Maths Fast Track Notes - CA Nishant Kumar - StepFly (Gvwz160521)

CA Foundation
Paper 3
BUSINESS
MATHEMATICS,
LOGICAL
REASONING,
STATISTICS
(FAST TRACK)
CA Nishant Kumar
CA Nishant Kumar
UNACADEMY
FREE LIVE Lectures daily at 10:30 a.m. on:
https://www.youtube.com/channel/UC9RPlh
B_vNQMSJJSQhSDe3Q
CHAPTER 1 – RATIO, PROPORTION, INDICES, LOGARITHMS – UNIT 1 – RATIO
Chapter 1 – Ratio and Proportion, Indices,

Logarithms
FREE Fast Track Lectures –
https://www.youtube.com/playlist?list=PLAKrxMrPL3fwOSJWxnr8j0C9a
4si2Dfdz
Chapter 1 – Lecture 1 – https://youtu.be/Drou7FrzFMg

Chapter 1 – Lecture 2 – https://youtu.be/1I5xKZ-9oJU
Unit 1 – Ratio
Ratio
A ratio is a comparison of two quantities of the same kind and of same units. If “a” and “b” are two quantities
of the same kind, then the fraction a/b is called the ratio of a to b. It is written as a : b. The quantities a and
b are called terms of the ratio; “a” is called the first term or the “antecedent” and “b” is called the second
term or the “consequent”. Usually, a ratio is expressed in its simplest form.
Points to Remember
1. Ratio exists only between quantities of same kind.
2. Quantities to be compared must be in the same units.
Example 1 – What is the ratio between 150 gm and 2 kg?
Example 2 – What is the ratio between 25 minutes and 45 seconds?
3. To compare ratios, use calculator as is explained in the class.
1 1
Example 3 – Which of the following is greater – 2 : 3 , 3.6 : 4.8?
3 3
4. If a quantity increases or decreases in the ratio a : b, then new quantity = b of the original quantity/a.
The fraction by which the original quantity is multiplied to get a new quantity is called the factor
multiplying ratio. (This is basically unitary method.)
Example 4 – Rounaq weighs 56.7 kg. If he reduces his weight in the ratio 7 : 6, find his new weight.
5. Inverse Ratio – The inverse ratio of a/b is b/a.
6. Compound Ratio – The multiplication of two or more ratios is called compound ratio. The
compound ratio of a : b and c : d is ac : bd.
7. Duplicate Ratio – A ratio compounded of itself is called a Duplicate Ratio. The duplicate ratio of
a : b is a2 : b2.
8. Sub-Duplicate Ratio – The sub-duplicate ratio of a : b is a: b.
9. Triplicate Ratio – The triplicate ratio of a : b is a3 : b3.
3
10. Sub-Triplicate Ratio – The sub-triplicate ratio of a : b is a:3b.
8447757167 CA NISHANT KUMAR 1

CHAPTER 1 – RATIO, PROPORTION, INDICES, LOGARITHMS – UNIT 2 – PROPORTIONS
Unit 2 – Proportions
Proportion
An equality of two ratios is called Proportion. The quantities a, b, c, and d are said to be in proportion if
a : b = c : d. It is also written as a : b ⸬ c : d. The quantities a, b, c, and d are called the terms of the
proportion; a, b, c, and d are called the first, second, third and fourth terms respectively. They are also
called “first proportional”, “second proportional”, “third proportional”, and “fourth proportional”
respectively. The terms a and d are called “Extremes” and the terms b and c are called “Means”.
Cross-Product Rule
Clearly, if a : b = c : d, then by cross multiplication ad = bc. Therefore, product of means = product of
extremes. This is called the cross-product rule.
Continuous Proportion
The quantities a, b, and c are said to be in continuous proportion if a : b = b : c. In such case, the middle
term b is called the mean proportional. Obviously, b2 = ac or b = √ac.
Continued Proportion
When 3 or more numbers are related such that a/b = b/c = c/d = d/e… the numbers a, b, c, d, and e are said
to be in continued proportion.
Note – In a ratio a : b, both the quantities a and b should be of the same kind. However, this is not true in
case of proportion. In proportion a : b ⸬ c : d, the quantities a and b should be of the same kind, and
quantities c and d should be of the same kind.
Properties of Proportion
1. Cross-Product Rule
a c
If = , then ad = bc.
b d
2. Invertendo
a c b d
If = , then =
b d a c
3. Alternendo
a c a b
If = , then =
b d c d
4. Componendo
a c a+b c+d
If = , then =
b d b d
5. Dividendo
a c a −b c−d
If = , then =
b d b d
6. Componendo and Dividendo

CHAPTER 1 – RATIO, PROPORTION, INDICES, LOGARITHMS – UNIT 2 – PROPORTIONS
a c a+b c+d
If = , then =
b d a −b c−d
7. Addendo
a c e a + c + e...
If = = = ... , then each of these ratios is equal to , i.e.
b d f b + d + f ...
a a + c + e... c a + c + e... e a + c + e...
= ; = ; = …
b b + d + f ... d b + d + f ... f b + d + f ...
8. Subtrahendo
a c e a − c − e...
If = = = ... , then each of these ratios is equal to , i.e.
b d f b − d − f ...
a a − c − e... c a − c − e... e a − c − e...
= ; = ; = …
b b − d − f ... d b − d − f ... f b − d − f ...

CHAPTER 1 – RATIO, PROPORTION, INDICES, LOGARITHMS – UNIT 3 – INDICES
Unit 3 – Indices
The word “Indices” means plural of “Index”. When a number is expressed in the form of an, a is called the
base, and n is called the index/exponent/power.
Integral Exponents of a Real Number

Positive Integral Power
For any real number a and a positive integer n, an is defined as
an = a × a× a × a × … × a (n times)
Negative Integral Power

For any real number a and a negative integer n, a–n is defined as
1
a−n =
an
Zero Power
For any real number a, a0 is defined as
a0 = 1
Laws of Indices
1. First Law
am × an = am+n
2. Second Law
am
n
= a m−n
a
3. Third Law
(a ) ( )
n m
m
= a mn = a n
4. Fourth Law
(ab)n = anbn
n
a a
n
  = n
b b
5. Fifth Law
( ) ( a)
m
( )
m m
= n am =
m 1 1 n
= am = a
n
a n n n
, i.e. a

CHAPTER 1 – RATIO, PROPORTION, INDICES, LOGARITHMS – UNIT 3 – INDICES
Cyclic Order Tricks

Type I
1. (a – b) + (b – c) + (c – a) = 0
2. a(b – c) + b(c – a) + c(a – b) = 0
3. (a2 – b2) + (b2 – c2) + (c2 – a2) = 0
4. (a3 – b3) + (b3 – c3) + (c3 – a3) = 0
5. (b – c)(b + c – a) + (c – a)(c + a – b) + (a – b)(a + b – c) = 0
1 1 1
6. + + =0
(a − b)(b − c) (b − c)(c − a ) (c − a )(a − b)
If one of the above, or something like above is in the power of a base, the result will always be equal to 1.
For example, x a −b  x b − c  x c − a = 1.
Type II
In such types of questions, the product of the powers is equal to the power of the last term.
For example,
1. If a p = b ; b q = c ; c r = a , the product of the powers, i.e. pqr is equal to the power of the last term,
i.e. the power of a, i.e. 1.
2. If a m = b ; b n = c ; c r = d ; d p = a , the product of the powers, i.e. mnrp is equal to the power of
the last term, i.e. the power of a, i.e. 1.

CHAPTER 1 – RATIO, PROPORTION, INDICES, LOGARITHMS – LOGARITHMS
Unit 4 – Logarithms
Logarithms are used to simplify huge calculations. 23 = 8 is expressed in terms of Logarithms as log 2 8 = 3.
It is read as log 8 to the base 2 is 3.
Notes –
1. For any positive real number, a, we know that a0 = 1 and a1 = a. Therefore, log a 1 = 0 and
log a a = 1 .
2. If, in a question, the base is not mentioned, it is considered to be 10.
Laws of Logarithms
1. First Law
log a ( mn ) = log a m + log a n
2. Second Law
m
log a  = log a m − log a n
n
3. Third Law
( )
log a mn = n.log a m
4. Fourth Law (Base Change Formula)
log b m
log a m =
log b a
log a m  log m a = 1
5. Fifth Law
1
= log m a
log a m
6. Sixth Law
a log a n = n
7. Seventh Law
p
log aq n p = log a n
q

CHAPTER 2 – EQUATIONS AND MATRICES – UNIT 1 – EQUATIONS
Chapter 2 – Equations and Matrices

FREE Fast Track Lectures:
https://www.youtube.com/watch?v=ZZpvRpkgmaE&list=PLAKrxMrPL3f
wOSJWxnr8j0C9a4si2Dfdz
Link for Lecture 1 of Equations and Matrices: https://youtu.be/IMoRIfP82FU

Link for Lecture 2 of Equations and Matrices: https://youtu.be/yo2R4FdcZ5E
Unit 1 – Equations
An equation is a mathematical statement of equality. The value of the variable which satisfies an
equation is called the “solution” of the equation, or the “root” of the equation. An equation is said
to be a Linear Equation, a Quadratic Equation, or a Cubic Equation depending on the highest power
of the variable in it. If the highest power of the variables in an equation is 1, it is said to be a Linear
Equation. If the highest power of the variables in an equation is 2, it is said to be a Quadratic
Equation. If the highest power of the variables in an equation is 3, it is said to be a Cubic Equation.
Simple Equation
A simple equation is an equation with only one unknown in the form of ax + b = 0 . Here, a and b
are constants and x is the variable which we need to find out. A simple equation has only one root.
Questions to be Solved from Scanner

1. Page 3.136 – Question 74
2. Page 3.112 – Question 33 – Homework
Simultaneous Linear Equations in Two Unknowns

An equation of the form ax + by + c = 0 is called a linear equation (because the highest power is 1)
in two unknowns (x and y). Two such equations such as a1 x + b1 y + c1 = 0 and a2 x + b2 y + c2 = 0
are called simultaneous equations in two unknowns, the unknowns being x and y.



Quadratic Equation
A quadratic equation is an equation in which the highest power of the variables is 2. A quadratic
equation is of the form ax 2 + bx + c = 0 . x is a variable while a, b and c are constants. A quadratic
equation has two solutions/roots. There are two methods of solving any quadratic equation:
1. Factorization Method
Example: Solve the equation x 2 − 5 x + 6 = 0 using factorization method.
−b  b 2 − 4ac
2. Using the formula . If we call the roots α and β, then,
2a
−b + b 2 − 4ac −b − b 2 − 4ac
= ;=
2a 2a
Example: Solve the equation x − 5 x + 6 = 0 using the formula.
2
We’ll mostly be using the method only.

b
Sum of roots ( +  ) = −
a
c
Product of roots ( ) =
a
If α and β are the roots of the equation, the equation is given by: x 2 − ( +  ) x +  = 0 .
In other words, x 2 − ( Sum of Roots) x + Product of Roots = 0 .
3. Fastest Method –
x2 − 5x + 6 = 0
Here, a = 1; b = –5; c = 6
b −5
Sum of Roots = − = − =5
a 1
c 6
Product of Roots = = = 6
a 1
5 
Now, take the sum of the roots, divide it by half, and add x to it. You’ll get  + x  .
2 
Similarly, take the sum of the roots, divide it by half, and subtract x from it. You’ll get
5 
 − x  . Multiply these two and equate with the product, i.e. 6.
2 

5  5 
 + x − x = 6
2  2 
2
5
  −x =6
2
 
2
25
− 6 = x2
4
0.25 = x 2
x = 0.25 = 0.5
5  5 
Now, put the value of x = 0.5 in the factors  + x  , and  − x  . You’ll get the roots.
2  2 
5 5
Therefore,  = + 0.5 = 3 ;  = − 0.5 = 2
2 2
This method applies to complicated roots as well.
Nature of Roots
−b  b2 − 4ac
x=
2a
1. If b 2 − 4ac = 0 , the roots are real and equal;

2. If b 2 − 4ac  0 , the roots are real and unequal;
a. If b 2 − 4ac is a perfect square, the roots are real, rational and unequal;
b. If b 2 − 4ac is not a perfect square, the roots are real, irrational and unequal;
3. If b 2 − 4ac  0 , the roots are imaginary and unequal.
Since b 2 − 4ac discriminates the roots, it is called the discriminant (D). Therefore, D = b 2 − 4ac .
Notes:
1. A real number is a number which can be expressed on a number line. Therefore, every
number is a real number, including negative numbers.
2. An imaginary number is a number multiplied by a unit “i”, which is identified by its
property i 2 = −1 .
3. An integer is a number without any fractional part. It includes positive as well as negative
numbers.
4. A rational number is a number which can be expressed as a fraction of two integers. The
decimal expansion of a rational number either terminates after a finite number of digits, or
begins to repeat the same finite sequence of digits over and over.
Examples:
2
a. 2 is a rational number as it can be expressed in the form of .
1
5
b. is a rational number as its decimal expansion 2.5 terminates after a finite number
2
of digits.

2
c. is a rational number as its decimal expansion comes to 0.222…, i.e. it begins to
9
repeat itself over and over.
5 2
d. − , − are also rational numbers.
2 9
5. An irrational number is a number whose decimal expansion either does not terminate after
a finite number of digits or does not repeat itself over and over.
Examples:
a.  is an irrational number as its decimal expansion is 3.14159265359…, i.e. it
neither terminates after a finite number of digits nor does it repeat itself over and
over.
b. 2 is an irrational number as its decimal expansion is 1.41421356237…, i.e. it
neither terminates after a finite number of digits nor does it repeat itself over and
over.
6. Irrational roots occur in conjugate pairs, i.e. if (m + n ) is a root, then (m − n ) is the
other root of the same equation.
c
7. If one root is reciprocal to the other root, then their product is 1 and so = 1 , i.e. c = a .
a
8. If one root is equal to the other root but opposite in sign, then their sum = 0 , i.e.
b
− = 0  b = 0.
a



Cubic Equation
A cubic equation is an equation of the form ax3 + bx 2 + cx + d = 0 . It has three roots/solutions. The
trick to solve such type of questions is to always try the options.


CHAPTER 2 – EQUATIONS AND MATRICES – UNIT 2 – MATRICES AND DETERMINANTS
Unit 2 – Matrices and Determinants
Introduction to Matrices
Before getting into the definition of Matrix, let’s look at this situation: Ram, Sita and Laxman are
three friends. Ram has 5 books, 3 pencils and 2 pens. Sita has 10 books, 8 pencils and 7 pens.
Laxman has 15 books, 10 pencils and 2 pens. The above information about three friends can be
represented in the following form:
Books Pencils Pens
Ram 5 3 2
Sita 10 8 7
Laxman 15 10 2
The above information can be expressed as follows:
 5 3 2 First Row
10 8 7  Second Row
 
15 10 2  33 Third Row
First Column Second Column Third Column

The information presented in the above form is called a matrix.
In the above matrix, there are three rows and three columns. Therefore, it is said that the matrix is
of the order 3 × 3 (read as 3 by 3). The individual numbers inside the matrix are known as
elements. The number 5 is at the 1st row and 1st column, and is represented as a11 = 5 . The number
3 is at the 1st row and 2nd column, and is represented as a12 = 3 . The number 7 is at the 2nd row and
3rd column, and is represented as a23 = 7 .
Note – The brackets surrounding the elements can be round () as well as box [].
The order of the matrix is denoted as m × n, where m is the number of rows and n is the number
of columns.
Types of Matrices
Following are the different types of matrices that we’ll be studying:
1. Row Matrix
2. Column Matrix
3. Zero Matrix or Null Matrix
4. Square Matrix and Rectangular Matrix
5. Diagonal Matrix

6. Scalar Matrix
7. Unit Matrix
8. Upper Triangle Matrix
9. Lower Triangle Matrix
10. Sub Matrix
11. Equal Matrices
Row Matrix
A matrix which has only one row is called a Row Matrix or a Row Vector. For example, 1 2 5
is a row matrix.
Column Matrix
A matrix which has only one column is called a Column Matrix or a Column Vector. For example,
1 
 2  is a column matrix.
 
 5 
Zero Matrix or Null Matrix

A matrix in which every element is zero is called a Zero Matrix or a Null Matrix. A Zero Matrix
0
0 0  
or a Null Matrix of order m × n is denoted as Omn. For example,   ,  0  , 0 0 0 are Zero
0 0  
0
Matrices.
Square Matrix and Rectangular Matrix

A matrix in which the number of rows and columns is the same is called a Square Matrix. For
1 5 9
1 2   
example,   , 15 42 44  are Square Matrices.
 3 4  
78 98 19 
1 2 7 
Any other matrix is a Rectangular Matrix. For example,   is a rectangular matrix.
5 8 3 
Diagonal Matrix
A Diagonal Matrix is a Square Matrix in which all the elements except those falling on the diagonal
1 0 0 
are zero. For example, 0 42 0  is a Diagonal Matrix as all the elements other than the
0 0 19 
diagonal elements are zero. This diagonal is called the “Principal Diagonal” or the “Leading
Diagonal”.

Scalar Matrix
A Scalar Matrix is a Diagonal Matrix in which all the elements on the leading diagonal are the
 45 0 0 
same. For example,  0 45 0  is a Scalar Matrix, as all the elements on the leading diagonal
 0 0 45
are the same, i.e., 45.
Unit Matrix
A Unit Matrix is a Scalar Matrix in which all the elements on the leading diagonal are 1. For
1 0 0
example,  0 1 0  is a Unit Matrix as all the elements on the leading diagonal are 1. A Unit
 0 0 1 
Matrix is denoted by I.
Upper Triangle Matrix

A square matrix in which all the elements below the leading diagonal are zero is called an Upper
1 2 4 3
0 5 1 3
Triangle Matrix. For example,   is an Upper Triangle Matrix as all the elements
0 0 2 9 
 
0 0 0 5
below the leading diagonal are zero.
Lower Triangle Matrix

A square matrix in which all the elements above the leading diagonal are zero is called a Lower
1 0 0 0 
2 5 0 0
Triangle Matrix. For example,   is a Lower Triangle Matrix as all the elements above
4 3 2 0
 
7 8 9 5 
the leading diagonal are zero.
Sub Matrix
A matrix which is a part of another bigger matrix is called a Sub Matrix. For example, let there be
1 2 3
 2 3
a matrix A =  4 5 6  . A Sub Matrix B could be B = 
5 6 
. Therefore, this sub matrix B is
 7 8 9  
obtained by deleting the third row and the first column.
Equal Matrices
1 2 3 1 2 3
No rocket science here; following two matrices are clearly equal: A =  4 5 6  ; B =  4 5 6 
 
 7 8 9   7 8 9 

Algebra of Matrices
Addition and Subtraction of Matrices
Addition or Subtraction of two matrices is possible only if their order is the same. To add two
matrices, simply add the corresponding elements of both the matrices. To subtract, suppose matrix
B from matrix A, simply subtract all the elements of matrix B from the corresponding elements of
matrix A.

Scalar Multiplication
When each element of a matrix, say, A is multiplied by a constant, say, k, it is called Scalar
Multiplication.
Example
2 3 5
Multiply the matrix A =   with 4.
4 6 0
Negative of a Matrix
When each element of a matrix, say, A is multiplied by –1, the resultant matrix is known as –A, or
negative of the original matrix A.
Example
2 3 5
What is the negative of the matrix A =  ?
4 6 0
Multiplication of Two Matrices

The product AB of the two matrices A and B is possible only if the number of columns of matrix
A is the same as the number of rows of matrix B, i.e. product AB is possible if the order of A is m
× n and the order of B is n × p. The resultant matrix AB is of the order m × p.
Example
5 3
1 5 3
If A =   , B = 1 0  , find AB.
4 5 6  2 8 

Transpose of a Matrix
The matrix which is obtained by interchanging the rows and columns of a matrix is known as
Transpose of the matrix. If the matrix is A, its transpose is denoted by AT or A′.
Example

 1 3 7
Give the transpose of the matrix A =  −2 0 3  .
 6 8 2 
Properties of Transpose of a Matrix

1. A matrix is transpose of its transpose, i.e. A = (A′)′.
2. The transpose of the sum of the two matrices is the sum of their transpose matrices, i.e. (A
+ B)′ = A′ + B′.
3. Transpose of a multiplication of a matrix and constant number is equal to the multiplication
of the constant number by the transpose of matrix, i.e. (kA)′ = k.A′.
4. The transpose of the product of two matrices is equal to the product of their transpose in
reverse order, i.e. (AB)′ = B′.A′.

Symmetric Matrix
A matrix A is called a Symmetric Matrix, if A′ = A.
1 3 7  1 3 7 
Example: A =  3 0 8  is a Symmetric Matrix as A ' =  3 0 8  is the same as A.
 
 7 8 2  7 8 2 
Skew Symmetric Matrix

A matrix A is called a Skew Symmetric Matrix if A′ = –A.
 0 2 −3  0 −2 3 
 
Example: A =  −2 0 5  is a Skew Symmetric Matrix as A ' =  2 0 −5 = –A.
 3 −5 0   −3 5 0 
As a matter of property, in a Skew Symmetric Matrix, aij = –aji for all i, j, where i is row and j is
column.
Introduction to Determinants
Every square matrix can be associated with a number. This number is called the “Determinant” of
the matrix. If A is a square matrix of order n, its determinant is denoted by det A, or A , or ∆.
Determinant of a 2 × 2 Matrix
a b 
The determinant of a 2 × 2 matrix A =   is given by ad – bc.
c d 
Example

5 4
Evaluate .
−2 3
Determinant of a 3 × 3 Matrix
 a1 a2 a3 
The determinant of 3 × 3 matrix A =  b1 b2 b3  is given by:
 c1 c2 c3 
a1 a2 a3
A = b1 b2 b3
c1 c2 c3
b2 b3 b1 b3 b1 b2
A = a1 − a2 + a3
c2 c3 c1 c3 c1 c2
A = a1 (b2c3 − c2b3 ) − a2 (b1c3 − c1b3 ) + a3 (b1c2 − c1b2 )
Example
2 3 −2
Evaluate  = 1 2 3 .
−2 1 −3
Singular Matrix
A matrix A is said to be a Singular Matrix if A = 0 .

