 0.93
2.10 1.25
0.73 0.85
0.90 0.99
1.79 0.95
1.35 0.35
1.08 0.64
1.28 0.41
1.20 0.90
1.68
0.15

2. American Cancer Society estimates that about 1.7% of women have breast cancer. A study
for the Cure Foundation states that mammography correctly identifies about 78% of the
women who truly have breast cancer. An article published in 2021 suggests that around 10%
of all mammograms are false positive. Answer the following clearly stating your assumptions,
if any, with appropriate justification.
a. A woman has tested positive in a mammography. What is the probability that she has
breast cancer?
b. In order to double check the same woman undergoes a second test by the same
mammography kit. This test too results in a positive. Does the probability of her
having breast cancer change now or remain the same as earlier. Please justify your
responses accordingly.

3. Mrs. Dhairya Patel, the owner of Gajanan Stores near IRMA, would like to know if the number
of items purchased by a customer is independent of the type of payment method that the
customer chooses to use. Since she plans for setting up a bigger store, it would help her to
 determine the various checkout lanes. She gave you the data of 368 customer transactions
that she collected at random seeking your help.

Number of items Cash UPI Debit/ Credit card

purchased
5 or fewer 30 15 43
6 to 9 46 23 66
10 to 19 31 15 43
20 or more 19 10 27

4. The owner Mr. Chirag Desai of Chirag Computers is considering what to do with his business
over the next year. Sales growth over the past couple of years has been good, but sales could
grow substantially if a major proposed electronics firm is built in the vicinity. Mr. Desai sees
three options, the first if to enlarge his current store, the second is to locate a new site, and
the third is to simply wait and do nothing. The process of expanding or moving would take
little time, and, therefore, the store would not lose revenue. Help Chirag computer take some
decision based on the following assumptions.
a. Strong growth would as a result of the increased population of computer fanatics
from the new electronics firm has a 55% probability.
b. Strong growth with a new site would give annual returns of Rs 14,040,000 per year.
Weak growth with a new site would mean annual returns of Rs 8,280,000
c. Strong growth with an expansion in the current site would give annual returns of Rs
13,680,000 per year. Weak growth would mean annual returns of Rs 7,200,000.
d. At the existing store with no changes, there would be returns of Rs 12,240,000 if there
is a strong growth and Rs 7,560,000 if there is a weak growth.
e. Expansion at the current site would cost Rs 6,264,000.
f. Expansion at a new site would cost Rs 7,380,000.

5. The tab Noodle house in Assignment_1.xlsx contains data of Noodles sold in 74 outlets of a
noodle joint in the month of June.
a. Represent the data using a frequency table.
b. Draw a line graph using the frequency table in excel? What does the line graph show?
c. Make a histogram using the data.
d. What is your comment on the skewness of the distribution?
e. Are there any outliers?