Minors of a Determinant
Let A = aij  be a square matrix of order n. The minor M ij of aij in A is the determinant of the
square sub-matrix of order ( n − 1) obtained by leaving the ith row and jth column of A.
Example 22
1 3 −2 
Find the minors in the matrix A =  4 −5 6  .
 3 5 2 
Example 23
 4 −7 
Find the minors in the matrix A =  .
 −3 2 

Cofactors of a Determinant
Let A = aij  be a square matrix of order n. The Cofactor Cij of aij in A is equal to ( −1) times
i+ j
the determinant of the sub-matrix of order ( n − 1) obtained by leaving ith row and jth column of A.
In other words, Cij = Cofactor of aij in A
In other words, Cij = ( −1)

i+ j
 M ij , where M ij is minor of aij in A.
Thus, we have:
1. Cij = M ij , if (i + j ) is even
2. Cij = −Mij , if (i + j ) is odd
Example 24
1 3 −2 
Find the Cofactors in the matrix A =  4 −5 6  and construct a cofactor matrix.
 3 5 2 
Shortcut for Constructing a Cofactor Matrix

For a 2 × 2 Matrix
For a 2 × 2 matrix A, the cofactor matrix is constructed as follows:
1. Prepare a 2 × 2 matrix format.
2. Element a11 of the Cofactor Matrix = Element a22 of Matrix A.
3. Element a12 of the Cofactor Matrix = Element a21 of Matrix A, with opposite sign.
4. Element a21 of the Cofactor Matrix = Element a12 of Matrix A, with opposite sign.
5. Element a22 of the Cofactor Matrix = Element a11 of Matrix A.
 4 −7 
Example: Construct a Cofactor matrix of the following matrix A =  .
 −3 2 
2 3
Solution: Cofactor Matrix of A =  .
7 4 
For a 3 × 3 Matrix
1 3 −2 
For a 3 × 3 matrix A =  4 −5 6  , the cofactor matrix is constructed as follows:
 3 5 2 
1. Copy the 3 × 3 matrix as it is:

1 3 −2
4 −5 6
3 5 2

2. Repeat Columns 1 and 2 after Column 3:

1 3 −2 1 3
4 −5 6 4 −5
3 5 2 3 5
3. Repeat Rows 1 and 2 after Row 3:
1 3 −2 1 3
4 −5 6 4 −5
3 5 2 3 5
1 3 −2 1 3
4 −5 6 4 −5
Now you have a 5 × 5 matrix.
4. Eliminate Row 1 and Column 1 entirely:
1 3 −2 1 3
4 −5 6 4 −5
3 5 2 3 5
1 3 −2 1 3
4 −5 6 4 −5
5. Now you’re left with:
−5 6 4 −5
5 2 3 5
3 −2 1 3
−5 6 4 −5
6. Now, element a11 of the cofactor matrix is given by:
−5 6 4 −5
5 2 3 5
3 −2 1 3
−5 6 4 −5
= (–5 × 2) – (5 × 6) = –10 – 30 = –40

−5 6 4 −5
5 2 3 5
3 −2 1 3
−5 6 4 −5
= (6 × 3) – (2 × 4) = 18 – 8 = 10

−5 6 4 −5
5 2 3 5
3 −2 1 3
−5 6 4 −5
= (4 × 5) – (3 × –5) = 20 – (–15) = 35
−5 6 4 −5
5 2 3 5
3 −2 1 3
−5 6 4 −5
= (5 × –2) – (3 × 2) = –10 – 6 = –16

−5 6 4 −5
5 2 3 5
3 −2 1 3
−5 6 4 −5
= (2 × 1) – (–2 × 3) = 2 – (–6) = 8
−5 6 4 −5
5 2 3 5
3 −2 1 3
−5 6 4 −5
= (3 × 3) – (1 × 5) = 9 – 5 = 4
−5 6 4 −5
5 2 3 5
3 −2 1 3
−5 6 4 −5
= (3 × 6) – (–5 × –2) = 18 – 10 = 8
−5 6 4 −5
5 2 3 5
3 −2 1 3
−5 6 4 −5

= (–2 × 4) – (6 × 1) = –8 – 6 = –14
−5 6 4 −5
5 2 3 5
3 −2 1 3
−5 6 4 −5
= (1 × –5) – (4 × 3) = –5 – 12 = –17
Adjoint of a Matrix
Adjoint of a matrix is the transpose of the Cofactor matrix.
Example 25
1 3 −2 
Find the Adjoint matrix of A =  4 −5 6  .
 3 5 2 
Inverse of a Matrix
The inverse of a matrix A is denoted as A–1. If A is a square matrix and A  0 , then
1
A−1 =  Adjoint of A .
A
Example 26
1 3 −2 
Find the Inverse matrix of A =  4 −5 6  .
 3 5 2 
Example 27
1 2 
Show that the matrix A =   satisfies the equation A2 − 5 A − 2 I = O . Hence, deduce the value
3 4 
–1
of A .
Solving Equations using Matrices and Determinants

A system of linear equations may have a unique solution, or many solutions, or no solution at all.
If it has a solution (whether unique or not), the system is said to be consistent. If it doesn’t have a
solution, it is said to be inconsistent.
There are two methods of solving equations using Matrices and Determinants:
Method I – Matrix Inversion Method
Consider the following set of simultaneous linear equations:

2x − 3 y = 3
4 x − 11 y = 11
In matrix form, they can be represented in three different matrices as follows:
 2 −3  x 3
A=  ; X =   ; B =   , where AX = B , or X = A−1B . The matrix A is called the
 4 −11  y 11
coefficient matrix. The equations have a solution only if A  0 , i.e. if the matrix A is non-singular.
The reason for this is fairly obvious. The solution of the equations is given by the product A−1 B,
1
and A−1 =  Adjoint of A . Therefore, if A is a singular matrix, i.e., if A = 0 , then
A
1 1
= = Not Defined.
A 0
Example 28
Solve the following set of linear equations: 2 x − 3 y = 3 ; 4 x − 11 y = 11 using matrix inversion
method.
Example 29
Solve the following set of linear equations: 2 x + 8 y + 5 z = 5 ; x + y + z = −2 ; x + 2 y − z = 2 using
matrix inversion method.
Example 30
Using the inverse of the coefficient matrix, solve the following system of equations: x + y + z = 3;
x + 2 y + 3z = 4; x + 4 y+ 9 z = 6 .
Method II – Cramer’s Rule

Consider a system of simultaneous linear equations given by:
a1 x + b1 y + c1 z = d1
a2 x + b2 y + c2 z = d 2
a3 x + b3 y + c3 z = d 3
x y z
The solution of the above equations is given by: x = ; y= ; z = ; where,
  
a1 b1 c1 d1 b1 c1 a1 d1 c1 a1 b1 d1
 = a2 b2 c2 ; x = d 2 b2 c2 ; y = a2 d2 c2 ; z = a2 b2 d2
a3 b3 c3 d3 b3 c3 a3 d3 c3 a3 b3 d3
Note:

1. If   0 , then the given system of equations is consistent and has a unique solution given
x y z
by: x = ; y= ;z= .
  
2. If  = 0 , x = 0 , y = 0 , z = 0 ; then the given equations will have infinite
solutions. A system of equations which has an infinite number of solutions is said to be a
dependent system.
3. If  = 0 , and at least one of the determinants x, y, z is non-zero, then the given system
of equations is inconsistent, i.e. it doesn’t have any solution.
Example 31
Solve the following system of equations: 5 x − 7 y + z = 11 ; 6 x − 8 y − z = 15 ; 3 x + 2 y − 6 z = 7 .
Example 32
Solve the following system of equations: 2 x − y + z = 4 ; x + 3 y + 2 z = 12 ; 3 x + 2 y + 3 z = 16 .
Answer
 = 0; x = 0; y = 0; z = 0 . Since  = x = y = z = 0, this system of equations has infinite
solutions and is dependent.
Example 33
Solve the following system of equations: x + y + 3 z = 6 ; x − 3 y − 3 z = −4 ; 5 x − 3 y + 3z = 8 .
Answer
 = 0; x = −12 . Since  = 0 , but x  0, this system of equations is inconsistent.
Example 34
Solve the following system of equations x + y − z = −2 ; 3x + 2 y + 3z = 13 ; 2 x + 7 y + 4 z = 31 .
Answer
19 8 65
 = −36; x = 38; y = −96; z = −130; x = − ; y= ; z=
18 3 18
Exercise 1
Choose the most appropriate option (a), (b), (c), or (d).
1. If a matrix has 16 elements; what are the possible orders it can have
(a) 2 × 8; 8 × 1; 4 × 4; 1 × 16; 16 × 1 (b) 2 × 8 ; 8 × 2; 4 × 4; 1 × 16; 16 × 1
(c) 2 × 8; 8 × 2; 4 × 1; 1 × 16; 16 × 1 (d) 2 × 4 ; 8 × 2; 4 × 4; 1 × 16; 16 × 1
Answer: (b)
2. Transpose of a rectangular matrix is a
(a) rectangular matrix (b) diagonal matrix
(c) square matrix (d) scaler matrix
Answer: (a)
3. Transpose of a row matrix is

(a) zero matrix (b) diagonal matrix

(c) column matrix (d) row matrix
Answer: (c)
4. Two matrices A and B are multiplied to get AB if
(a) both are rectangular
(b) both have same order
(c) no. of columns of A is equal to rows of B
(d) no. of rows of A is equal to no. of columns of B
Answer: (c)
5. If |A| = 0, then A is
(a) zero matrix (b) singular matrix
(c) non-singular matrix (d) 0
Answer: (b)
6. If A is a symmetric matrix, then At =
(a) A (b) |A|
(c) 0 (d) diagonal matrix
Answer: (a)
7. If the order of matrix A is m × p. And the order of B is p × n. Then the order of matrix AB is?
(a) m × n (b) n × m
(c) n × p (d) m × p
Answer: (a)
8. If A and B are matrices, then which from the following is true?
(a) A + B ≠ B + A (b) (At)t ≠ A
(c) AB ≠ BA (d) all are true
Answer: (c)
 2 3
9. What is a, if A =   is a singular matrix?
4 a 
(a) 5 (b) 6
(c) 7 (d) 8
Answer: (b)
 2i 3i  2
10. If A =   (i = −1) then |A| = ?
 2i − i 
(a) 2 (b) 8
(c) 4 (d) 5
Answer: (b)
 b11 b12 b13   a11 a12 
11. If A = b21 b22 b23   a21 a22  , then order of matrix A = ?
b31 b32 b33   a31 a32 
(a) 2 × 2 (b) 2 × 3
(c) 3 × 2 (d) 3 × 3
Answer: (c)
 2 −3  1 5  2 5
Let A =   B=  C =  . Using this, solve questions 12 to 16.
4 5   6 −7   3 4

12. Find A + B.
3 2   3 2
(a)   (b)  
10 −2   −10 −2 
 2 3  3 −1
(c)   (d)  
 −10 −2   −10 −2 
Answer: (a)
13. Find A – B.
1 2  1 −8
(a)   (b)  
 −2 −2   −2 12 
1 8   1 −8 
(c)   (d)  
 −2 −12   −12 −2 
Answer: (b)
14. 3A ─ C
 −4 −14   4 −14 
(a)   (b)  
 9 11   −9 11 
 4 −14   2 −3 
(c)   (d)  
 9 11  4 5 
Answer: (c)
15. AB
 −16 31   16 31 
(a)   (b)  
 34 −15   34 −15 
 16 31   2 −3 
(c)   (d)  
 34 5  4 5 
Answer: (a)
16. BA
 22 22   −22 22 
(a)   (b)  
 −16 −53   16 −53 
 22 −11  22 −33 
(c)   (d)  
 16 53   16 53 
Answer: (a)
 a −b   a b 
17.    
 b a   −b a 
a 2 + b2 0   −a 2 − b 2 0 
(a)   (b)  
 0 a + b2 
2
 0 a + b2 
2
a 2 − b2 0  a 2 − b2 0 
(c)   (d)  
 0 a 2 + b2   0 a 2 − b2 
Answer: (a)

 a 2 + b 2 b 2 + c 2   −2ab −2bc 
18.  2 2 2
+ 
 a + c a + b   +2ac +2ab 
2
 a 2 + b 2 + 2ab b 2 + c 2 − 2bc   ( a + b) 2 (b − c) 2 
(a)  2 2  or  
 a + c + 2ac a + b + 2ab   (a + c) ( a + b) 2 
2 2 2
 a 2 + b 2 − 2ab b 2 + c 2 + 2bc   ( a − b) 2 (b + c) 2 
(b)  2 2  or  
 a + c + 2ac a + b + 2ab   (a + c) ( a + b) 2 
2 2 2
 a 2 + b 2 − 2ab b 2 + c 2 − 2bc   ( a − b) 2 (b − c) 2 
(c)  2 2  or  
 a + c + 2ac a + b + 2ab   (a + c) ( a + b) 2 
2 2 2
 a 2 + b 2 − 2ab b 2 + c 2 − 2bc   ( a − b) 2 (b − c) 2 
(d)  2 2  or  
 a + c − 2ac a + b + 2ab   (a − c) ( a + b) 2 
2 2 2
Answer: (c)
 l m  − p q
19.  + 
n 0   r s 
l + p m + q  l + p m + q 
(a) 
s 
(b) 
n + r n − r s 
l + p m − q  l − p m + q 
(c) 
s 
(d) 
n + r n + r s 
Answer: (d)
 a b a b 
20.     
 −b a   b −a 
a 2 + b2 0  a 2 + b2 0 
(a)   (b)  
 0 −a − b 2 
2
 0 −a + b 
2 2
 −a 2 − b 2 0  a 2 − b2 0 
(c)   (d)  
 0 a + b2 
2
 0 a + b2 
2
Answer: (a)
1
 
21.  2   (3 4 5 6)
5
 
3 4 5 6 3 5 4 6
(a)  6 8 10 12  (b)  6 8 10 12 
15 20 25 30  12 16 20 24 
3 4 5 6 3 4 5 6
(c)  6 8 10 12  (d)  6 8 10 12 
12 16 20 24   24 16 16 12 
Answer: (a)

 x y   1 2 3
22.     
2 3  x y z
 x + 2 xy 3x + y 2 3xyz   x + xy 2 x + y 2 3x + yz 
(a)   (b)  
 2 + 3x 4 + 3 y 6 + 3z   2 + 3x 4 + 3 y 6 + 3z 
 x + 2 xy 2 xy + y 2 12 yz   x − xy 2 x − y 2 3x − yz 
(c)   (d)  
 2 + 3x 4 + 3y 6 + 3z   2 + 3x 4 + 3 y 6 + 3z 
Answer: (b)
 1 −2 3   1 3 5 
   
23.  4 5 6    0 2 4 
7 8 9 3 0 5
   
10 1 12  10 1 28 
(a)  22 22 70  (b)  22 −2 70 
34 37 112  34 −5 112 
10 1 28  10 1 28 

(c)  22 −2 −70  
(d)  22 −2 70 
34 −5 112  34 −5 −112 
Answer: (a)
 2 −3 
 −3 −1 3   
24.    1 0 
 −1 0 2   3 1 
 
14 −6  14 −6 
(a)   (b)  
 4 −5  4 5 
14 −6   −14 −6 
(d) 
5 
(c)  
 −4 5   4
Answer: (b)
1 2 3 0
3 1 2  
25. If A =   , B =  2 3 0 1  ; find AB. Does BA exist?
2 0 4  3 0 1 2
 
(a) AB exists but BA does not exist (b) AB does not exist but BA exists
(c) Both AB and BA don’t exist (d) None of these
Answer: (a)
 0 3
 
 0 2 2 3  1 2
26. If A =  ; B = 
3 2 1 0  2 1
 
3 0
(a) AB ≠ BA (b) AB = BA
(c) AB exists BA not exists (d) AB not exists BA exists
Answer: (a)

0 i 
27. If A =   ; where i = −1 , find A and A
2 2 3
 i 0
 −1 0  3  0 −i   −1 0  3  0 −i 
(a) A2 =   A =  (b) A2 =  A =
 0 1  −i 0  0 −1 
 −i 0 
1 0  3  0 −i  1 0  3  0 −i 
(c) A2 =   A =  (d) A2 =  A =
0 −1  −i 0  0 1   −i 0 

Answer: (b)
28. Find the elements C23, C32, C31 in the product C = AB.
 2 3 4  1 3 0
   
Where A =  1 2 3  , B =  −1 2 1 
1 1 2  0 0 2
   
 −1 12 11
(a) C23= 8, C32= -1, C22= 7, C31 = 5 and AB =  −1 7 8 
 0 5 5 
 −1 12 11
(b) C23= 8, C32= 5, C22= 7, C31 = 0 and AB =  −1 7 8 
 0 5 5 
 −1 12 11
(c) C23= 8, C32= –1, C22 = 7, C31 = 5 and AB =  −1 7 8 
 −2 5 5 
 −1 12 11 
(d) C23= 8, C32= –1, C22= 7, C31 = 5 and AB =  −1 7 8 
 0 −5 −5
Answer: (b)
29. Using matrix Cramer’s method
x = 1, y = −1, z = 1,  = 1 , find x, y and z values
(a) x = 1, y = –1 and z = –1 (b) x = –1, y = 1 and z = 1
(c) x = 1, y = –1 and z = 1 (d) x = –1, y = –1 and z = 1
Answer: (c)
30. –5x – 5y – 2z = 0; 2x + 2y + z = 2; 2x + 2y + 8z = –1, then the values of x, y, z using crammers
rule
(a) x = 1, y = –1 and z = 1 (b) inconsistent
(c) x = –1, y = –1 and z = 1 (d) None of these
Answer: (b)
31. x + y = –1; y + z = 1; z + x = 0
(a) x = –1; y = 0; z = 1 (b) x = 1; y = 0; z = 1
(c) x = 1; y = 0; z = –1 (d) x = –1; y = 0; z = –1
Answer: (a)

6 5
32. If A =   , find (A′)′
3 9
(a) A (b) -A
(c) A2 (d) None of these
Answer: (a)
33. Chose the correct alternative:
x y  −2 3
If 2   −9  = 18 I
 z p  1 0
(a) x =18; z = 9/2 (b) x = 0, z = -9/2
(c) x = 0; z = 9/2 (d) None of these
Answer: (c)
 0 3 −4 
34.  −3 0 −5  is a
 4 4 8 
(a) Symmetric matrix (b) Null matrix
(c) Skew-symmetric matrix (d) None of these
Answer: (d)
6 10
35. A =   is
3 5 
(a) A Singular Matrix (b) A Non-Singular Matrix
(c) An Identity Matrix (d) A Symmetric Matrix
Answer: (a)

CHAPTER 3 – LINEAR INEQUALITIES
Chapter 3 – Linear Inequalities

FREE Complete FAST TRACK Lectures:
Linear Inequalities – Fast Track – https://youtu.be/L_jBRWkKyjU
Introduction
We have already studied Equations in the previous chapter. An example of a linear equation in one
variable is 5x = 10. Notice the “=” sign between the terms “5x” and “10”. This is the equality sign
which signifies that the term “5x” is equal to “10”. This would give the value of x to be 2. This
implies that the equation 5x = 10 holds true only for x = 2. For all the other values of x, this equation
won’t hold true. Therefore, there’s only 1 solution to the equation.
An Inequality on the other hand is of the type 5x < 10. Notice the “<” sign between the terms “5x”
and “10”. This is the inequality sign which signifies that the term “5x” is always less than “10”.
On solving this, we’ll get x < 2. This means that the inequality 5x < 10 holds true for all the values
of x which are less than 2. Thus, it is clear that while an equation has only 1 solution, an inequality
has infinite solutions. These infinite solutions that an inequality has is called Solution Space.
Again, since the highest power of the variables is 1, it is said to be a Linear Inequality.
Solving Linear Equations in Two Variables Graphically

Any linear equation in two variables can be plotted on a graph paper. The graph of a linear equation
in two variables is always a straight line.
Consider the equation 2x + 5y = 9. Following is its graph:

The above is the graph of the equation 2x + 5y = 9. The straight line that you see is the line of the
various solutions of this equation. This means that all the points falling on this straight line will
solve the equation 2x + 5y = 9. Take, for example, the point (4.5, 0). Putting 4.5 for x and 0 for y,
we get the LHS → 2 × 4.5 + 5 × 0 = 9 + 0 = 9 = RHS. Therefore, we can see that the point (4.5, 0)
is the solution of the equation 2x + 5y = 9. Similarly, any such point falling on this line is the
solution of this equation.
Now consider another equation: 3x – y = 5. Following is its graph:
The above is the graph of the equation 3x – y = 5. The straight line that you see is the line of the
various solutions of this equation. This means that all the points falling on this straight line will
solve the equation 3x – y = 5. Take, for example, the point (0, –5). Putting 0 for x and –5 for y, we
get the LHS → 3 × 0 – (–5) = 0 + 5 = 5 = RHS. Therefore, we can see that the point (0, –5) is the
solution of the equation 3x – y = 5. Similarly, any such point falling on this line is the solution of
this equation.
If we superimpose these two graphs, the lines will intersect at a point. This intersection point will
give us the solution of these two equations when solved simultaneously.

As can be seen from the above graph, the lines intersect at the point (2, 1). Hence, this is the
solution of the set of the equations: 2x + 5y = 9; 3x – y = 5.
Graphing Linear Inequalities in Two Variables

Consider the inequality 2x + 5y < 9. Following is its graph:
You can see that the line of the inequality is a dotted line and the area below it is shaded. The
shaded area is the solution space of the inequality 2x + 5y < 9. Any point lying in the shaded area
will satisfy this inequality 2x + 5y < 9. The dotted line indicates that any point lying on this line
will not satisfy the inequality. However, if the inequality was 2x + 5y ≤ 9, then the line would not
have been dotted:

This means that any point lying on the fixed line, as well as in the shaded area will satisfy the
inequality 2x + 5y ≤ 9.
Consider the inequality 2x + 5y > 9. Its graph is:
Any point in the shaded area will satisfy the inequality 2x + 5y > 9. The dotted line indicates that
any point lying on this line will not satisfy the inequality 2x + 5y > 9. However, this line would
not have been dotted if the inequality was 2x + 5y ≥ 9. The graph in such a case would have been:

This means that all the points lying on the line as well as in the shaded area will satisfy the
inequality 2x + 5y ≥ 9.
Points to be Noted
1. If the inequality sign is > or <, a dotted line is drawn.
2. If the inequality sign is ≥ or ≤, a fixed line is drawn.
3. If the sign is < or ≤, the area towards 0 is shaded.
4. If the sign is > or ≥, the area away from 0 is shaded.
Solving a System of Linear Inequalities in Two Variables Graphically

Consider the following system of Linear Inequalities in Two Variables: 2x + 5y < 9; 3x – y < 5.
The graph of 2x + 5y < 9 is:
The graph of 3x – y < 5 is:

On superimposing these two graphs, we get:
The dark shaded portion in the above graph is the solution space of both the inequalities
simultaneously, i.e. any point lying in the dark shaded portion will satisfy both the inequalities 2x
+ 3y < 9, as well as 3x – y < 5.

CHAPTER 4 – TIME VALUE OF MONEY – UNIT 1 – SIMPLE INTEREST
Chapter 4 – Time Value of Money

FREE Fast Track Lectures
Lecture 1 of Time Value of Money: https://youtu.be/LemnCsQQt3Y
Lecture 2 of Time Value of Money: https://youtu.be/PWfBodgPeVo
Lecture 3 of Time Value of Money: https://youtu.be/MBjrml3CCnk
Unit 1 – Simple Interest
Suppose you deposit ₹10,000 into a bank for 2 years. The interest rate that the bank offers is 5%
p.a. After two years, you’ll receive the initial amount that you invested, i.e. ₹10,000 plus interest
for two years on this amount. The amount of interest will be 5% × ₹10,000 × 2 = ₹1,000. So, in
effect, you’ll receive ₹10,000 + ₹1,000 = ₹11,000.
Now, the initial amount that you invested, i.e. ₹10,000 is known as the Principal. The interest
rate, i.e. 5% is known as Rate of Interest. The amount of interest, i.e. ₹1,000 is simply called
Interest. The total amount received after two years is known as the Accumulated Amount or
Balance.
Simple Interest
Simple Interest means the interest which is calculated only on the Principal amount, and not on
the interest accrued on it. Some important formulas are given below:
1. I = Pit
2. A = P + I
A = P + Pit
A = P (1 + it )
A− P
3. i =
Pt
A− P
4. t =
Pi
Here,
I = Amount of Interest
P = Principal (initial value of investment)

CHAPTER 4 – TIME VALUE OF MONEY – UNIT 1 – SIMPLE INTEREST
i = Annual interest rate in decimal

t = Time in years
A = Accumulated amount (final value of investment)

CHAPTER 4 – TIME VALUE OF MONEY – UNIT 2 – COMPOUND INTEREST
Unit 2 – Compound Interest
Compound Interest
The word “compound” simply stated means “to add”. Compound Interest means that interest is
calculated not only on the Principal amount, but even on the interest amount accrued on it. The
rate of interest in case of compound interest is usually mentioned as 5% p.a. compounded
annually. This means that interest for every year will be added to the principal to calculate the
interest for the next year. For example, if I deposit ₹10,000 into a bank for two years, the compound
interest is calculated as follows:
1. For the first year: 5% on ₹10,000 for 1 year → 5% × ₹10,000 = ₹500
2. For the second year: 5% on (₹10,000 + ₹500) for 1 year → 5% × ₹10,500 = 525
Total interest received = ₹500 + ₹525 = ₹1,025. Total amount received after two years = ₹10,000
+ ₹1,025 = ₹11,025. Here, we must compare it with Simple Interest. While in Simple Interest, the
total interest was 5% × ₹10,000 × 2 = ₹1,000, in Compound Interest, the total interest is ₹1,025.
The extra ₹25 is because of the compounding of the interest of the first year to the principal
amount.
Suppose the rate of interest is 5% p.a. compounded semi-annually. This means that interest for
every six months would be added to the principal to calculate the interest for the next six months.
The interest would be calculated as follows:
1. For the first six months: 5% on ₹10,000 for 6 months → 5% × ₹10,000 × 6/12 = ₹250.
Now, this ₹250 is my interest which has accrued for 6 months.
2. For the next six months: 5% on (₹10,000 + ₹250) for 6 months → 5% × ₹10,250 × 6/12 =
₹256.25.
3. For the next six months: 5% on (₹10,000 + ₹250 + ₹256.25) for 6 months → 5% ×
₹10,506.5 × 6/12 = ₹262.66.
4. For the last six months: 5% on (₹10,000 + ₹250 + ₹256.25 + ₹262.66) for 6 months → 5%
× ₹10,768.91 × 6/12 = ₹269.22
Total interest received = ₹250 + ₹256.25 + ₹262.66 + ₹269.22 = ₹1,038.13. Total amount received
after two years = ₹10,000 + ₹1,038.13 = ₹11,038.13.
We can see that on the initial investment of ₹10,000 for two years @ 5% p.a., the interest and
amount was as under:
Particulars Interest (₹) Amount (₹)
1. Simple Interest 1,000.00 11,000.00
2. Interest Compounded Annually 1,025.00 11,025.00
3. Interest Compounded Semi-Annually 1,038.13 11,038.13

Thus, it can be concluded that a greater frequency of compounding results in larger amount of
interest.
Conversion Period
The period at the end of which the interest is compounded is called the Conversion Period. In our
example above, first we compounded the interest after every year, therefore, the conversion period
was 1 year. After that, we compounded the interest after every six months, therefore, the
conversion period was 6 months. In such a case, the number of conversion periods per year would
be 2. Similarly, the table below shows the typical conversion periods that are used in the questions:
Conversion Period Description Number of Conversion
Periods in a Year
1 Day Compounded Daily 365
1 Month Compounded Monthly 12
3 Months Compounded Quarterly 4
6 Months Compounded Semi-Annually 2
12 Months Compounded Annually 1
Formula for Compound Interest

n
 i 
An = P 1 + 
 NOCPPY 
Where,
An = Accrued amount
P = Principal
i = Annual interest rate in decimal
NOCPPY = No. of Conversion Periods Per Year
n = total conversions, i.e. t × NOCPPY, where t = Time in years
Therefore, the formula can also be written as:
t  NOCPPY
 i 
An = P 1 + 
 NOCPPY 
Compound Interest (CI) is, therefore, given by An − P .
  i 
t  NOCPPY

Therefore, CI =  P 1 +  −P
  NOCPPY  
 i 
t  NOCPPY

Therefore, CI = P 1 +  − 1
 NOCPPY  

Difference Between Compound Interest and Simple Interest

The difference between Compound Interest (CI) and Simple Interest (SI) on a certain sum (P)
 
invested for (t) years at the rate (i) is given by the formula: CI − SI = P  (1 + i ) − 1 − it 
t
Effective Rate of Interest

Effective Rate of Interest is denoted by the letter E and is calculated using the formula:
t  NOCPPY
 i 
E = 1 +  −1 .
 NOCPPY 
The actual rate of interest given in the question (i) is called the Nominal Rate.

CHAPTER 4 – TIME VALUE OF MONEY – UNIT 4 – MISCELLANEOUS PROBLEMS
Unit 3 – Annuity and Perpetuity
Annuity
A fixed sum of money payable or receivable after every fixed period (a month, a year, etc.) for a
certain number of years is called Annuity. Thus, annuity can be defined as a sequence of periodic
payments (or receipts) regularly over a specified period of time.
Therefore, to be called annuity, both the following conditions must be satisfied:
1. Amount paid or received must be constant over the period of annuity, and
2. Time interval between two consecutive payments or receipts must be the same.
Annuity Regular and Annuity Due/Immediate

1. Annuity Regular – When the payments are made/received at the end of the year, it is said
to be Annuity Regular.
2. Annuity Due/Immediate – When the payments are made/received in the beginning of the
year, it is said to be Annuity Due/Immediate.
Future Value
When we deposit our money in a bank, or in any investment, we receive some interest. Suppose I
deposit ₹10,000 today @ 10% p.a. At the end of 1 year, I will receive ₹10,000 + (10% × ₹10,000)
= ₹11,000. Therefore, the Future Value of today’s ₹10,000 is ₹11,000 when it is invested @ 10%
p.a.
Future value is the cash value of an investment at some time in future compounded at some interest
rate. It is very similar to the compound interest. When you calculate the Amount using the formula
n
 i 
An = P 1 +  , you are actually calculating the future value of your present investment.
 NOCPPY 
The formula of Future Value can be derived simply by replacing An with Future Value and P with
t  NOCPPY
 i 
single Cash Flow. Therefore, F .V . = C.F . 1 +  .
 NOCPPY 
Future Value of Annuity Regular

Annuity Regular means that the payments/receipts are made at the end of the year.
The future value can be calculated directly by using the formula:

 i 
t  NOCPPY

 1 +  − 1
 i   NOCPPY 
A  n,  = A   , where A = Periodic Payments.

 NOCPPY  i
 NOCPPY 
 
Future Value of Annuity Due/Immediate

Annuity Due/Immediate means that the payments/receipts are made in the beginning of the year.
The future value of Annuity Due/Immediate can be calculated directly by using the formula:
 i 
Future Value of Annuity Regular ×  1 + .
 NOCPPY 
  i 
t  NOCPPY

  1 +  − 1 
 i     NOCPPY    i 
A  n,  = A   1 +
  NOCPPY 
, where A = Periodic
 NOCPPY   i 
  NOCPPY  
 
Payments.
Present Value
Present Value is simply the reverse of Future Value. When we deposit our money in a bank, or in
any investment, we receive some interest. Some I deposit ₹10,000 today @ 10% p.a. At the end of
1 year, I will receive ₹10,000 + (10% × ₹10,000) = ₹11,000. Therefore, the Present Value of the
₹11,000 that I’ll receive one year later, (i.e., in future) is ₹10,000.
We studied that future value is the cash value of an investment at some time in future compounded
at some interest rate. This means that future value is tomorrow’s value of today’s money
compounded at some interest rate. Similarly, present value is today’s value of tomorrow’s money
discounted at some interest rate.
The formula for the present value can be derived from the formula of Amount that we studied in
Compound Interest as follows:
t  NOCPPY
 i 
An = P 1 + 
 NOCPPY 
An
P= t  NOCPPY
 i 
1 + 
 NOCPPY 
Present Value of Annuity Regular

Annuity Regular means that the payments/receipts are made at the end of the year.
Present Value of Annuity Regular = Annuity × Sum of Discounting Factors

( Factor ) − 1
n
Present Value of Annuity Regular = Annuity 

( Discount Rate )  ( Factor )
n
t  NOCPPY
 i 
1 +  −1
Present Value of Annuity Regular (P.V.) = Annuity   NOCPPY 
.
t  NOCPPY
 i   i 
   1 + 
 NOCPPY   NOCPPY 
Note – The Present Value of Annuity is sometimes also denoted by V.
Present Value of Annuity Due/Immediate

P.V. of Annuity Due/Immediate = Initial Cash Payment/Receipt + P.V. of Annuity Regular (for n
– 1 periods)
n = t × NOCPPY
Applications of Future Value and Present Value

Following are some of the applications of future value and present value:
1. Sinking Fund
2. Leasing
3. Capital Expenditure (Investment Decision)
4. Net Present Value (NPV)
5. Valuation of Bond
Let’s look at these applications one by one.
Sinking Fund
Sinking Fund is a fund created for a specified purpose. Some amount is deposited in this fund
regularly over a period of time at a specified interest rate. Interest is compounded at the end of
every period. We can clearly calculate the future value to find out how much balance the fund
would have at the end of the period.
Leasing
Leasing in layman’s terms means taking some asset on rent. The party who lends the asset is called
the “lessor”, and the party who borrows the asset is called the “lessee”. You’ll study about leases
in detail later in CA Intermediate and CA Final. Obviously, the lessor would charge some rent on
the asset lent by him. This rent is known as “Lease Rental”. By using the concepts of Present Value
and Future Value, we’ll see whether leasing is preferable for the company or not. Following
examples will make things clear.

Capital Expenditure (Investment Decision)

We have studied in Accounts that an expenditure which results in benefit for more than one year
is known as a Capital Expenditure. Usually, a Capital Expenditure results in a huge amount of
Outflow. However, there’s anticipation of periodic inflows as well. These inflows would obviously
last till the life of the capital expenditure. In order to find out whether a capital expenditure is
beneficial or not, we compare the outflow that occurs today with the present value of all the future
inflows. If the present value of the inflows exceeds the outflow, the capital expenditure is said to
be beneficial. Following examples will make things clear:
Net Present Value (NPV)

This is similar to what we studied above in Capital Expenditure (Investment Decisions). The only
difference is, that while in Capital Expenditure (Investment Decisions), we used to just see whether
the present value of future cash flows is exceeding our initial investment or not, here, in Net Present
Value, we’re actually going to find out how much does the present value of future cash inflows
exceed our initial investment. The difference between the present value of future cash flows and
the initial cash outflow is known as the Net Present Value (NPV). Needless to say, if NPV is +ve,
it is beneficial to take the project, whereas, if NPV is -ve, it is worthless to take the project.
Net Present Value = P.V. of Cash Inflows – Initial Cash Outflow
Sometimes, it may so happen, that a project requires not just the initial investment, but also some
additional investment in the future. In such a case, we not only take the P.V. of the Cash Inflows,
but we also calculate the P.V. of the Cash Outflows, and then compare the same.
Net Present Value = P.V. of Cash Inflows – P.V. of Cash Outflows
Valuation of Bond
A Bond is a financial instrument similar to a debenture. When you purchase a debenture, you pay
a certain amount of money, and you receive interest periodically from it. Similarly, Bond is also a
financial instrument, containing a fixed percentage of interest. Bonds are generally issued for a
fixed term longer than one year. After the specified duration, the bond is redeemed.
Perpetuity
Perpetuity is simply an annuity that lasts forever. For e.g., if I receive ₹10,000 at the end of every
year for the rest of my life, we’ll call this perpetuity. The present value of perpetuity is calculated
A
by using the formula: . Here, A is the payment or receipt each period.
i
NOCPPY
Perpetual Growth or Growing Perpetuity

We studied perpetuity where we said that if I want ₹10,000 every year for the rest of my life, this
is called perpetuity. On the other hand, if I want ₹10,000 at the end of the first year, ₹15,000 at the
end of the second year, ₹20,000 at the end of the third year, ₹25,000 at the end of the fourth year,

and so on for the rest of my life, it is called Perpetual Growth. The present value of Growing
A
Perpetuity is calculated by the formula: . Here, A is the periodic payment or receipt; i is the
i−g
annual rate of interest in decimal; and g is the annual growth rate in decimal.

CHAPTER 5 – PERMUTATIONS AND COMBINATIONS – UNIT 1 – PERMUTATIONS
Chapter 5 – Basic Concepts of Permutations

and Combinations
Lecture 1 of Permutations and Combinations: https://youtu.be/JUZhzx9SkIw
Lecture 2 of Permutations and Combinations: https://youtu.be/7YPzPvuopDw
Unit 1 – Permutations
Introduction
Permutations are used to determine the number of ways in which certain items can be arranged.
Factorial
The Factorial of a number is the product of all the numbers from 1 till that number. For example,
the factorial of 5 = 1 × 2 × 3 × 4 × 5 = 120. The factorial of 5 is denoted either as 5!, or 5 .
Note: 0! = 1.
Rules of Counting
OR
This is the first rule of counting. “OR” always means “+”.
AND
This is the second rule of counting. “AND” always means “×”.
Permutations
The word Permutation means “each of several possible ways in which a number of things can be
ordered or arranged”.
When r items need to be arranged from a set of n items, it is written as nPr, and is calculated using
n!
the formula: .
( n − r )!

n!
Therefore, n Pr = .
( n − r )!
Note: n Pn = n !
Questions to be solved from Scanner

1. Question 23
2. Question 54
3. Question 34
4. Question 35
5. Question 39 – Homework
6. Question 2
7. Question 42
8. Question 67
10. Question 50
11. Question 55
Permutations of items not all distinct

1. Question 18
4. Question 16
Permutations with Restrictions

Note: The number of ways in which n items can be arranged so that two particular items are not
together is ( n − 2 ) . ( n − 1)! . – Question 7

1. Question 28
2. Question 41
3. Question 38
9. Question 44


Circular Permutations
No. of ways in which n items can be arranged in a circular fashion is ( n − 1) ! .
Note:
• The number of ways of arranging n persons along a round table so that no person has the
1
same two neighbours is ( n − 1) ! .
2
1
• The number of necklaces formed with n beads of different colours is ( n − 1) ! .
2

1. Question 10
2. Question 21
Permutations when Repetition is Allowed

No. of arrangements of n items when repetitions are allowed = n n .
Question
How many 5 digit numbers can be formed from the numbers 1, 2, 3, 4, and 5, given that any digit
can be used any number of times?

CHAPTER 5 – PERMUTATIONS AND COMBINATIONS – UNIT 2 – COMBINATIONS
Unit 2 – Combinations
Combinations
The word “Combination” is used for selecting things, and not arranging things. The number of
ways in which r objects can be selected from a set of n items is denoted by n Cr , and is given by
n!
the formula: .
r !( n − r ) !
n!
Therefore, n Cr = .
r !( n − r ) !

1. Question 86
2. Question 87
5. Question 25
6. Question 1
8. Question 3
9. Question 4
10. Question 5
11. Question 9
16. Question 48
17. Question 58
20. Question 70
Combinations of items not all distinct

1. Question 13
2. Question 76

Some Standard Results

1. Number of ways of selecting some or all items from a set of n items –
(
a. When there are 2 choices for each item: 2n − 1 . )
i. Question 40
ii. Question 60
(
b. When there are 3 choices for each item: 3n − 1 . )
2. n
Cr = Cn − r
n
n +1
3. Cr = nCr + nCr −1
a. Question 36
b. Question 15
c. Question 75 – Homework – Same as Question 15
d. Question 52 – Homework – Same as Question 15
e. Question 45
f. Question 69 – Homework – Similar to Question 45
n
C r + 1 n Cr −1 r
4. n r = ; n = .
Cr +1 n − r Cr n − r +1
a. Question 19 – Homework
5. If Cx = nC y , and x  y , then x + y = n
n
a. Question 49
b. Question 26
c. Question 82 – Homework
n
6. If Px = n Py , and x  y , then x + y = 2n − 1
1
7. The number of diagonals in a polygon of n sides is n(n − 3) .
2
8. Division of Items in Groups –
a. Division of Distinct Items in Groups –
i. Equal items in every group – The number of ways to divide n students into
n!
k groups of h students each is given by
k !( h !)
k
Question
In how many number of ways can 12 students be equally divided into three
groups?
Solution
The number of ways to divide n students into k groups of h students each is
n!
given by .
k !( h !)
k
We have, n = 12; k = 3; h = 4.

n! 12!
Therefore, = = 5, 775 .
k !( h !) 3!( 4!)
k 3
ii. Unequal items in every group – The number of ways to divide n items into
3 groups → one containing a items, the second containing b items, and the
n!
third containing c items, such that a + b + c = n , is given by .
a !b !c !
Question
The number of ways in which 9 things can be divided into twice groups
containing 2, 3, and 4 things respectively is _________.
Solution
The number of ways to divide n items into 3 groups → one containing a
items, the second containing b items, and the third containing c items, such
n!
that a + b + c = n , is given by .
a !b !c !
Here, n = 9; a = 2; b = 3; c = 4
n! 9!
= = 1, 260
a !b !c ! 2!  3!  4!
b. Division of Identical Items in Groups – The number of ways to divide n identical

n!
objects into k groups of h items each is given by
( h !)
k
Question
In how many number of ways can 15 mangoes be equally divided among 3
students?
Solution
The number of ways to divide n identical objects into k groups of h items each is
n!
given by .
( h !)
k
We have, n = 15; k = 3; h = 5.
n! 15!
Therefore, = = 7,56, 756 .
( h!) ( 5!)
k 3
9. The maximum number of points of intersection of n circles will be n ( n − 1)

10. Pr = n −1 Pr + r. n −1 Pr −1
n
n
Cr 1
11. n
=
Pr r !
a. Question 79
b. Question 61

Miscellaneous Questions
1. Question 11
2. Question 12
3. Question 51
4. Question 53
5. Question 66
6. Question 72
7. Question 78
8. Question 80
9. Question 88
10. Question 30
11. Question 6
12. Question 83

CHAPTER 6 – SEQUENCE AND SERIES – UNIT 1 – ARITHMETIC PROGRESSION
Chapter 6 – Sequence and Series

FREE FAST TRACK Lectures:
Lecture 1 of Sequence and Series: https://youtu.be/d2ImTctYMR8
Lecture 2 of Sequence and Series: https://youtu.be/LzpooC2IMXM
Unit 1 – Arithmetic Progression
Arithmetic Progression
A sequence of numbers is known as an Arithmetic Progression if the difference between two
consecutive terms is the same. For example,
1. 2, 4, 6, 8, 10… is an arithmetic progression as the difference between any two consecutive
terms is the same, i.e. 2.
2. 1, 5, 9, 13… is an arithmetic progression as the difference between any two consecutive
terms is the same, i.e. 4.
Since the difference between any two consecutive terms in an A.P. is the same, i.e. common, it is
known as the common difference.
The nth term of an A.P. is given by:
tn = a + ( n − 1) d
Here,
tn = nth term
a = first term
d = common difference


Arithmetic Mean
If we select any three consecutive terms from an A.P., the middle term is known as the Arithmetic
Mean. If there are three consecutive terms t1 , t2 , and t3 , the term t2 is known as the arithmetic
t1 + t3
mean, and is given by .
2

Sum of the First n Terms

The sum of n terms of an A.P. is given by the formula:
Sn =
n
2
2a + ( n − 1) d  .


If the common difference is not given but the first and the last terms are given, the sum can be
calculated using the formula:
n
Sn = ( a + l ) , where l is the last term.
2


CHAPTER 6 – SEQUENCE AND SERIES – UNIT 2 – GEOMETRIC PROGRESSION
Unit 2 – Geometric Progression
A sequence of numbers is known as a Geometric Progression if the ratio between two consecutive
terms is the same. For example,
1. 5, 15, 45, 135, … is a geometric progression as the ratio between any two consecutive
 15 45 
terms is the same, i.e. 3.  = 3, = 3, etc. 
5 15 
2. 1, 1/2, 1/4, 1/9, … is a geometric progression as the ratio between any two consecutive
 1/ 2 1/ 4 
terms is the same, i.e. 1/2.  = 1/ 2, = 1/ 2, etc. 
 1 1/ 2 
Since the ratio between any two consecutive terms in a G.P. is the same, i.e. common, it is known
as the common ratio.
The nth term of a G.P. is given by:
tn = ar n −1
Here,
tn = nth term
a = first term
r = common ratio
Geometric Mean
If we select any three consecutive terms from a G.P., the middle term is known as the Geometric
Mean. If there are three consecutive terms t1 , t2 , and t3 , the term t2 is known as the geometric
mean. There are two methods of calculating the geometric mean:
1. If there are three consecutive terms t1 , t2 , and t3 , the term t2 is the geometric mean and is
given by t1  t3 . For example, the Geometric Mean between the numbers 3 and 27 is given
by 3  27 = 9 .
2. Geometric mean is also calculable as the nth root of the product of n numbers. For example,
if I ask you to calculate the geometric mean between 3 and 27, it obviously implies that
there are three numbers in total. Therefore, n = 3. Also, we know that the G.M. is 9 (as

calculated above). Now, let’s check whether 9 is equal to the nth root of the product of n
1
numbers. ( 3  9  27 ) 3 = 9 . Therefore, it is clear that the geometric mean can also be
calculated as the nth root of the product of n numbers.

Sum of the First n Terms

The sum of n terms of a G.P. is given by the formula:
 1− rn 
1. When r < 1, S n = a  
 1− r 
 r n −1 
2. When r > 1, S n = a  
 r −1 
3. When r = 1, it becomes an A.P. with d = 0, and the sum is calculated using the formula:
Sn = 2a + ( n − 1) d  . For example, to calculate the sum of series 2, 2, 2, … to 11 terms,
n
2
we have a = 2; d = 0; n = 11; and the sum is given by  ( 2  2 ) + (11 − 1) 0 = 22 .
11
2

Sum of Infinite Terms of a G.P.

The sum of infinite terms of a G.P. is given by the formula:
a
1. When r < 1, S =
1− r
2. When r ≥ 1, S = 




CHAPTER 6 – SEQUENCE AND SERIES – UNIT 3 – SPECIAL SERIES
Unit 3 – Special Series
Following are some of the Standard Results:
n ( n + 1)
1. Sum of first n natural or counting numbers (1 + 2 + 3 + 4 + ... + n ) =
2
2. Sum of first n odd numbers 1 + 3 + 5 + ... + ( 2n − 1) = n2
n ( n + 1)( 2n + 1)
3. Sum of the Squares of first n natural numbers (12 + 22 + 32 + 42 + ... + n 2 ) =
6
 n ( n + 1) 
2
4. Sum of the Cubes of first n natural numbers (1 + 2 + 3 + 4 + ... + n ) = 

3 3 3 3 3

 2 
5. Sum of the series such as: 1 + 11 + 111 + … to n terms, or 2 + 22 + 222 + … to n terms,
Number 10 (10 − 1) 
n
or 3 + 33 + 333 + … to n terms, and so on:  − n  . For example:

9  9 
1 10 (10 − 1) 
n
a. 1 + 11 + 111 + … to n terms =   − n
9  9 

2 10 (10 − 1) 
n
b. 2 + 22 + 222 + … to n terms =   − n
9  9 

3 10 (10 − 1) 
n
c. 3 + 33 + 333 + … to n terms =   − n
9  9 

a. Page 3.355 – Question 81
b. Page 3.345 – Question 66
c. Page 3.340 – Question 58
d. Page 3.307 – Question 8
1  1 − ( 0.1)  
n
6. Sum of the series 0.1 + 0.11 + 0.111 + … to n terms =   n −   .

9   9  

Example: Calculate the sum of 0.7 + 0.77 + 0.777 + … to n terms.
Solution:
0.7 + 0.77 + 0.777 + … to n terms = 7 × (0.1 + 0.11 + 0.111 + … to n terms)
7  1 − ( 0.1) 
n
Therefore, 0.7 + 0.77 + 0.777 + … to n terms =   n −  

9   9 


CHAPTER 6 – SEQUENCE AND SERIES – UNIT 3 – SPECIAL SERIES
2  1 − ( 0.1) 

n

Similarly, sum of series 0.2 + 0.22 + 0.222 + … to n terms =  n −  
9   9 

4  1 − ( 0.1) 
n
Sum of series 0.4 + 0.44 + 0.444 + … to n terms =   n −   .

9   9 

ab dbr
7. Sum of an Arithmetico-Geometric Series to infinity = + .
1 − r (1 − r )2
Where, a = t1 of the A.P.; b = t1 of the G.P.
4 7 10
For example, the series 1 + + 2 + 3 + ... is an Arithmetico-Geometric series. The
5 5 5
numerators 1, 4, 7, 10, … are in A.P., with a = 1, and d = 3. The denominators 1, 5, 52,
53,… are in G.P., with b = 1, and r = 5. However, since this G.P. is in the denominator, the
common ratio of the entire series will be 1/5. Therefore, we have a = 1, b = 1, d = 3, and r
ab dbr
= 1/5. Putting these values in the formula S = + , we have:
1 − r (1 − r )2
1 1 3 1 (1/ 5 ) 35
S = + = .
1 − (1/ 5 ) 1 − (1/ 5 )2 16
8. The nth element of the sequence –1, 2, –4, 8, … is ( −1) .2n−1

n

CHAPTER 7 – SETS, RELATIONS AND FUNCTIONS – UNIT 1 – SETS
Chapter 7 – Sets, Relations and Functions
Unit 1 – Sets
Playlist for Fast Track Lectures:
Link for Lecture 1 of Sets, Relations, and Functions: https://youtu.be/8Yfa10bWCw4
Link for Lecture 2 of Sets, Relations, and Functions: https://youtu.be/dKewi--FuLc
Sets
A set is a collection of well-defined distinct objects. Every object of a set is called its “element”.
A set is usually denoted by a capital letter and its elements are denoted by small letters.
For example, A = a, e, i, o, u is a set of vowels. As can be noted, the name of the set “A” is
written in capital, while the elements inside the set, “ a ”, “ e ”, “ i ”, “ o ”, and “ u ” are written in
small. Since “ a ” is an element of the set “ A ”, it is written as a  A , and is read as “ a belongs to
A ”, or “ a is a member of A ”. Also, since “ b ” is not an element of the set “ A ”, it is written as
b  A, and is read as “ b does not belong to A ”.
Description of a Set
A set is generally described in either of the following two forms:
1. Roster Form or Braces Form
2. Set-Builder Form or Algebraic Form or Rule Method or Property Method
Roster Form or Braces Form

In this form, a list of the elements of a set is made, and then this list is put inside curly braces {}.
For example, A = a, e, i, o, u . This is a set represented in Roster or Braces form.
Following are some other examples:
1. B = 2, 4, 6, 8, 10 is a set of all even numbers from 2 to 10, both inclusive.
2. C =  pqr , prq, qrp, rqp, qpr , rpq is a set of all possible arrangements of the alphabets
p , q , and r .
3. D = 1, 3, 5, 7, 9 is a set of all odd numbers before 10.

4. E = 1, 2 is a set of roots of the equation x 2 − 3 x + 2 = 0 .
Notes –
1. The order in which the elements are written in a set makes no difference. Therefore, {a, e,
i, o, u} and {e, a, i, o, u} denote the same set.
2. The repetition of an element has no effect. Therefore, {1, 2, 3, 2} is the same set as {1, 2,
3}.
Set-Builder Form or Algebraic Form or Rule Method or Property Method

In this form, the set of all even numbers from 2 to 10, both inclusive, is written as:
B = {x : x = 2m and m being an integer lying in the interval 0 < m < 6}
It is read as “B is a set of x, such that, x = 2m and m being an integer lying in the interval 0 < m <
6”. The colon “:” is read as “such that”. Instead of the colon, sometimes “|” is also used. Therefore,
the set can also be written as:
B = {x | x = 2m and m being an integer lying in the interval 0 < m < 6}
It is read exactly as we discussed above. Here, “|” is read as “such that”.
Types of Sets
Following are the different types of sets:
1. Empty Set or Null Set or Void Set
2. Singleton Set
3. Finite Set
4. Infinite Set
5. Equal Sets
6. Equivalent Sets
Empty Set or Null Set or Void Set

A set which doesn’t have any element is known as an Empty Set, or a Null Set, or a Void Set. It is
denoted by the Greek letter ϕ. This letter is pronounced as phi. In Roster Form, ϕ is represented as
{}.
A set which has at least one element is called a Non-Empty set. Therefore, the set A = {0} is a
Non-Empty set as it contains one element, i.e. 0.
Note – “ϕ”, “{0}”, and “0” are all different –
• ϕ is a set with no element at all;
• {0} is a set with the element “0”; and,
• 0 is just a number.
Singleton Set
A set which contains only one element is called a Singleton Set. For example, A = {5} is a singleton
set whose only member/element is the number “5”.

Finite Set
A set is said to be a Finite Set if its elements can be counted. For example,
1. The set of vowels  A = a, e, i, o, u is a finite set as it has countable number of elements,
i.e. 5.
2. The set of all odd numbers from 0 to 12  B = 1, 3, 5, 7, 9, 11 is a finite set as it has
countable number of elements, i.e. 6.
Cardinal Number of a Finite Set
Cardinal Number of a Finite Set refers to the number of distinct elements of a finite set. For
example,
1. Consider the set of all the vowels: A = a, e, i, o, u . The cardinal number of this set is 5,
as it has 5 elements. It is represented as n ( A) = 5 .
2. Consider the set of all odd numbers from 0 to 12: B = 1, 3, 5, 7, 9, 11 . The cardinal
number of this set is 6, as it has 6 elements. It is represented as n ( B ) = 6 .
3. Consider the set of letters of the word “ALLOY”: C =  A, L, L, O, Y  . Even though the
letter “L” is present twice, it’ll be counted only once, and therefore, the cardinal number of
this set is 4. It is represented as n ( C ) = 4 .
Infinite Set
Obviously, a set whose elements can’t be counted is called an Infinite Set. For example, the set of
natural numbers {1, 2, 3, 4, 5, …} is an infinite set.
Equal Sets
No rocket science here, if two sets have exactly the same elements, they are said to be Equal Sets.
For example, the sets A = {1, 2, 3, 4} and B = {1, 2, 3, 4} are equal sets.
Equivalent Sets
Two sets A, and B are said to be Equivalent if their Cardinal Numbers are equal, i.e., n(A) = n(B).
For example, the sets A = {1, 2, 3, 4} and B = {5, 6, 7, 8} are equivalent sets as n(A) = n(B) = 4.
Clearly, all equal sets are equivalent but all equivalent sets are not equal.
Subsets
Let A and B be two sets. If every element of A is an element of B, then A is called a subset of B.
For example, if A = {1, 2, 3, 4, 5} and B = {1, 2, 3, 4, 5, 6, 7, 8, 9}, then every element of A is an
element of B, and hence A is said to be a subset of B. It is written as A  B. Obviously, every set
is a subset of itself and an empty set is a subset of every set. A subset A of a set B is called a proper
subset if A ≠ B. If A is a proper subset of B, it is written as A  B.
If A is a subset of B, it means that B is the superset of A and it is written as B  A. If A is not a
subset of B, it is written as A  B.

Symbols at a Glance
Description Symbol Meaning
 Subset If A is a subset of B, it means that the set A contains either some,
or all elements of the set B.
 Proper If A is a subset of B, and A ≠ B, A is said to be a proper subset of
Subset B.
 Superset If A is a subset of B, it means that B is a superset of A.
 Not a If A is not a subset of B, it is written as A  B.
Subset
No. of Subsets of a Given Set
Consider a set A = {1, 2, 3}. Following are its subsets: {1, 2, 3}, {1}, {2}, {3}, {1, 2}, {1, 3}, {2,
3}, {}. A set with n elements has 2n subsets. Therefore, the set A, which has 3 elements has 23 = 8
subsets.
The number of proper subsets of a set containing n elements is 2n − 1 . This is because 2 n also
consists of the set itself, which is an improper subset. Therefore, 1 is removed in order to get the
number of proper subsets.
Power Set
Consider a set A = {1, 2, 3}. Following are its subsets: {1, 2, 3}, {1}, {2}, {3}, {1, 2}, {1, 3}, {2,
3}, {}. A set containing all the subsets of set A is called the Power Set. Therefore,
P ( A) = 1, 2, 3 , 1 , 2 , 3 , 1, 2 , 1, 3 , 2, 3 , {} .
Points to Remember
1. Every set is a subset of itself.
2. The empty set is a subset of every set.
3. Total number of subsets of a finite set containing n elements is 2n.
4. The set containing all the subsets of a particular set is called the power set.
Operations on Sets
Universal Set
In any discussion, there’s always a set which contains the elements of all the sets under
consideration. This set is known as the Universal Set. It is denoted by U or S.
For example, let there be the following sets: A = {1, 2, 3}, B = {2, 4, 5, 6}, and C = {1, 3, 5, 7}.
The universal set will be U = {1, 2, 3, 4, 5, 6, 7}.

Union of Sets
If A and B are two sets, the union of these two sets will be a set containing the elements of both A
as well as B. It is written as A  B.
For example, if A = {1, 2, 3, 6}, and B = {2, 3, 4, 5}, then A  B = {1, 2, 3, 4, 5, 6}.
Intersection of Sets
If A and B are two sets, the intersection of these two sets will be a set containing the elements
which are present in both the sets. It is written as A  B.
For example, if A = {1, 2, 3, 6}, and B = {2, 3, 4, 5}, then A  B = {2, 3}.
Disjoint Sets
Two sets A and B are said to be Disjoint Sets if A  B = ϕ.
For example, let A = {1, 2, 3}, and B = {4, 5, 6}. Clearly there’s no common element in both the
sets. Therefore, A  B = ϕ. Therefore, A and B are disjoint sets.
Overlapping Sets
Two sets A and B are said to be Overlapping Sets if A  B ≠ ϕ. In other words, if the sets are not
disjoint, they are overlapping.
For example, let A = {1, 2, 3}, and B = {3, 4, 5}. Now, A  B = {3}. Therefore, A and B are
overlapping sets.
Difference of Sets
If A and B are two sets, A – B will be a set containing the elements of the set A which do not belong
to B.
For example, if A = {2, 3, 4, 5, 6, 7}, and B = {3, 5, 7, 9, 11, 13}, then A – B = {2, 4, 6}; and B –
A = {9, 11, 13}.
Compliment of a Set
Let U be a universal set and A be another set. Obviously, A will be a subset of U. The compliment
of A is written as A′ or Ac and is determined by U – A.
For example, if U = {1, 2, 3, 4, 5, 6, 7, 8, 9, 10}, A = {1, 3, 5, 7}, and B = {2, 4, 6}; then, A′ = U –
A = {2, 4, 6, 8, 9, 10}; and B′ = U – B = {1, 3, 5, 7, 8, 9, 10}.
Some Rules to Remember

1. (A  B)′ = A′  B′

2. (A  B)′ = A′  B′

CHAPTER 7 – SETS, RELATIONS AND FUNCTIONS – UNIT 2 – WORD PROBLEMS ON SETS
Unit 2 – Word Problems on Sets
Some Important Results on Number of Elements in Sets

If the question involves two sets A, and B, and the requirement is to find either the union, or the
intersection of those two sets, use the following:
1. n ( A  B ) = n ( A) + n ( B ) − n ( A  B )
2. n ( A  B ) = n ( A) + n ( B ) − n ( A  B )

Venn Diagrams
Venn Diagrams are used to solve word problems which involve:
1. Two sets, but the requirement is neither of the union of those sets, nor of the intersection
of those sets; or
2. Three sets.
What are Venn Diagrams?

The sets and their operations can be represented pictorially through what are called Venn
Diagrams. In Venn Diagrams, a rectangle represents the universal set and all the individual sets
are represented by circles. Following is the representation of a universal set and a set A.
Union of Sets
The shaded portion in the following figure represents union of sets:

Intersection of Sets
The shaded portion in the following figure represents intersection of sets:
Disjoint Sets
Following figure represents disjoint sets:
Difference of Sets
The shaded portion in the following figure represents A – B:
The shaded portion in the following figure represents B – A:

Compliment of a Set
The shaded portion in the following figure represents A′:


CHAPTER 7 – SETS, RELATIONS AND FUNCTIONS – UNIT 3 – RELATIONS
Unit 3 – Relations
Product Sets/Cartesian Product of Sets

It is pretty simple → it’s like multiplying ( x + y + z ) and ( a + b ) . For example, let A = 1, 2, 3 ,
and B = 4, 5 . Then A  B = (1, 4 ) , (1, 5) , ( 2, 4 ) , ( 2, 5 ) , (3, 4 ) , (3, 5 ) . The individual
elements of the set A × B, i.e. (1, 4), (1, 5), … are called ordered pairs.

Number of Elements in the Cartesian Product of Two Sets

If A and B are two finite sets, then n(A × B) = n(A) × n(B).
Relations
A relation from set A to set B is denoted by one or more ordered pairs, where the first element of
every ordered pair belongs to set A and the second element of every ordered pair belongs to set B.
We know that ordered pairs arise when two sets are multiplied. Since a relation between two sets
is “one or more ordered pairs”, it implies that a relation between the sets A and B is basically a
subset of the product of both the sets.
For example, let A = 1, 2 and B = 1, 2, 3, 4 , then,

A  B = (1, 1) , (1, 2 ) , (1, 3) , (1, 4 ) , ( 2, 1) , ( 2, 2 ) , ( 2, 3) , ( 2, 4 ) .
Now, R = (1, 2 ) , ( 2, 4 ) is a relation from A to B since R is a subset of A × B.
From the above discussion, one thing is clear that a set R is a relation from set A to set B only if R
is a subset of A × B.
Question 1
If A = a, b, c, d  , B =  p, q, r , s , then which of the following are relations from A to B?
1. R1 = ( a, p ) , ( b, r ) , ( c, s )
2. R2 = ( q, b ) , ( c, s ) , ( d , r )
3. R3 = ( a, p ) , ( a, q ) , ( d , p ) , ( c, r ) , ( b, r )
4. R4 = ( a, p ) , ( q, a ) , ( b, s ) , ( s, b )

Total Number of Relations

Let A and B be two non-empty finite sets consisting of m and n elements respectively. Then A × B
consists of mn ordered pairs. So, total number of subsets of A × B is 2 mn . Since each subset of A ×
B defines a relation from A to B, so total number of relations from A to B is 2 mn .

Domain and Range of a Relation

Domain is the set of all the first elements of the ordered pairs in a relation; and Range is the set of
all the second elements of the ordered pairs in a relation.
For example, if A = {1, 3, 5, 7} and B = {2, 4, 6, 8, 10}, and let R = {(1, 8), (3, 6), (5, 2), (1, 4)}
be a relation from A to B, then Domain is {1, 3, 5} and Range is {8, 6, 2, 4}. Domain and Range
are written as Dom (R) = {1, 3, 5} and Range (R) = {8, 6, 2, 4} respectively.
Different Types of Relations

Following are the various types of relations:
1. Identity Relation
2. Reflexive Relation
3. Symmetric Relation
4. Transitive Relation
5. Equivalence Relation
6. Inverse Relation
Identity Relation
If every element in a set is related only to itself, such a relation is known as an identity relation.
For example, let A = {1, 2, 3}, and R = {(1, 1), (2, 2), (3, 3)}. Now, R is an identity relation because
every element of the set A is related only to itself.
Mathematically, it can be represented as:
A relation R on the set A is an identity relation if and only if R = ( a, a ) : a  A .
Reflexive Relation
A reflexive relation is very similar to identity relation with only one difference, i.e., in addition to
there being all the elements related to themselves, there may also be some other elements present
in the relation. For example, let A = {1, 2, 3}, and R = {(1, 1), (2, 2), (3, 3), (1, 2), (2, 3)}. Now, R
is a reflexive relation because in addition to all the elements being related to themselves, some
elements are related to some other elements as well. The only condition is that both the elements
of the ordered pairs should belong to the same set A.
A relation R on the set A is a reflexive relation if ( a, a )  R for all a  A .


Symmetric Relation
Consider the following example: Ayushman Khurana is the brother of Aparshakti Khurana, and
therefore, obviously, Aparshakti Khurana is the brother of Ayushman Khurana. Such a relation is
known as a symmetric relation. So, in a relation R, if (a, b)  R, and therefore, (b, a) also belongs
to R, such a relation is known as a symmetric relation.
A relation R on the set A is a symmetric relation if ( a, b )  R  ( b, a )  R .

Transitive Relation
Consider the following example: Salman Khan is the brother of Arbaz Khan, and Arbaz Khan is
the brother of Sohail Khan; so, obviously, Salman Khan is the brother of Sohail Khan, right! This
is called transitive relation. So, in a relation R, if (a, b)  R and (b, c)  R, and therefore, (a, c)
also belongs to R, such a relation is known as a transitive relation.
A relation R on the set A is a symmetric relation if ( a, b )  R and ( b, c )  R  ( a, c )  R .

Equivalence Relation
A relation which is reflexive, symmetric, as well as transitive, is known as an equivalence relation,
or simply an equivalence. Consider a set of straight lines. The relation “is parallel to” is:
• A reflexive relation, as every straight line is parallel to itself;
• A symmetric relation, as if a line A is parallel to another line B, then obviously, the line B
is parallel to the line A;
• A transitive relation, as if a line A is parallel to another line B, and the line B is parallel to
another line C, then obviously, the line A is parallel to the line C.
Therefore, this relation is an equivalence relation.
Inverse Relation
An example of an inverse relation is given below:
Consider the set A = {1, 2, 3}, and the relation R = {(1, 2), (2, 2), (3, 1), (3, 2)}. Here, Dom (R) =
{1, 2, 3}, and Range (R) = {2, 1}. Now the inverse of this relation (R–1) = {(2, 1), (2, 2), (1, 3), (2,
3)}. Therefore, to make an inverse relation, simply interchange the position of elements in all the
ordered pairs. Now, here, Dom (R–1) = {2, 1}, and Range (R–1) = {1, 2, 3}.
From the above discussion, it can be concluded that Dom (R) = Range (R–1); and Range (R) = Dom
(R–1).



CHAPTER 7 – SETS, RELATIONS AND FUNCTIONS – UNIT 4 – FUNCTIONS
Unit 4 – Functions
Introduction
Consider the following linear equation in two variables:
y = 2x + 3
Now, you may easily find out the value of y for any value of x.
For example, for x = 1, y = 2 × 1 + 3 = 5
For example, for x = 2, y = 2 × 2 + 3 = 7
For example, for x = 3, y = 2 × 3 + 3 = 9, and so on…
Here, in this equation “ y = 2 x + 3 ”, y is nothing but a function of x. In terms of functions, it is
written as: f ( x ) = 2 x + 3 .
If we consider a set A = {1, 2, 3}, and a set B = {5, 7, 9, 10} and prepare a relation “ y = 2 x + 3 ”,
it’ll be the set R = {(1, 5), (2, 7), (3, 9)}. Now this set R is known as a function which represented
as: f ( x ) = ( x, y ) : y = 2 x + 3 . The pictorial representation is given below:
The values 5, 7, and 9 are known as the images, and the values 1, 2, and 3 are known as the pre-
images of the function f ( x ) .
We can see from the above discussion that for any value of x, there is always a unique value of y.
This is the basic definition of function. A function is a relation, wherein, for every value of x, there
is a unique value of y. In other words, a relation is said to be a function when both the following
conditions are satisfied:
1. All the values of set A have an image in set B, and
2. All the values of set A have a single image in set B.
Consider the following diagrams:

f1 is not a function from A to B because the first condition, i.e. “All the values of set A should
have an image in set B” is not satisfied. This is so, because the value “3” in set A does not have
any image in set B.
f 2 is not a function from A to B because the second condition, i.e. “All the values of set A should
have a single image in set B” is not satisfied. This is so, because the value “4” in set A has two
images in set B, i.e. “c” and “e”.
f3 is a function from A to B because both the conditions are satisfied. Please note that it doesn’t
matter that the elements “2”, as well as “3” from set A have the same image “b” in set B. All that
matters is that the element “2” has only one image, i.e. “b”, and the element “3” also has only one
image, i.e. “b”. It doesn’t matter that the image for both the elements is the same.
f 4 is a function from A to B because both the conditions are satisfied.
Note – A function from set A to set B is also known as mapping from set A to set B, and is
represented as f : A → B .



Domain, Co-Domain, and Range of a Function

Let f : A → B , then set A is known as the Domain of the function, set B is known as the Co-
Domain of the function and the set of all the image elements is known as the Range of the function.
For example, consider a set A = {1, 2, 3}, and a set B = {5, 7, 9, 10}.
The set for the function f ( x ) = 2 x + 3 would be f = (1, 5) , ( 2, 7 ) , ( 3, 9 ) .
Now, Dom ( f ) = 1, 2, 3 ; Co − Dom ( f ) = 5, 7, 9, 10 ; Range ( f ) = 5, 7, 9 .

Various Types of Functions

Following are the various types of functions:
1. One-One Function
2. Many-One Function
3. Onto or Surjective Functions
4. Into Functions
5. Bijection Function
6. Identity Function
7. Constant Function
8. Equal Functions
9. Composite Functions
10. Inverse of a Function
One-One Function
Let there be two non-empty sets – A and B. A function f is said to be a one-one function from set
A to set B if different elements of set A have different images in set B. Following is the
diagrammatic representation of a one-one function.

For example, let A = {4, 5, 6}, B = {9, 10, 11, 12}. Let f = {(4, 9), (5, 10), (6, 12)}. Here, f is a
one-one function as different elements in set A have different images in set B.
One-one functions are also known as injective functions.
Many-One Function
Let there be two non-empty sets – A and B. A function f is said to be a many-one function from set
A to set B if two or more distinct elements of set A have the same image in set B. Following is the
diagrammatic representation of a many-one function.
For example, let A = {–4, 4, 5}, B = {16, 25}. Consider the rule f ( x ) = x 2 . Now,
f ( −4 ) = ( −4 ) = 16 ; f ( 4 ) = ( 4 ) = 16 ; f ( 5) = ( 5) = 25 . Therefore, f = {(–4, 16), (4, 16), (5,
2 2 2
25)}. Here, since two distinct elements of set A, i.e. “–4” and “4” have the same image “16” in set
B, this is a many-one function.
Onto or Surjective Functions

Let there be two non-empty sets – A and B. A function f is said to be an onto function from set A
to set B if every element in set B has at least one pre-image in set A.
For example, let A = {6, 7, 8}, B = {9, 10}, and let f = {(6, 9), (7, 10), (8, 10)}. Here, since every
element of B has at least one pre-image in set A, f is an onto function.

Into Functions
Let there be two non-empty sets – A and B. A function f is said to be an into function from set A
to set B if one or more elements in set B do not have even a single pre-image in set A.


Bijection Function
A function which is one-one and onto is known as a Bijective Function. A bijective function is
also known as one-to-one correspondence.
Identity Function
Let A be a non-empty set. An identity function is defined as follows:
f : A → A : f ( x) = x  x  A
Therefore, it is a one-to-one onto function with domain A and range A.

An identity function is denoted by the letter I.
If you think about it, it is exactly like an identity relation.
Constant Function
Let there be two non-empty sets – A and B. A function f is said to be a constant function from set
A to set B if every element in set A has the same image element in set B.
For example, let A = {1, 2, 3}, B = {5, 7, 9}. Let f : A → B : f ( x ) = 5 for all x  A . Here,
f (1) = 5; f ( 2 ) = 5 ; f ( 3) = 5 . Therefore, f = {(1, 5), (2, 5), (3, 5)}. Clearly, all the elements of A
have the same image in set B. Therefore, this is a constant function.
Note – The range set of a constant function is a singleton set.

Equal Functions
Let there be two functions f and g. They will be said to be equal to each other when both the
following conditions are satisfied:
1. Both f and g have the same domain, and
2. f ( x ) = g ( x ) for all the values of x.
For example, let A = {1, 2}, B = {3, 6}; f : A → B : f ( x ) = x 2 + 2 and g : A → B : g ( x ) = 3x .
Then, obviously, f and g have the same domain. Also, f (1) = 12 + 2 = 3 ; f ( 2 ) = 22 + 2 = 6 , and,
g (1) = 3 1 = 3 ; g ( 2 ) = 3  2 = 6 . Therefore, we find that f (1) = g (1) , and f ( 2 ) = g ( 2 ) . Since
both the conditions of equality of two functions are satisfied, f = g .

Composite Functions
Till now, we’ve studied functions such as f ( x ) = x + 1 , or f ( x ) = x 2 + 2 , or f ( x ) = 2 x , and so
on. In all such functions, we simply had to put the value of x to find the value of the function. For
example, find the value of the function f ( x ) = x + 1 for x = 3 . You would simply put the value of
x as “3”, and solve it as follows: f ( 3) = 3 + 1 = 4 . Easy!
Now, consider the following:
Let there be a function f ( x ) = x + 1 , and another function g ( x ) = 2 x + 2 . Find the value of

f ( g ( x ) ) for x = 3 . Confused? It’s pretty simple actually! The question wants us to calculate
f ( g ( 3) ) . Therefore, instead of putting the value of x as “3” in f ( x ) = x + 1 , we simply have to
put the value of x as “ g ( 3) ” in f ( x ) = x + 1 . For this, first we’ll calculate g ( 3) .
g ( 3) = ( 2  3) + 2 = 8 ; now we’ll put this value 8 in f ( x ) = x + 1  f (8) = 8 + 1 = 9 . Thus, we
have arrived at the value of f ( g ( x ) ) for x = 3 , or f ( g ( 3) ) . It is also written as fog ( 3) . Such
functions are known as Composite Functions.

Inverse of a Function
Let there be two non-empty sets – A and B. Let there be a one-one onto function f : A → B . The
inverse of this function ( f −1 ) is given as f −1 : B → A . Following diagram will make it clear:
Notes –

1. A function is invertible only if it is one-one onto.

2. If f is one-one onto, then f −1 is also one-one onto.
Algorithm for finding out the inverse of a function:

Step 1 – Write the function in the form of an equation, substituting y in place of f ( x ) .
Step 2 – Rearrange the terms so that x comes on the LHS.
Step 3 – Substitute f −1 ( x ) in place of x, and x in place of y.


NUMBER SERIES, CODING & DECODING, ODD MAN OUT – MOCK TEST QUESTIONS
Chapter 9 – Number Series, Coding &

Decoding, and Odd Man Out –
Compilation of Mock Test Paper Questions
https://www.youtube.com/watch?v=ZZpvRpkgmaE&list=PLAKrxMrPL
3fwOSJWxnr8j0C9a4si2Dfdz
Link for Lecture on Number Series, Coding and Decoding, and Odd Man Out:
https://youtu.be/AFoW6Iq_rVg
Number Series
1. Find missing term 7, 26, 63, 124, 215, 342, ?
a. 391
b. 421
c. 481
d. 511
(MTP May, 2020)
Answer – (d)
2. Find missing term of the alphabet series ABD, DGK, HMS, MTB, SBL?
a. XKW
b. ZAB
c. ZKU
d. ZKW
(MTP May, 2020)
Answer – (d)
3. Find the missing term of the series 17, 14, 15, 12, 13, ?, ?
a. 10, 11
b. 14, 11
c. 11, 13
d. 12, 13
(MTP November, 2019)
Answer – (a)
4. Find the missing term of the number series 24, 60, 120, 210, ?
a. 300
b. 336
c. 420
d. 525
(MTP May, 2019)
Answer – (b)
5. Find the missing term of the number series 48, 24, 96, 48, 192, ?

a. 76
b. 90
c. 96
d. 98
(MTP May, 2019)
Answer – (c)
6. Find the missing number of the series 22, 24, 28, ? , 52, 84
a. 36
b. 38
c. 42
d. 46
(MTP May, 2019)
Answer – (a)
7. Find the missing number of series 1, 5, 13, 25, 41, ?
a. 51
b. 57
c. 61
d. 63
(MTP May, 2019)
Answer – (c)
8. 18, 24, 21, 27, ?, 30, 27
a. 33
b. 30
c. 24
d. 21
(MTP May, 2018)
Answer – (c)
9. 5, 7, 11, ?, 35, 67
a. 23
b. 28
c. 30
d. 19
(MTP May, 2018)
Answer – (d)
Coding & Decoding

10. In a certain language, FLOWER is coded UOLDVI, then how is TERMINAL coded in that
language?
a. FLKPMROZ
b. GVINRMZO
c. RVNIGLKA
d. MNIVGYEO
(MTP May, 2020)
Answer – (b)
Solution
Look at the common letters in FLOWER and TERMINAL. The common letters are E and L. The
code for L is O. L is the last letter in Terminal, so its code should end with O. Since there are

only two options ending with O, options (a) and (c) are out. Next, the code for E is V. Since E
is the second letter in Terminal, the second letter in the code should be V. Between options
(b) and (d), option (b) has V in second position. Therefore, option (b) is the answer.
11. In a certain language TWINKLE is written as SVHOJKD, then how would FILTERS be written in
the same code?
a. EHKUDQR
b. ITNFKD
c. KVOHMF
d. TIMFKD
Answer – (a)
12. GO = 32, SHE = 49, then SOME will be equal to
a. 56
b. 58
c. 62
d. 64
(MTP May, 2019)
Answer – (a)
13. In a certain Code DECEMBER is written as ERMBCEDE. Which word will be written as
ERMBVENO in that code?
a. AUGUST
b. SEPTEMBER
c. OCTOBER
d. NOVEMBER
(MTP May, 2019)
Answer – (d)
14. If SUMMER is coded as RUNNER the code for WINTER will be
a. SUITER
b. VIOUER
c. WALKER
d. SUFFER
(MTP May, 2019)
Answer – (b)
15. In a certain code KAVERI is written as VAKIRE. How is MYSORE written in that code?
a. EROSYM
b. SYMORE
c. SMYERP
d. SYMERO
(MTP May, 2019)
Answer – (d)
16. In a certain code language “EXAM’ is coded as 39 ‘PAPER’ is coded at 51 then PASS is coded as
a. 39
b. 47
c. 489
d. 51
Answer – (d)

17. If GARDEN is coded as 325764 and WATER as 92165, how can we code the word WARDEN in
the same way?
a. (a) 925764
b. (b) 295764
c. (c) 952764
d. (d) 957264
(MTP May, 2018)
Answer – (a)
18. If F=6, MAT=34, then how much is CAR?
a. 21
b. 22
c. 25
d. 28
(MTP May, 2018)
Answer – (b)
Odd Man Out

19. Find the wrong term of the series 121, 143, 165, 186, 209
a. 143
b. 165
c. 186
d. 209
(MTP May, 2020)
Answer – (c)
20. Find odd man out of the series 145, 197, 257, 325, 399
a. 145
b. 399
c. 257
d. 325
(MTP May, 2020)
Answer – (b)
21. Find out the odd man out of the series 5, 27, 61, 122, 213, 340, 509
a. 27
b. 61
c. 122
d. 509
Answer – (a)
22. Find odd one out of the series 7, 9, 11, 12, 14, 15
a. 15
b. 14
c. 9
d. 7
(MTP May, 2019)
Answer – (b)
Solution
This is an ambiguous question. It can be solved in different ways.

One way to look at it is that only 9 is a perfect square, and hence 9 is the odd one out.
Another way to look at it is that this series is divided into two parts, each containing three
numbers. Therefore, the first part would contain the numbers 7, 9, and 11; and the other part
would contain the numbers 12, 14, and 15. Now, if you look closely, in the first part, i.e., 7, 9,
and 11, the difference between any two terms is 2. Applying the same thing in the second
part, we find that the difference between 14 and 12 is 2, but the difference between 15 and
14 is not 2, and therefore, 15 is the odd one out.
Similarly, there are some other ways also.
However, in none of the ways, the answer is coming out to be 14. Since ICAI has given the
answer 14, let’s not play with ICAI, and memorize this question. If this comes in the exam,
mark the answer 14.
23. Find odd one out of the series 37, 45, 49, 65, 79
a. 37
b. 45
c. 49
d. 65
(MTP May, 2019)
Answer – (c)
24. Find the odd man out
a. January
b. April
c. July
d. October
Answer – (b)
25. Find the odd man out of the series 5, 10, 17, 25
a. 5
b. 10
c. 17
d. 25
Answer – (d)
26. Find the odd one out 1, 4, 9, 16, 20, 36, 49
a. 1
b. 9
c. 20
d. 36
(MTP May, 2018)
Answer – (c)
27. Find the odd one out 16, 25, 36, 72, 144, 196, 225
a. 36
b. 72
c. 196
d. 225
(MTP May, 2018)
Answer – (b)

SEATING ARRANGEMENTS – COMPILATION OF MOCK TEST QUESTIONS
Chapter 11 – Seating Arrangements –

Link for Lecture on Seating Arrangements: https://youtu.be/jFafMuv1iIs
Horizontal
1. Five Friends are sitting on a bench. A is to the left of B but on the right of C, D is to the right
of B but one the left of E. Who are at the extremes?
a. A, B
b. A, D
c. C, E
d. B, D
(MTP May, 2020; MTP November, 2018)
Answer – (c)
2. Five students A, B, C, D and E are standing in a row. D is on the right of E; B is on the left of E
but on right of A. D is next to C on his left. The student in middle is
a. B
b. A
c. E
d. C
(MTP May, 2019)
Answer – (c)
3. In a college party, 5 girls are sitting in a row. F is to the left of M and to the right of O. R is
sitting to the right of N but to the left of O. Who is sitting in the middle?
a. O
b. R
c. P
d. M
(MTP May, 2019)
Answer – (a)
4. Five friends P, Q, R, S and T are sitting in a row facing North. Here, S is between T and Q and
Q is to the immediate left of R. P is to the immediate left of T. Who is in the middle?
a. S
b. T
c. Q
d. R
(MTP May, 2019; MTP November, 2018)
Answer – (a)

5. There are five houses A, B, C, D, and E. A is the right of B and E is left of C and right of A. B is
right of D. Which house is middle?
a. A
b. B
c. C
d. D
(MTP November, 2018; MTP May, 2018)
Answer – (a)
6. Six Children A, B, C, D, E and F are sitting in a row facing towards North. C is sitting between
A and E, D is not at the end. B is sitting immediate right of E, F is not at the right end, but D is
sitting 3rd left of E. Which of the following is right of D.
a. A
b. F
c. E
d. C
(MTP May, 2020; )
Answer – (a)
Read the following information carefully and then answer the questions 7, 8, and 9.
Six friends A, B, C, D, E and F are sitting on a bench, facing towards North.

I. A is sitting next to B.
II. C is sitting left to D.
III. D is not sitting with E.
IV. E is on the left end of the bench.
V. C is third position from right.
VI. A is on the right side of B and to the right side of E.
VII. A and C are sitting together.
VIII. F is sitting Right of D.
(MTP May, 2020)
7. At what position is A sitting?
a. Between B and C
b. Between D and C
c. Between E and B
d. Between C and E
Answer – (a)
8. What is the position of B?
a. Second from right
b. Centre
c. Extreme left
d. Second from left
Answer – (d)
9. What is the position of D?
a. Extreme from left
b. Extreme right
c. Third from left
d. Second from right
Answer – (d)

10. Six friends A, B, C, D, E and F are sitting in row facing East. “C “is between ‘A’ and ‘E’. ‘B’ is just
to the right of ‘E but left of D’. ‘F’ is not right end. How many persons are to the left of E?
a. 1
b. 2
c. 3
d. 4
Answer – (c)
11. Seven children A, B, C, D, E, F and G are sitting in a row. G is to the right of D and to the left of
B. A is on the right of C, A and D have one child between them. E and B have two children
between them. Who is exactly in the middle?
a. A
b. C
c. D
d. G
Answer – (c)
12. In a march past, seven persons are standing in a row. Q is standing left to R but right to P. O is
standing right to N and left to P. Similarly, S is standing right to R and left to T. Find out who is
standing in middle?
a. P
b. Q
c. R
d. O
Answer – (b)
Arrangement in Two Rows

Study the following information carefully to answer the questions 1 to 3:
Eight persons, P to W are sitting in front of one another in two rows. Each row has four persons. P is
between U and V and facing North. Q, who is to the immediate left of M is facing W. R is between T
and M and W is to the immediate right of V.
(MTP May, 2019)
1. Who is sitting in front of R?

a. U
b. Q
c. V
d. P
Answer – (d)
2. Who is to the immediate right of R?
a. M
b. U
c. M or P
d. T
Answer – (d)
3. In which of the following pairs, persons are sitting in front of each other?
a. MV
b. RV
c. TV
d. UR
Answer – (a)
Circular
1. Four girls are A, B, C and D are sitting around a circle facing the centre. B and C are in front
of each other, which of the following is definitely true?
a. A and D are in front of each other
b. A is not between B and C
c. D is to the left of C
d. A is to the left of C
Answer – (a)
Read the following information and answer the Questions that follows.
I. Six friends A, B, C, D, E and F are sitting in a closed circle facing the center.
II. E is to the left of D.
III. C is between A and B.
IV. F is between E and A.
2. Who is to the left of B?

a. A
b. C
c. D
d. E
Answer – (c)
3. Who is to the right of C?
a. A
b. B
c. D
d. E
Answer – (a)
4. Six girls are standing in such a way that they form a circle, facing the centre. Subbu is to the
left of Pappu, Revathi is between Subbu and Nisha, Aruna is between Pappu and Keerthna.
Who is to the right of Nisha?
a. Ravathi
b. Aruna
c. Subbu
d. Keerthana
(MTP May, 2018)
Answer – (a)

BLOOD RELATIONS – COMPILATION OF MOCK TEST QUESTIONS
Chapter 12 – Blood Relations –

Link for Lecture on Blood Relations: https://youtu.be/oPFBlifVuqo
1. C is mother of A and B. If D is husband of B, then what is C to D?

a. Mother
b. Aunt
c. Mother-in-law
d. Sister
Answer – (c)
2. A is B’s sister, C is B’s mother, D is C’s father of E is D’s mother, then how is A related D?
a. Granddaughter
b. Daughter
c. Aunt
d. Father
(MTP May, 2019)
Answer – (a)
3. A is father of C and D is son of B. E is brother of A. If C is sister of D how is B related to E?
a. Sister-in-law
b. Sister
c. Brother
d. Brother-in-law
(MTP May, 2019)
Answer – (a)
4. X is the husband of Y. W is the daughter of X. Z is husband of W. N is the daughter of Z. What
is the relationship of N to Y?
a. Cousin
b. Niece
c. Daughter
d. Grand-daughter
(MTP May, 2019)
Answer – (d)
5. A is the sister of B. B is the brother of C. C is the son of D. How is D related to A?
a. Mother
b. Daughter

c. Son
d. Uncle
Answer – (a)
6. If P is the husband of Q and R is the mother of S and Q. What is R to P?
a. Mother
b. Sister
c. Aunt
d. Mother-in-law
Answer – (d)
7. P is the father of T. T is the daughter of M. M is the daughter of K. What is P to K?
a. Father
b. Father-in-law
c. Brother
d. Son-in-law
Answer – (d)
8. A and B are brothers. E is the daughter of F. F is the wife of B. What is the relation of E to A?
a. Sister
b. Daughter
c. Niece
d. Daughter
Answer – (c)
9. A is B’s brother. C is D’S father. E is B’s mother. A and D are brothers. How is E related to C?
a. Sister
b. Sister-in-law
c. Niece
d. Wife
(MTP May, 2018)
Answer – (d)
10. A is B’s brother, C is A’s mother, D is C’s father, E is B’s son, How is B related to D?
a. Son
b. Granddaughter
c. Grandfather
d. Great grandfather
(MTP May, 2018)
Answer – (b)
11. A is the mother of D and sister of B. B has a daughter C who is married to F. G is the husband
of A. How is G related to D?
a. Uncle
b. Husband
c. Son
d. Father
(MTP May, 2018)
Answer – (d)

12. Given that:

A is the mother of B
C is the son of A
D is the brother of E
E is the daughter of B
The grandmother of D is:
a. A
b. B
c. C
d. E
(MTP May, 2020)
Answer – (a)
13. Moni is daughter of Sheela. Sheela is wife of my wife’s brother. How Moni is related to my
wife?
a. Cousin
b. Niece
c. Sister
d. Sister-in-law
Answer – (b)
14. A, Q, Y and Z are different persons. Z is the father of Q. A is the daughter of Y and Y is the son
of Z. If P is the son of Y and B is the brother of P, then
a. B and Y are brothers
b. A is sister of B
c. Z is the uncle of B
d. Q and Y are brothers
(MTP May, 2019)
Answer – (b)
15. A’s mother is sister of B and she has a daughter C who is 21 years old. How is B related to D?
a. Uncle
b. Maternal Uncle
c. Niece
d. Daughter
(MTP May, 2019)
Answer – (b)
16. A family has a man, his wife, their four sons and their wives. The family of every son also 3
sons and one daughter. Find out the total number of male members in the whole family?
a. 4
b. 8
c. 12
d. 17
(MTP May, 2020)
Answer – (d)
17. Pointing to a lady, a man said, “The son of her only brother is the brother of my wife”. How is
lady is related to man?
a. Mother’s sister
b. Grandmother

c. Sister of Father-in-law
d. Maternal Aunt
(MTP May, 2020)
Answer – (c)
18. Pointing a man to photo graph, a man is said to a woman, “His mother is the only daughter of
your father”. How is the woman is related to the man in the photograph?
a. Sister
b. Mother
c. Wife
d. Daughter
Answer – (b)
19. Read the following information and answer the question

‘A+B’ means ‘A is the daughter of B’.
‘A × B’ means ‘A is the son of B’.
‘A – B’ means ‘A is the wife of B’.
If P × Q - S, which of the following is true
a. S is wife of B
b. S is father of P
c. P is daughter of Q
d. Q is father of P
(MTP May, 2020)
Answer – (b)
20. Read the following information carefully to answer the questions that follow
‘P + Q’ means ‘P is father of Q’
‘P – Q’ means ‘P is mother of Q’
‘P × Q’ means ‘P is brother of Q’
‘P ÷ Q’ means ‘P is sister of Q’
Which of the following means M is the maternal uncle of T?
a. M ÷ K – T
b. M × K – T
c. M × K + T
d. M ÷ K + T
Answer – (b)

CHAPTER 15 – UNIT 1 – MEASURES OF CENTRAL TENDENCY
Chapter 15 – Measures of Central Tendency

and Dispersion
Lecture 1 of Measures of Central Tendency and Dispersion: https://youtu.be/AEmBanqkVt0
Lecture 2 of Measures of Central Tendency and Dispersion: https://youtu.be/C9WkWXODxFs
Lecture 3 of Measures of Central Tendency and Dispersion: https://youtu.be/KqanMibPeUs
Lecture 4 of Measures of Central Tendency and Dispersion: https://youtu.be/2v5tjtq0DYE
Unit 1 – Measures of Central Tendency
Categorization of Data
Data can be categorised as follows:
1. Unclassified Data – Individual Series
2. Grouped Frequency Distribution
a. Discrete Series
b. Continuous Series
i. Exclusive Series
ii. Inclusive Series
Unclassified Data/ Individual Series

Suppose there are 10 students in a class, and they received marks for their Mathematics Paper held
recently. You make a list of the individual marks that every student received:
Student Marks
Student 1 55
Student 2 65
Student 3 75
Student 4 95
Student 5 80
Student 6 70
Student 7 65
Student 8 60

Student 9 50
Student 10 40
This series is known as the Individual Series. There’s only one variable in this series. In the above
example, the variable is “Marks”.
Individual Series is also known as Unclassified Data.
Grouped Frequency Distribution

Discrete Series
Marks ( xi ) No. of Students ( f i )
50 40
60 10
70 10
80 9
90 11
95 20
Total 100
This type of series is known as a Discrete Series. It comprises of a variable and its frequency. In
the above example, “Marks” is the variable, and “No. of Students” is the frequency.
Continuous Series
Marks (Class Interval) No. of Students (Frequency)

0 – 10 2
11 – 20 5
21 – 30 4
31 – 40 6
41 – 50 10
51 – 60 18
61 – 70 7
71 – 80 15
81 – 90 28
91 – 100 5
Total 100
Continuous Series are of two types:

1. Exclusive Series
2. Inclusive Series
Exclusive Continuous Series

Where the lower limit of a class interval is the same as the upper limit of the preceding class
interval, such series is known as Exclusive Series. For example,
Class Interval 0 – 10 10 – 20 20 – 30 30 – 40 40 – 50
Frequency 2 3 4 5 6

In the above table, we can see that the lower limit of the second class interval, (i.e., 10), is the same
as the upper limit of the first class interval; the lower limit of the third class interval, (i.e., 20), is
the same as the upper limit of the second class interval, and so on.
Inclusive Continuous Series

Where the lower limit of a class interval is NOT the same as the upper limit of the preceding class
interval, such series is known as Inclusive Series. For example,
Class Interval 0 – 10 11 – 20 21 – 30 31 – 40 41 – 50
Frequency 2 5 4 6 10
In the above table, we can see that the lower limit of the second class interval, (i.e., 11), is not the
same as the upper limit of the first class interval.
Arithmetic Mean
This is the simple average which we’ve been studying since childhood. If a variable x assumes n
n
x i
values, x1 , x2 , x3 , … xn , then the arithmetic mean is given by x = i =1
.
n
Properties of Arithmetic Mean (AM)

1. If all the values assumed by a variable are a constant, say k, then the AM is also k. For
example, if the height of every student in a group of 20 students is 180 cm, then the mean
height will also be 180 cm (obviously).
2. Sum of Deviations from the Mean is always zero, i.e.,
a. For unclassified data:  ( xi − x ) = 0
b. For classified data:  f (x − x) = 0
i i
For example, consider the following unclassified data: 58, 63, 37, 45, 29. Now, x = 46.4 .
Now, the sum of deviations from the mean is calculated as follows:
58 – 46.4 = 11.6
63 – 46.4 = 16.6
37 – 46.4 = –9.4
45 – 46.4 = –1.4
29 – 46.4 = –17.4
Total 0.0
3. AM is affected due to a change in origin or scale:
a. Change in Origin:
Suppose you are weighing some students in a class. Suppose the average weight
comes to 80 kgs. Afterwards, you find out that the weighing machine was not
aligned to zero. It was aligned to 2. This means that when there’s no weight on the
weighing machine, its pointer, instead of pointing at 0, was pointing at 2. This
means that every student’s weight is higher by 2 kgs. Now, you’ll have to weigh
the students again, and calculate the mean again. Instead, you can simply subtract
2 from the original mean 80, and you’ll get the corrected mean as 78 kgs.
b. Change in Scale:

Suppose you are weighing some students in a class. Suppose the average weight
comes to 80 kgs. Afterwards, you realise that the requirement was to calculate the
average weight in pounds, and not kgs. Now, you know that 1 kg = 2.205 pounds.
Now, you’ll again have to weigh all the students in pounds, and then calculate the
mean weight. Instead, you may simply multiply 80 with 2.205 and you’ll get the
corrected mean as 176.4 pounds.
4. Let there be two groups containing n1 and n2 observations. Let their arithmetic means be
n1 x1 + n2 x2
x1 and x2 respectively. Now, the combined AM is given by x = .
n1 + n2
Median
For a given set of observations, Median is defined as the middle-most value, when the observations
are arranged either in an ascending order or a descending order of magnitude.
Median of Individual Series (Unclassified Data)

Following steps are followed in order to calculate the median of an individual series:
1. Arrange the series in ascending order.
 n +1
2. Find the rank of the median using the formula   , where n is the total number of
 2 
observations. In case n is even, this formula will give the mid-point of two terms → take
the average of those two terms, and that’ll be the median. Rank will give us the median
term.
Median of Discrete Series

Follow the following steps:
1. Arrange the series in ascending order of the variable.
2. Find cumulative frequency ( cf ) .
 N +1
3. Find out the rank using the formula   , where N is the total of frequencies.
 2 
Median of Continuous Series

Following steps are followed:
1. Make sure that the series is exclusive
2. Arrange the series in ascending order and find cumulative frequency
N
3. Find the Rank of Median =
2
Rank − c
4. Median (M) = l + i
f
Where, l = lower limit of Median Class Interval
Where, f = frequency of Median Class Interval
Where, i = Class Interval/Class Size
Where, c = cumulative frequency of the class interval preceding Median Class Interval

Property of Median
If x and y are two variables related by y = a + bx for any two constants a and b, then the median
of y is given by yme = a + bxme .
For example, if the relationship between x and y is given by 2 x − 5 y = 10 , and xme = 16 , find yme .
2 10
Now, 2 x − 5 y = 10  5 y = 2 x − 10  y = x −  y = 0.40 x − 2  y = −2 + 0.40 x
5 5
Therefore, yme = a + bxme  yme = −2 + ( 0.40 16 ) = −2 + 6.4 = 4.40.
Quartile
n /4 n /4 n /4 n /4
Q1 Q2 Q3
First Quartile Second Quartile Third Quartile
Lower Quartile Median Quartile Upper Quartile
It is to be noted from the above diagram that the Second Quartile is actually the Median, as it
divides the entire series into two equal parts.
Needless to say, that the second quartile is given by the average of the first and the third quartiles.
Therefore,
First Quartile + Third Quartile
Median Quartile =
2
Quartile of Individual Series (Unclassified Data)
Following steps are followed to calculate the quartiles of an Individual Series (Unclassified Data):
1. Arrange the series in ascending order.
n +1
2. Rank of Q1 =
4
3 ( n + 1)
Rank of Q3 = , where n is the total number of observations.
4
Quartile of Discrete Series

Following steps are followed to calculate the quartiles of a Discrete Series:
1. Arrange the series in ascending order, and find cumulative frequency.
N +1
2. Rank of Q1 =
4
3 ( N + 1)
Rank of Q3 = , where N is the total of the frequencies.
4

Quartile of Continuous Series

Following steps are followed to calculate the quartiles of a Continuous Series:
1. Make sure that the series is exclusive.
2. Arrange the series in ascending order and find cumulative frequency.
N
3. Find the Rank of Q1 =
4
3N
Rank of Q3 = , where N is the total of the frequencies.
4
Rank − c
4. Q1 = l + i
f
Rank − c
Q3 = l + i
f
Where, l = lower limit of Class Interval
Where, f = frequency of Class Interval
Where, i = Class Interval/Class Size
Where, c = cumulative frequency of preceding Class Interval
Deciles and Percentiles

Deciles divide a given series into 10 equal parts. Therefore, there are 9 deciles denoted by D1 to
n +1 2 ( n + 1)
D9. Rank of Decile for an individual series is calculated as follows: D1 = , D2 = ,
10 10
3 ( n + 1)
D3 = , and so on.
10
Percentiles divide a given series into 100 equal parts. Therefore, there are 99 percentiles denoted
n +1
by P1 to P99. Rank of Percentile for an individual series is calculated as follows: P1 = ,
100
2 ( n + 1) 3 ( n + 1)
P2 = , P3 = , and so on.
100 100
Summary of Partition Values

No. No. of Rank for Rank for
Partition Rank for
of Partition Symbol Individual Continuous
Value Discrete Series
Parts Values Series Series
n +1 N +1 N
Median 2 1 M
2 2 2
n +1 N +1 N
Q1 = , Q1 = , Q1 = ,
Q1 to 4 4 4
Quartile 4 3
Q3 3 ( n + 1) 3 ( N + 1) 3N
Q3 = Q3 = Q3 =
4 4 4

n +1 N +1 N
D1 = , D1 = , D1 = ,
10 10 10
D1 to
Decile 10 9 5 ( n + 1) 5 ( N + 1) 5N
D10 D5 = D5 = D5 = and
10 10 10
and so on… and so on… so on…
n +1 N +1 N
P1 = , P1 = , P1 = ,
100 100 100
P1 to
Percentile 100 99 5 ( n + 1) 5 ( N + 1) 5N
P99 P5 = P5 = P5 = and
100 100 100
and so on… and so on… so on…
Rank − c
The formula for any partition value of a continuous series is l + i
f
Mode or Modal Value

Mode is defined as that value which has the highest frequency.
Mode of an Individual Series (Unclassified Data)

Mode of an Individual Series is calculated using the inspection/observation method. We simply
have to observe which element occurs the maximum number of times, and that’ll give us our mode.
Mode of Discrete Series

In a discrete series, mode is the variable which has the highest frequency.
For example, consider the following series:
X 5 7 9 11
Frequency (f) 25 35 55 98
Since the highest frequency (i.e., 98) is of the variable 11, the mode of the series is 11.
Mode of Continuous Series

Following steps are followed:
1. Locate the class interval with highest frequency. This class interval is known as the Modal
Class Interval, and it contains the mode.
f1 − f 0
2. Calculate Mode using the formula: Mode = l + i
2 f1 − f 0 − f 2
Here,
l = lower limit of the modal class interval
f1 = frequency of the modal class interval
f0 = frequency of the preceding class interval
f2 = frequency of the succeeding class interval
i = class interval/class size
Properties of Mode
1. Relationship between Mean, Median, and Mode
a. For a moderately skewed distribution of data:

Mean – Mode = 3(Mean – Median), or Mode = 3Median – 2Mean

b. For a symmetric distribution of data:
Mean = Median = Mode
2. If x and y are two variables related by y = a + bx for any two constants a and b, then the
mode of y is given by ymo = a + bxmo .
Geometric Mean
Geometric Mean is defined as the nth root of the product of n observations.
Harmonic Mean –
For a given set of non-zero observations, harmonic mean is defined as the reciprocal of the AM of
n
the reciprocals of the observations. Therefore, HM = .
 (1/ xi )
Properties of Harmonic Mean
1. If all the observations taken by a variable are constants, say k, then the HM of the
observations is also k.
1 1 1 2
2. The harmonic mean of 1, , , …, is .
2 3 n ( n + 1)
3. If there are two groups with n1 and n2 observations and H1 and H 2 as respective HMs,
n1 + n2
then the combined HM is given by .
n1 n2
+
H1 H 2
4. If rates are given, and an average rate is to be calculated, Harmonic Mean is used.
2xy
5. Harmonic Mean is used for calculating Average Speed. Average Speed = .
x+ y
Relationship between AM, GM, and HM

1. AM ≥ GM ≥ HM
2. GM2 = AM × HM

CHAPTER 15 – UNIT 2 – MEASURES OF DISPERSION
Unit 2 – Measures of Dispersion
Range
Individual Series
Range is defined as the difference between the largest and the smallest observation.
Range = Largest Observation – Smallest Observation
Continuous Series
Range = Upper Most Class Boundary – Lower Most Class Boundary
Coefficient of Range
L−S
Coefficient of Range = 100
L+S
Property of Range
Range is not affected with the change in origin, however, when there’s a change in the scale, it is
affected in the same ratio. In other words, if a and b are two constants related with the variables x
and y as y = a + bx , then the range of y is given by Ry = b  Rx .
Mean Deviation
Mean deviation is defined as the arithmetic mean of the absolute deviations of the observations
from an appropriate measure of central tendency.
1
MDA =
n
 xi − A
Here, A could either be Mean, or the Median. If A is mean, the above formula gives us the mean
deviation about the mean; if A is median, the above formula gives us the mean deviation about the
median.
Coefficient of Mean Deviation
Mean Deviation about A
Coefficient of Mean Deviation =  100
A
Properties of Mean Deviation

1. For a set of observations, the sum of absolute deviations is minimum when the deviations
are taken from the median. This property states that  xi − Median is the lowest. In other
words,  x − Median
i is lower than  x − Any other value .
i

For example, consider the following set of observations: 2, 4, 6, 8, 20. Clearly, the median
is 6. Now, in order to calculate  xi − Any other value , let’s take the “other value” as 8,
and 10.
x x − Median , i.e., x − 6 x −8 x − 10
2 4 6 8
4 2 4 6
6 0 2 4
8 2 0 2
20 14 12 10
Total  xi − 6 = 22  xi − 8 = 24  xi −10 = 30
From the above table, we can see that the sum of the deviations from the median is
minimum.
2. Mean Deviation is not affected with the change in origin, however, when there’s a change
in the scale, it is affected in the same ratio. In other words, if a and b are two constants
related with the variables x and y as y = a + bx , then the MD of y is given by
MDy = b  MDx .
Standard Deviation
SD =
( x − x )
i
2
, or SD =
( x ) − ( x )
i
2
2
n n
Sometimes, instead of Standard Deviation, Variance is also used. Variance is nothing but the
square of Standard Deviation. Therefore, Variance = SD =

2  ( xi − x )
2
, or
 ( xi 2 )
−(x) .
2
n n
Coefficient of Variation
SD
Coefficient of Variation (CV) = 100
AM
Properties of Standard Deviation

a −b
1. For any two numbers a and b, standard deviation is given by .
2
n2 − 1
2. For the first n natural numbers, standard deviation is given by .
12
3. If all the observations assumed by a variable are constant i.e. equal, then the SD is zero.
This means that if all the values taken by a variable x is say, k, then SD = 0. This result
applies to range as well as mean deviation.
4. Standard Deviation is not affected with the change in origin.
5. When there’s a change in the scale, Standard Deviation is affected in the same ratio. In
other words, if a and b are two constants related with the variables x and y as y = a + bx ,
then the SD of y is given by SDy = b  SDx .

6. Consider two groups containing n1 and n2 observations, with means x1 and x2

respectively, and standard deviations s1 and s2 respectively. The combined SD is given by
n1s12 + n2 s2 2 + n1d12 + n2 d 2 2
SD =
n1 + n2
where,
d1 = x1 − x
d 2 = x2 − x
n1 x1 + n2 x2
x=
n1 + n2
n1s12 + n2 s2 2
Note – When x1 = x2 , combined SD is given by .
n1 + n2
7. SD = Range/2
Quartile Deviation
Q3 − Q1
Quartile Deviation is also known as Semi-Inter Quartile Range. It is given by: QD =
2
Q3 − Q1
Coefficient of Quartile Deviation =  100
Q3 + Q1
Quartile Deviation is not affected with the change in origin, however, when there’s a change in the
scale, it is affected in the same ratio. In other words, if a and b are two constants related with the
variables x and y as y = a + bx, then the QD of y is given by QDy = b  QDx .
Relationship between SD, QD, and MD

1. 4SD = 5MD = 6QD
15
2. SD =  MD  QD – Question 143
8
3. Ratio between SD, MD, and QD = 15 : 12 : 10

CHAPTER 16 – PROBABILITY
Chapter 16 – Probability
FREE FAST TRACK LECTURES:
Link for Lecture 1 of Probability at 10:00 a.m.: https://youtu.be/5W4ylV61o20
Link for Lecture 2 of Probability at 10:00 a.m.: https://youtu.be/36XjUgvbtfs
Introduction
The result of a random experiment is known as an event or an outcome. Probability is the chance
of an outcome.
No. of Favourable Cases/Events/Outcomes
Probability =
Total No. of Cases/Events/Outcomes
Question 1
A coin is tossed. What is the probability that the outcome will be heads?
Solution
Total no. of outcomes = 2 (i.e., Heads, and Tails)
No. of favourable outcomes = 1 (i.e., heads)
1
Therefore, Probability =
2
Question 2
A dice is rolled. Find the probability for the following outcomes:
1. Number 1 appears
2. Number 4 appears
3. Even number appears
4. Odd number appears
5. Number greater than 4 appears
Solution
Total number of outcomes = 6 (i.e., 1, 2, 3, 4, 5, 6)
1. Number 1 appears
No. of favourable outcomes = 1 (i.e., 1)
1
6

2. Number 4 appears
No. of favourable outcomes = 1 (i.e., 4)
1
6
3. Even number appears
No. of favourable outcomes = 3 (i.e., 2, 4, 6)
3 1
Therefore, Probability = =
6 2
4. Odd number appears
No. of favourable outcomes = 3 (i.e., 1, 3, 5)
3 1
6 2
5. Number greater than 4 appears
No. of favourable outcomes = 2 (i.e., 5, 6)
2 1
6 3
Equally Likely Events or Mutually Symmetric Events or Equi-Probable

Events
If two or more events have the same probability, the events are said to be equally likely events.
For example, when a coin is tossed, the probability of getting heads is ½; also, the probability of
getting tails is also ½. Therefore, these two events are said to be equally likely.
Similarly, when a dice is thrown, the probability of getting either 1, or 2, or 3, or 4, or 5, or 6 is
1/6. Therefore, these events are known as equally likely events.
The events which have different probabilities are said “Not Equally Likely” events.
Impossible Events
Events which have zero probability are known as “Impossible Events”. For example, let today be
Monday. Now, the probability that tomorrow is going to be Wednesday is zero. Therefore, this
event is an impossible event.
Sure/Certain Events
Events which have 100% (or 1) probability are known as “Sure/Certain Events”. For example, let
today be Wednesday. Now, the probability that tomorrow is going to be Thursday is 100%, i.e. 1.
Therefore, this event is a sure/certain event.
From the above discussion on impossible and certain events, it can be seen that the probability
ranges from 0 to 1 (both inclusive). Probability can never be a negative number.

Mutually Exclusive Events or Incompatible Events

The events which cannot occur simultaneously are called mutually exclusive events. For example,
when a coin is tossed, there are a total of two outcomes – Heads, and Tails. However, these two
events cannot occur at the same time. If heads occur, tails would not occur; and if tails occur, heads
would not occur. Therefore, these two events are said to be mutually exclusive events. “Mutually
exclusive events” is technically defined as follows: when the occurrence of one event prevents the
occurrence of other event, such events are known as mutually exclusive events.
The events which can occur simultaneously are called “Not Mutually Exclusive” events. For
example, when a dice is rolled, the events “odd number occurs”, and “number 5 occurs” can occur
together. Therefore, these events are called “not mutually exclusive” events.
Sample Space
The set of all possible events is known as Sample Space. The sum of probabilities of every element
in the sample space is always 1. For example, when a coin is tossed, two events may occur – Heads,
or Tails. Therefore, the sample space is S: {H, T}. Now, the probability of heads is ½, and the
probability of tails is ½, and the sum total of this is ½ + ½ = 1. Therefore, we see that the probability
of the sample space is 1. Similarly, when a dice is rolled, 6 events may occur – 1, 2, 3, 4, 5, or 6.
Therefore, the sample space is S: {1, 2, 3, 4, 5, 6}. Now, the probability of each of these events is
1/6. Sum total of the probability of all the events is 1/6 + 1/6 + 1/6 + 1/6 + 1/6 + 1/6 = 1. Therefore,
again, we see that the probability of the sample space is 1.
Simple (or Elementary) and Composite (or Compound) Events

An event which cannot be split into two or more parts is known as a simple event. For example,
when a dice is thrown, the event “5 occurs” cannot be broken down into any more parts.
An event which can be broken down into two or more simple events is known as a composite
event. For example, when a dice is thrown, the event “odd number occurs” can be broken down
into two or more parts. This is because, if the numbers 1, 3, or 5 occur, they correspond to our
event “odd number occurs”. Therefore, the event “odd number occurs” can be broken down into 3
parts – “1 occurs”, “3 occurs”, and “5 occurs”. Similarly, on throwing of a dice, the event “number
more than 2 occurs” can be split into 4 parts – “3 occurs”, “4 occurs”, “5 occurs”, and “6 occurs”.
Therefore, the event “number more than 2 occurs” is also a composite event.
Exhaustive Events
If a coin is tossed, there are two possible events – Heads, or Tails. Now, one of these events will
necessarily occur when a coin is tossed. Such events are known as exhaustive events.
Classical Definition of Probability or a Prior Definition

Consider a random experiment with total number of outcomes denoted by n. Consider the event
denoted by A for which we have to find out the probability. Suppose the number of outcomes in
favour of event A is denoted by n A . Then Probability of event A is given by:

nA No.of equally likely events favourable to A

P ( A) = =
n Total no.of equally likely events
Now, instead of considering all the events, let’s consider only the mutually exclusive, exhaustive,
and equally likely events, denoted by m. Consider the event denoted by A for which we have to
find out the probability. Suppose the number of mutually exclusive, exhaustive, and equally likely
outcomes in favour of event A is denoted by mA . Then Probability of event A is given by:
mA No.of mutually exclusive, exhaustive, and equally likely events favourable to A

P ( A) = =
m Total no.of mutually exclusive, exhaustive, and equally likely events
Limitations or Demerits of Classical Definition of Probability

1. It is applicable only when the total no. of events is finite.
2. It can be used only when the events are equally likely or equi-probable.
3. This definition has only a limited field of application like
a. coin tossing,
b. dice throwing,
c. drawing cards etc.
where the possible events are known well in advance.
In the field of uncertainty or where no prior knowledge is provided, this definition is
inapplicable.
Properties
1. The probability of an event lies between 0 and 1, both inclusive, i.e. 0  P ( A)  1 .
When P ( A) = 0, A is known as an impossible event, and when P ( A) = 1, A is known as a
sure/certain event.
2. Non-occurrence of event A is denoted by A ' , or Ac , or A , and it is known as
complimentary event of A. (This is similar to the compliment of a set that we studied in set
theory.) The event A along with its complimentary A ' forms a set of mutually exclusive
and exhaustive events.
P ( A) + P ( A ') = 1
mA m − mA
 P ( A ') = 1 − P ( A ) = 1 − =
m m
m − mA
Therefore, P ( A ') =
m
3. The ratio of no. of favourable events to the no. of unfavourable events is known as odds in
favour of the event A and its inverse ratio is known as odds against the event A.
Odds in favour of A → mA : ( m − mA )
Odds against A → ( m − mA ) : mA
4. Computation of total number of outcomes when an experiment is repeated a certain number
of times:
When an experiment with total number of events a is repeated b number of times, the total
number of outcomes is given by a b .

Question 3
A coin is tossed three times. What is the probability of getting:
1. 2 heads
2. At least 2 heads
Solution
Here, the experiment is tossing of a coin, containing 2 outcomes – Heads and Tails. This
experiment is repeated 3 times. Therefore, total number of outcomes is 23 = 8.
The sample space for the given experiment is S: {(HHH), (HHT), (HTH), (HTT), (THH), (THT),
(TTH), (TTT)}
1. Probability of 2 heads
We can see that no. of events containing two heads are 3, i.e., HHT, HTH, THH.
Therefore, Probability = 3/8 = 0.375.
2. Probability of at least 2 heads
We can see that no. of events containing at least two heads are 4, i.e., HHH, HHT, HTH,
THH.
Therefore, Probability = 4/8 = 0.5.
Question 4
A dice is rolled twice. What is the probability of getting a difference of 2 points?
Solution
Here, the experiment is rolling of a dice, containing 6 outcomes. This experiment is repeated twice.
Therefore, total number of outcomes is 62 = 36.
Events in which the difference is of 2 points are {(1, 3), (2, 4), (3, 5), (4, 6), (3, 1), (4, 2), (5, 3),
(6, 4)}. Therefore, total number of outcomes in favour of the event = 8.
Therefore, probability = 8/36 = 0.22.
Question 5
Two dice are thrown simultaneously. Find the probability that the sum of points on the two dice
would be 7 or more.
Solution
Two dice are thrown simultaneously is the same as one dice being thrown twice. Therefore, the
total number of outcomes are 62 = 36.
The question asks the probability of the sum being 7 or more. We know that the highest sum can
be 12 when both the dice show 6. Now, a total of 7 or more, i.e., 7, or 8, or 9, or 10, or 11, or 12
can occur in the following combinations:
Condition Events Corresponding to Condition Total Events
Sum of 7 {(1, 6), (2, 5), (3, 4), (4, 3), (5, 2), (6, 1)} 6

Sum of 8 {(2, 6), (3, 5), (4, 4), (5, 3), (6, 2)} 5
Sum of 9 {(3, 6), (4, 5), (5, 4), (6, 3)} 4
Sum of 10 {(4, 6), (5, 5), (6, 4)} 3
Sum of 11 {(5, 6), (6, 5)} 2
Sum of 12 {(6, 6)} 1
Total 21
Question 6
What is the chance of picking a spade or an ace not of spade from a pack of 52 cards?
(a) 4/13 (b) 5/13 (c) 6/13 (d) 7/13
Solution
We know that in a pack of cards, we have:
Heart : 2, 3, 4, 5, 6, 7, 8, 9, 10, Jack, Queen, King, Ace = 13 Cards
Diamond : 2, 3, 4, 5, 6, 7, 8, 9, 10, Jack, Queen, King, Ace = 13 Cards
Spade : 2, 3, 4, 5, 6, 7, 8, 9, 10, Jack, Queen, King, Ace = 13 Cards
Club : 2, 3, 4, 5, 6, 7, 8, 9, 10, Jack, Queen, King, Ace = 13 Cards
Total 52 Cards
Therefore, probability of picking a spade = 13/52 = 0.25

Also, probability of picking an ace not of spade = 3/52 = 0.06
Therefore, probability of picking a spade or an ace not of spade = 0.25 + 0.06 = 0.31
Try the options:
Option (a) → 4/13
On calculator, we can see that 4/13 = 0.31. Therefore, option (a) is the answer.
Question 7
Find the probability that a four-digit number comprising the digits 2, 5, 6 and 7 would be divisible
by 4.
Solution
Total number of 4 digit numbers that can be formed from these 4 digits = 4! = 24.
Any number is divisible by four if the number formed by the last two digits of that number is
divisible by 4. For example, consider the number 45620. Now, the last two digits of this number
are 2, and 0. The number formed from these two digits is 20, which is divisible by 4. Therefore,
the number 45620 is also divisible by 4.
Now, we have 2, 5, 6, and 7. The two digit numbers that can be formed from these digits which
are divisible by 4 are 52, 56, 72, and 76. Therefore, we know that the last two digits could either
be 52, 56, 72, and 76. Therefore, there are 4 ways to fill the last two digits of a four-digit number.

Now, after filling the last two spaces, we’ll be left with the first two spaces and two digits to fill
them. Hence, the first two digits can be filled in 2! ways.
Therefore, the no. of 4 digit numbers that can be formed from the digits 2, 5, 6, and 7, which are
divisible by 4 is 2! × 4 = 8.
Question 8
A committee of 7 members is to be formed from a group comprising 8 gentlemen and 5 ladies.
What is the probability that the committee would comprise of:
1. 2 ladies,
2. At least 2 ladies.
(a) 140/429; 392/429 (b) 147/435; 392/429 (c) 140/429; 399/429 (d) 140/429; 392/478
Solution
There are 8 + 5 = 13 people in total. A committee of 7 members can be formed in 13

C7 =
13! 13!
= = 1,716 ways.
7!(13 − 7 )! 7!6!
1. Committee comprising of two ladies

No. of ways a committee can be formed consisting of 2 ladies = 5 C2  8C5 = 560 ways.
Therefore, the probability that the committee would comprise of 2 ladies = 560/1716 =
0.3263.
2. Committee comprising of at least two ladies
No. of ways a committee can be formed comprising at least two ladies:
Combinations Ladies Gents Total
2 ladies + 5 gents
5
C2 8
C5 5
C2  C5
8
560
3 ladies + 4 gents
5
C3 8
C4 5
C3  8C4 700
4 ladies + 3 gents
5
C4 8
C3 5
C4  C3
8
280
5 ladies + 2 gents C55
C2 8
C5  C2 5
28
8
Total 1,568
Therefore, the probability that the committee would comprise at least of 2 ladies =
1568/1716 = 0.9138
Now, try the options:
Option (a) → 140/429; 392/429
On calculator, 140/429 = 0.3263; and 392/429 = 0.9138. Therefore, option (a) is the answer.
Relative Frequency Definition of Probability

This is self-explanatory. Look at the question below:

Question 9
The following data relates to the distribution of wages of a group of workers:
Wages in ₹ 50 – 60 60 – 70 70 – 80 80 – 90 90 – 100 100 – 110 110 – 120
No. of workers 15 23 36 42 17 12 5
If a worker is selected at random from the entire group of workers, what is the probability that
1. his wage would be less than ₹50?
2. his wage would be less than ₹80?
3. his wage would be more than ₹100?
4. his wages would be between ₹70 and ₹100?
Solution
Total no. of workers = 15 + 23 + 36 + 42 + 17 + 12 + 5 = 150
1. Since there is no worker whose wage is less than ₹50, therefore, the probability is 0.
2. No. of workers whose wages are less than ₹80 = 15 + 23 + 36 = 74
Therefore, probability = 74/150 = 0.49
3. No. of workers whose wages are more than ₹100 = 12 + 5 = 17
4. No. of workers whose wages are between ₹70 and ₹100 = 36 + 42 + 17 = 95
Operations on Events – Set Theoretic Approach to Probability

Sample space represents the Universal Set, denoted by S or  . An event A is defined as a non-
n ( A)
empty subset of S. Then, probability of event A is given by: P ( A) = , where, n ( A ) is the
n(S )
cardinal number of the set A; and n ( S ) is the cardinal number of the set S.
Points to be Noted
1. Two events A and B are mutually exclusive, if A  B =  Therefore, P ( A  B ) = 0, or
P ( A  B ) = P ( A) + P ( B ) . Similarly, three events A, B, and C are mutually exclusive, if
P ( A  B  C ) = P ( A) + P ( B ) + P ( C ) .
2. Two events A and B are exhaustive, if P ( A  B ) = 1. Similarly, three events A, B, and C
are exhaustive, if P ( A  B  C ) = 1.
3. Three events A, B, and C are equally likely if P ( A) = P ( B ) = P ( C ) .
Question 10
Three events A, B and C are mutually exclusive, exhaustive and equally likely. What is the
probability of the complementary event of A?
Solution

Since all three events are mutually exclusive, we have
P ( A  B  C ) = P ( A) + P ( B ) + P ( C ) … Eq. (1)
Also, since all three events are exhaustive, we have
P ( A  B  C ) = 1 … Eq. (2)
Again, since all three events are equally likely, we have
P ( A) = P ( B ) = P ( C )
Let P ( A) = P ( B ) = P ( C ) = k … Eq. (3)
Combining equations (1) and (2), we have
P ( A) + P ( B ) + P ( C ) = 1 … Eq. (4)
Combining equations (3) and (4), we have

k + k + k =1
1
Therefore, 3k = 1  k =
3
1
Therefore, P ( A ) = P ( B ) = P ( C ) =
3
We know that P ( A) + P ( A ') = 1
1 2
Therefore, P ( A ') = 1 − P ( A ) = 1 − =
3 3
Axiomatic or Modern Definition of Probability

Important Theorems –
1. For any two mutually exclusive events A and B, the probability that either A or B occurs
is given by the sum of individual probabilities of A and B.
Consider two mutually exclusive events A and B. The probability that either A or B occurs
is given by P ( A  B ) = P ( A) + P ( B ) .
Refer Question 11.
2. For any k  2 mutually exclusive events A1 , A2 , A3 ,..., Ak , the probability that at least one
of them occurs is given by the sum of individual probabilities of the k events.
P ( A1  A2  A3  ...  Ak ) = P ( A1 ) + P ( A2 ) + P ( A3 ) + ... + P ( Ak )
3. For any two events A and B, the probability that either A or B occurs is given by the sum
of individual probabilities of A and B less the probability of simultaneous occurrence of
the events A and B.

P ( A  B ) = P ( A) + P ( B ) − P ( A  B )
Refer Question 12.
4. For any three events A, B and C, the probability that at least one of the events occurs is
given by P ( A  B  C ) = P ( A) + P ( B ) + P ( C ) − P ( A  B ) − P ( A  C ) −
P(B C) + P( A B C)
Refer Question 15.
Question 11
A number is selected from the first 25 natural numbers. What is the probability that it would be
divisible by 4 or 7?
Solution
We have n ( S ) = 25.
Let A be the event that the number is divisible by 4, and B be the event that the number is divisible
by 7.
Let’s find out if there’s any number which is divisible by both 4, as well as 7. The LCM of 4 and
7 is 28. Therefore, any number divisible by 28 is divisible by 4 as well as 7. However, our sample
space contains numbers only up to 25. Therefore, in our sample space, there cannot be any number
which is divisible by 4 as well as by 7. Hence, the events A and B are mutually exclusive.
Therefore, we’ll use the formula: P ( A  B ) = P ( A) + P ( B ) .
We have A = {4, 8, 12, 16, 20, 24}. Therefore, n ( A) = 6
We have B = {7, 14, 21}. Therefore, n ( B ) = 3
n ( A) 6
Therefore, P ( A) = =
n(S ) 25
n ( B) 3
P ( B) = =
n(S ) 25
6 3 9
Therefore, probability that either A or B occurs  P ( A  B ) = P ( A) + P ( B ) = + =
25 25 25
Question 12
A number is selected at random from the first 1000 natural numbers. What is the probability that
it would be a multiple of 5 or 9?
Solution
We have n ( S ) = 1000.

If a number is multiple of 5, that means it is divisible by 5. If a number is a multiple of 9, that

means it is divisible by 9.
Let A be the event that the number is divisible by 5.
Let B be the event that the number is divisible by 9.
Let’s find out if there’s any number which is divisible by both 5, as well as 9. The LCM of 5 and
9 is 45. Therefore, any number divisible by 45 is divisible by 5 as well as 9. Our sample space
contains numbers up to 1,000. Therefore, in our sample space, there will be many numbers which
are divisible by 5 as well as by 9. Therefore, the events A and B are NOT mutually exclusive.
Therefore, we’ll use the formula: P ( A  B ) = P ( A) + P ( B ) − P ( A  B ) .
( A  B) denotes the event that the number is divisible by 5 as well as by 9.
Therefore,
1000
No. of numbers divisible by 5 = = 200  n ( A) = 200
5
1000
No. of numbers divisible by 9 = = 111.11 = 111  n ( B ) = 111
9
1000
No. of numbers divisible both by 5 and 9 = = 22.22 = 22  n ( A  B ) = 22
45
Therefore,
n ( A) 200
P ( A) = = = 0.20
n(S ) 1000
n ( B) 111
P ( B) = = = 0.111
n(S ) 1000
n ( A  B) 22
P ( A  B) = = = 0.022
n(S ) 1000
P ( A  B ) = P ( A) + P ( B ) − P ( A  B ) = 0.20 + 0.111 − 0.022 = 0.289
Therefore, the probability that the number is a multiple of either 5 or 9 is 0.289.

Question 13
The probability that an Accountant's job applicant has a B. Com. Degree is 0.85, that he is a CA
is 0.30 and that he is both B. Com. and CA is 0.25. Out of 500 applicants, how many would be B.
Com. or CA?
Solution
We have n ( S ) = 500.

Let B be the event that the applicant has a B. Com degree.

Let C be the event that the applicant has a CA degree.
Then, ( B  C ) is the event that the applicant has both B. Com as well as CA degree.
Therefore, P ( B ) = 0.85 ; P ( C ) = 0.30 ; and P ( B  C ) = 0.25 .
P ( B  C ) = P ( B ) + P (C ) − P ( B  C )
P ( B  C ) = 0.85 + 0.30 − 0.25 = 0.90
Also,
n(B C) n(B C)

P(B C) =  0.90 =  n ( B  C ) = 500  0.90 = 450
n(S ) 500
Therefore, number of applicants who have B. Com as well as CA degree = 450. This is also known
as Expected Frequency.
Question 14
1 1 1
If P ( A − B ) = , P ( A ) = , and P ( B ) = , what is the probability that out of the two events A
5 3 2
and B, only B would occur?
(a) 11/30 (b) 12/30 (c) 13/30 (d) 14/30
Solution
Probability that only B occurs is denoted by P ( B − A ) , and is given by P ( B ) − P ( B  A) .
Similarly, probability that only A occurs is denoted by P ( A − B ) , and is given by

P ( A) − P ( A  B ) .
Therefore, we have P ( A − B ) = P ( A) − P ( A  B )
1 1 5−3 2
 P ( A  B ) = P ( A) − P ( A − B ) = − = =
3 5 15 15
Now, P ( B − A) = P ( B ) − P ( B  A)
1 2
 P ( B − A) = − = 0.37 Since P ( A  B ) = P ( B  A)
2 15
Now, try the options:
Option (a) → 11/30

On calculator, 11/30 = 0.37. Therefore, option (a) is the answer.

Question 15
There are three persons A, B and C having different ages. The probability that A survives another
5 years is 0.80, B survives another 5 years is 0.60 and C survives another 5 years is 0.50. The
probabilities that A and B survive another 5 years is 0.46, B and C survive another 5 years is 0.32
and A and C survive another 5 years 0.48. The probability that all these three persons survive
another 5 years is 0.26. Find the probability that at least one of them survives another 5 years.
Solution
We have P ( A) = 0.80 ; P ( B ) = 0.60 ; P ( C ) = 0.50 ; P ( A  B ) = 0.46 ; P ( B  C ) = 0.32 ;

P ( A  C ) = 0.48 ; P ( A  B  C ) = 0.26
We know that P ( A  B  C ) = P ( A) + P ( B ) + P ( C ) − P ( A  B ) − P ( A  C ) −
P(B C) + P( A B C)
Therefore, P ( A  B  C ) = 0.80 + 0.60 + 0.50 − 0.46 − 0.32 − 0.48 + 0.26 = 0.90
Conditional Probability and Compound Theorem of Probability

Independent and Dependent Events
Consider an example:
A bag consists of 5 red balls and 4 white balls. Let A be the event that a red ball is drawn, and B
be the event that a white ball is drawn. Now, a ball is drawn. The probability of event A (i.e., a red
ball is drawn) is 5/9. Now, the ball is put back in the bag, and once again, a ball is drawn. Now,
the probability of event B (i.e., a white ball is drawn) is 4/9.
Now, let’s start with the experiment all over again. A bag consists of 5 red balls and 4 white balls.
Let A be the event that a red ball is drawn, and B be the event that a white ball is drawn. Now, a
ball is drawn. The probability of event B (i.e., a white ball is drawn) is 4/9. Now, the ball is put
back in the bag, and once again, a ball is drawn. Now, the probability of event A (i.e., a red ball is
drawn) is 5/9.
We can see above that whether we calculate the probability of red ball first, or the white ball first,
it doesn’t make any difference. In other words, the probability of one event is not getting affected
because of the happening of another event. Such events are known as independent events.
Now, consider another example:
A bag consists of 5 red balls and 4 white balls. Let A be the event that a red ball is drawn, and B
be the event that a white ball is drawn. Now, a ball is drawn. The probability of event A (i.e., a red
ball is drawn) is 5/9. Now, another ball is drawn without putting the first ball back in. So, in total,
there are 8 balls in the bag now. Hence, the probability of event B (i.e., a white ball is drawn) is
4/8.

Now, let’s start with the experiment all over again. A bag consists of 5 red balls and 4 white balls.
Let A be the event that a red ball is drawn, and B be the event that a white ball is drawn. Now, a
ball is drawn. The probability of event B (i.e., a white ball is drawn) is 4/9. Now, another ball is
drawn without putting the first ball back in. So, in total, there are 8 balls in the bag now. Hence,
the probability of event A (i.e., a red ball is drawn) is 5/8.
We can see above that the probability of the events is getting affected because of the happening of
another event. When red ball was drawn first, its probability was 5/9, but when it was drawn
second, its probability became 5/8. Similarly, when white ball was drawn first, its probability was
4/9, but when it was drawn second, its probability became 4/8. Such events are known as dependent
events.
Rules of Probability When Events are Independent

1. P ( A  B ) = P ( A)  P ( B )
2. Probability of event A given that event B has already occurred is given by P(A/B):
P ( A  B)
P ( A / B) =
P ( B)
3. Probability of event B given that event A has already occurred is given by P(B/A):
P ( B  A)
P ( B / A) =
P ( A)
P ( A ' B ) P ( B) − P ( A  B)
4. P ( A '/ B ) = =
P ( B) P ( B)
P ( A  B ') P ( A) − P ( A  B )
5. P ( A / B ') = =
P ( B ') 1− P ( B)
P ( A ' B ') P ( A  B) ' 1− P ( A  B)
6. P ( A '/ B ') = = =
P ( B ') 1− P ( B) 1− P ( B)
7. Probability that only event A occurs: P ( A − B ) = P ( A) − P ( A  B )
8. Probability that only event B occurs: P ( B − A) = P ( B ) − P ( A  B )
9. Probability that only event A or only event B occurs: P ( A) + P ( B ) − 2P ( A  B )
Question 16
Rupesh is known to hit a target in 5 out of 9 shots whereas David is known to hit the same target
in 6 out of 11 shots. What is the probability that the target would be hit once they both try?
Solution
Let A be the event that Rupesh hits the target.
Let B be the event that David hits the target.
5 6
Then, P ( A ) = ; and P ( B ) =
9 11

Since both are independent events, P ( A  B ) = P ( A)  P ( B )
5 6 30
Therefore, P ( A  B ) =  =
9 11 99
Now, the probability that the target would be hit by at least one of them is given by P ( A  B ) .
We know that P ( A  B ) = P ( A) + P ( B ) − P ( A  B )
 5 6  30
Therefore, P ( A  B ) =  +  − = 0.80
 9 11  99
Question 17
A pair of dice is thrown together and the sum of points of the two dice is noted to be 10. What is
the probability that one of the two dice has shown the point 4?
Solution
Since the total is 10, the sample space is: S = {(4, 6), (5, 5), (6, 4)}. Therefore, n(S) = 3. Out of
this, there are two events, which have 4 in one of the dice. Therefore, probability = 2/3.
Question 18
In a group of 20 males and 15 females, 12 males and 8 females are service holders. What is the
probability that a person selected at random from the group is a service holder given that the
selected person is a male?
Solution
We have n ( S ) = 20 + 15 = 35
Let A be the event that the person is a service holder.

Let B be the event that the person is a male.
12 + 8 20 20
Therefore, P ( A ) = = ; P ( B) =
35 35 35
Also,
We have to determine the probability of event A given that event B has already occurred. Therefore,
we have to find out P ( A / B ) .
P ( A  B)
We know that P ( A / B ) = .
P ( B)
n ( A  B)
P ( A  B) =
n(S )

n ( A  B ) = male service holders = 12
n ( A  B) 12
Therefore, P ( A  B ) = =
n(S ) 35
P ( A  B) 12
35 = 12 = 0.60
Therefore, P ( A / B ) = =
P ( B) 20 20
35
Alternatively,
There are 20 males in total, and 12 males are service holders. Therefore, probability that the person
selected at random is a male and a service holder is 12/20 = 0.60.
Question 19
2 3
In connection with a random experiment, it is found that P ( A ) = , P ( B ) = , and
3 5
5
P ( A  B ) = . Evaluate the following probabilities:
6
1. P(A/B)
2. P(B/A)
3. P(A′/B)
4. P(A/B′)
5. P(A′/B′)
Solution
We know that P ( A  B ) = P ( A) + P ( B ) − P ( A  B )
2 3 5 13
Therefore, P ( A  B ) = P ( A ) + P ( B ) − P ( A  B ) = + − =
3 5 6 30
Now,
P ( A  B) 13
30 = 13
1. P ( A / B ) = =
P ( B) 3 18
5
P ( B  A ) 13 30 13
2. P ( B / A ) = = =
P ( A) 2 20
3
3 13
P ( A ' B ) P ( B ) − P ( A  B ) 5 − 30 5
3. P ( A '/ B ) = = = =
P ( B) P ( B) 3 18
5

2 13
P ( A  B ') P ( A) − P ( A  B ) −
4. P ( A / B ') = = = 3 30 = 7
P ( B ') 1− P ( B) 1−
3 12
5
5
P ( A ' B ') P ( A  B ) ' 1 − P ( A  B ) 1−
5. P ( A '/ B ') = = = = 6= 5
P ( B ') 1− P ( B) 1− P ( B) 1−
3 12
5
Question 20
The odds in favour of an event is 2 : 3 and the odds against another event is 3 : 7. Find the
probability that only one of the two events occur.
Solution
Let the two events be denoted by A and B.
Let m A denote the no. of events in favour A, mB denote the no. of events in favour of B, and m
denote the total number of events.
mA m
Therefore, P ( A ) = , and P ( B ) = A
m m
Also, odds in favour of event A = mA : ( m − mA )
mA 2 m 2
Therefore, =  3mA = 2 ( m − mA )  3mA = 2m − 2mA  5mA = 2m  A =
m − mA 3 m 5
mA 2
Therefore, P ( A ) = =
m 5
Also, odds against event B = ( m − mB ) : mB
m − mB 3 m 7
Therefore, =  7 ( m − mB ) = 3mB  7 m − 7 mB = 3mB  10mB = 7 m  B =
mB 7 m 10
mB 7
Therefore, P ( B ) = =
m 10
2 7 14
Since the events are independent, we have P ( A  B ) = P ( A )  P ( B ) =  = .
5 10 50
2 7  14  27
Probability that only one of the events occur: P ( A ) + P ( B ) − 2 P ( A  B ) = + −  2  =
5 10  50  50
Question 21
There are three boxes with the following compositions:

Colour Blue Red White Total

Box
I 5 8 10 23
II 4 9 8 21
III 3 6 7 16
One ball in drawn from each box. What is the probability that they would be of the same colour?
Solution
All the three balls would either be Blue or Red or White. Denoting Blue, Red and White balls by
B, R and W respectively and the box by lower suffix, the required probability is:
P ( B1  B2  B3 ) + P ( R1  R2  R3 ) + P (W1 W2 W3 )
=  P ( B1 )  P ( B2 )  P ( B3 ) +  P ( R1 )  P ( R2 )  P ( R3 ) +  P (W1 )  P (W2 )  P (W3 )
 5 4 3   8 9 6   10 8 7  1052
=   +   +    =
 23 21 16   23 21 16   23 21 16  7728
Random Variable – Probability Distribution

A random variable or stochastic variable is a function defined on a sample space associated with
a random experiment. A random variable is denoted by a capital letter.
Consider this example: A coin is tossed three times, and we assign X to denote the number of
heads. Here, X is known as the random variable. Here, the sample space is {(HHH), (HHT), (HTH),
(HTT), (THH), (THT), (TTH), (TTT)}. Each element in the sample space is known as a sample
point. For example, in the above sample space, “HHH” is a sample point; “HHT” is a sample point,
and so on. Now, looking at each of the sample points, we can determine the value of our random
variable X. In the sample point “HHH”, the value of the random variable X is 3, as there are three
heads; in the sample point “HHT”, the value of the random variable X is 2, as there are two heads;
in the sample point “HTH”, the value of the random variable X is 2, as there are two heads; in the
sample point “HTT”, the value of the random variable X is 1, as there is one head; in the sample
point “TTT”, the value of the random variable X is 0, as there are no heads; and so on.
Based on the above discussion, we have:
Sample Point HHH HHT HTH HTT THH THT TTH TTT
Value of Random Variable X 3 2 2 1 2 1 1 0
Now, the probability that the value of random variable X will be 3 is 1/8 (as the probability of three
heads is 1/8); the probability that the value of random variable X will be 2 is 3/8 (as the probability
of two heads is 3/8), and so on. Therefore, the probability distribution of the random variable is
given as follows:
X 0 1 2 3 Total
1 3 3 1
P 1
8 8 8 8
This tabular representation of the values of a random variable X and the corresponding
probabilities is known as its probability distribution.

Expected Value of a Random Variable

Important Formulae
1. Expected value (  ) of a random variable ( x ) is given by:  = E ( x ) =  pi xi
2. Expected value of ( x 2 ) is given by: E ( x 2 ) =   pi ( xi 2 ) 
3. Expected value of a monotonic function  g ( x )  is given by: E  g ( x ) =   pi g ( x )
4. Variance ( 2 ) of a random variable ( x ) is given by: V ( x ) =  2 = E ( x −  ) = E ( x 2 ) −  2

2
5. Standard Deviation ( ) of a random variable ( x ) is given by the positive square root of

the variance.
6. If a and b are two constants related with two random variables x and y as y = a + bx , then
the mean, i.e., the expected value of y is given by:  y = a + bx .
the standard deviation of y is given by:  y = b   x .
the variance of y is given by: ( y ) = ( b   x ) = ( b )  ( x ) .
2 2 2 2
Properties of Expected Value

1. Expectation of a constant k is k, i.e., E ( k ) = k , for any constant k.
2. Expectation of sum of two random variables is the sum of their expectations, i.e.,
E ( x + y ) = E ( x ) + E ( y ) , for any two random variables x and y.
3. Expectation of the product of a constant and a random variable is the product of the
constant and the expectation of the random variable, i.e., E ( kx ) = k .E ( x ) , for any constant
k.
4. Expectation of the product of two random variables is the product of the expectation of the
two random variables, provided the two variables are independent, i.e.,
E ( x  y ) = E ( x )  E ( y ) . This holds true whenever x and y are independent.
Question 22
An unbiased coin is tossed three times. Find the expected value of the number of heads and also
its standard deviation.
Solution
Let the number of heads be denoted by the random variable x. Therefore, probability distribution
of x is as follows:
x 0 1 2 3
1 3 3 1
p
8 8 8 8
The expected value of x is given by:

1  3  3  1 
 = E ( x ) =  pi xi =   0  +   1 +   2  +   3  = 1.50
8  8  8  8 
Variance of x is given by:
V ( x ) =  2 = E ( x −  ) = E ( x 2 ) −  2 , where, E ( x 2 ) =   pi ( xi 2 ) 
2
Calculation of E ( x 2 )
pi x xi 2 pi xi 2
0.125 0.000 0.000 0.000
0.375 1.000 1.000 0.375
0.375 2.000 4.000 1.500
0.125 3.000 9.000 1.125
Total   pi ( xi ) = 3.000

2
Therefore, V ( x ) =  = E ( x −  ) = E ( x 2 ) −  2 = 3 − (1.50 ) = 0.75

2 2 2
Standard Deviation ( ) = 0.75 = 0.87
Question 23
A random variable has the following probability distribution:
X 4 5 7 8 10
P 0.15 0.20 0.40 0.15 0.10
Find E  x − E ( x )  . Also, obtain v ( 3x − 4 ) .
2
Solution
To calculate E  x − E ( x )  , we first need to calculate E ( x ) =  pi xi .

2
Therefore, E ( x ) =  =  pi xi = ( 4  0.15) + ( 5  0.20 ) + ( 7  0.40 ) + (8  0.15) + (10  0.10 ) = 6.60
Now, E  x − E ( x )  is nothing but E  x −   , which is the variance of x.

2 2
x−  x −  pi  x −  
2 2
pi xi
0.150 4.000 –2.600 6.760 1.014
0.200 5.000 –1.600 2.560 0.512
0.400 7.000 0.400 0.160 0.064
0.150 8.000 1.400 1.960 0.294
0.100 10.000 3.400 11.560 1.156
 p x −  = 3.040
2
Total i
Therefore, variance of x, i.e., E  x − E ( x )  = E  x −   = 3.04

2 2

Now, we need to calculate v ( 3x − 4 ) . In this expression, “v” means the variance. Therefore, the
requirement is to calculate the variance of ( 3x − 4 ) . Let 3x − 4 be y.
Therefore, y = 3x − 4  y = −4 + 3x
We know that if a and b are two constants related with two random variables x and y as y = a + bx,
then the standard deviation of y is given by:  y = b   x . Therefore, variance of y is given by
( ) = ( b   )
2 2
y x .
In this equation, y = −4 + 3x , a = −4; b = 3
Therefore, ( y ) = ( b   x ) = 3  3.04 ( ) = ( 3)  ( )
2 2 2 2
= 9  3.04 = 27.36
2
3.04
Question 24
A random variable x has the following probability distribution:
x 0 1 2 3 4 5 6 7
P ( x) 0 2k 3k k 2k k2 7k 2 2k + k
2
Find:
1. the value of k.
2. P ( x  3)
3. P ( x  4 )
4. P ( 2  x  5)
Solution
1. We know that sum of probabilities is 1.
Therefore, 0 + 2k + 3k + k + 2k + k 2 + 7 k 2 + 2k 2 + k = 1
 10k 2 + 9k − 1 = 0  ( k + 1)(10k − 1) = 0  k = −1; 1
10
1
Since k can’t be negative, k = = 0.10.
10
2. P ( x  3) = P ( 0 ) + P (1) + P ( 2 ) = 0 + 2k + 3k = 5k = 5  0.10 = 0.50
3. P ( x  4 ) = P ( 4 ) + P ( 5) + P ( 6 ) + P ( 7 ) = 2k + k 2 + 7k 2 + 2k 2 + k = 2 ( 0.10 )
+ ( 0.10) + 7 ( 0.10 ) + 2 ( 0.10 ) + 0.10 = 0.40 .
2 2 2
4. P ( 2  x  5) = P ( 3) + P ( 4) + P ( 5) = k + 2k + k 2 = 0.10 + 2 ( 0.10 ) + ( 0.10 ) = 0.31

2

CHAPTER 17 – THEORETICAL DISTRIBUTIONS
Chapter 17 – Theoretical Distributions

FREE FAST TRACK Lectures:
Theoretical Distributions FAST TRACK Lecture 1: https://youtu.be/4qdwY_CT-QA
Theoretical Distributions FAST TRACK Lecture 2: https://youtu.be/PEd_XtPO5JQ
Binomial Distribution
Binomial Distribution is used to find out the probability where the total no. of outcomes is huge.
The probability is given by the following formula:
P ( x ) = nCx p x q n− x , for x = 0, 1, 2, 3, …, n
Here,
n = number of times the experiment is repeated
x = the requirement of the question
p = probability of success in each trial
q = probability of failure in each trial = 1 – p
Sometimes, P ( x ) is also written as f ( x ) . f ( x ) is called “Probability Mass Function”.
Conditions
Binomial distribution is applicable only if the following conditions are satisfied:
1. All the trials are independent, and
2. Each trial has only two outcomes.


Important Points
1. Binomial Distribution is applicable when the random variable (x) is discrete.
2. As n  0 , p, q  0 , therefore, f ( x )  0 for every x.
Also,  f ( x ) = f ( 0) + f (1) + f ( 2) + f (3) + ... + f ( n ) = 1
3. Binomial distribution is known as biparametric distribution as it is characterised by two
parameters n and p. This means that if the values of n and p are known, then the distribution
is known completely.
4. The mean of the binomial distribution is given by  = np .
5. Mode of a Binomial Distribution is given by 0 = ( n + 1) p
a. If the value of ( n + 1) p is an integer (i.e., without decimal part), then the binomial
distribution is said to have two modes. It is called a bi-modal binomial distribution.
The two modes are given by:
i. ( n + 1) p , and
ii. ( n + 1) p  − 1
Page 3.900 – Question 103
b. If the value of ( n + 1) p is a fraction (i.e., with a decimal part), then the binomial
distribution is said to have one mode. It is called a unimodal binomial distribution.
Its mode is given by the largest integer contained in ( n + 1) p.
Page 3.887 – Question 70
6. The variance of the binomial distribution is given by  2 = npq .
a. Variance of a binomial distribution is always less than its mean.
n
b. If p = q = 0.5, variance is the maximum, and is given by .
4
d. Page 3.879 – Question 53 – Homework
e. Page 3.875 – Question 45 – Homework
f. Page 3.872 – Question 41 – Homework
g. Page 3.871 – Question 39 – Homework
h. Page 3.867 – Question 30 – Homework
7. Standard Deviation of a binomial distribution is given by  = npq .
8. Additive property of binomial distribution:

Let x and y be two independent binomial distributions where x has the parameters n1 and
p, and y has the parameters n2 and p. Then ( x + y ) will be a binomial distribution with
parameters ( n1 + n2 ) and p.
9. Sometimes, Binomial Distribution is also written as B(n, p). So, if, in a question you find
something like “X~B(5, 0.4)”, it means that n = 5, and p = 0.4. Here, X denotes the
requirement of the question.
Poisson Distribution
Poisson Distribution is used to find out the probability where the total no. of outcomes is too huge
and the probability of success is extremely small. The probability is given by the following
formula:
e− m  m x
P ( x) = , for x = 0, 1, 2, 3, …, n
x!
Here,
e = exponential constant = 2.71828
m = mean = np
x = the requirement of the question
Sometimes, P ( x ) is also written as f ( x ) . f ( x ) is called “Probability Mass Function”.

Important Points
1. Poisson Distribution is applicable when the random variable (x) is discrete.
1
2. Since e − m = m  0, whatever may be the value of m (>0), it follows that f ( x )  0 for
e
every x.

Also,  f ( x ) = f ( 0) + f (1) + f ( 2) + f (3) + ... + f ( n ) = 1 .

3. Poisson distribution is known as a uniparametric distribution as it is characterised by only
one parameter m.
4. The mean of Poisson distribution is given by m, i.e.,  = m = np.
5. The variance of Poisson distribution is given by  2 = m = np.
6. The standard deviation of Poisson distribution is given by  = m = np .
b. Page 3.869 – Question 33 – Homework
7. Like binomial distribution, Poisson distribution could be also unimodal or bimodal
depending upon the value of the parameter m.
a. If m is an integer, there are two modes:
i. m
ii. m – 1
b. If m is a fraction, the mode is given by the largest integer contained in m.
8. Poisson approximation to Binomial distribution
When n is rather large and p is rather small so that m = np is moderate then
B ( n, p )  P ( m ) .
9. Additive property of Poisson distribution:
Let x and y be two independent poisson distributions where x has the parameter m1 , and y
has the parameter m2 . Then ( x + y) will be a poisson distribution with parameter
( m1 + m2 ) .
Applications
Poisson distribution is applied when the total number of events is quite large but the probability of
occurrence is extremely small. Thus, we can apply Poisson distribution for the following cases:
1. The distribution of the no. of printing mistakes per page of a large book.
2. The distribution of the no. of road accidents on a busy road per minute.
3. The distribution of the no. of radio-active elements per minute in a fusion process.
4. The distribution of the no. of demands per minute for health centre and so on.
Normal or Gaussian Distribution

 − ( x −  )2 
 
1  2 2 
P ( x) = f ( x) = .e  
, for –∞ < x < ∞
 2
Here,
e = exponential constant = 2.71828

x = random variable
μ = mean of the normal random variable x
σ = standard deviation of the given normal distribution
Sometimes, P ( x ) is also written as f ( x ) . f ( x ) is called “Probability Density Function”.

Important Points
1. Normal Distribution is applicable when the random variable (x) is continuous.
2. If we plot the probability function y = f ( x ) , then the curve, known as probability curve,
takes the following shape:
The area under this curve gives us the probability.

3. The area between –∞ and μ = the area between μ and ∞ = 0.5
 − z2 
1  2 
4. If μ = 0, and σ = 1, we have f ( z ) = e , for –∞ < z < ∞.
2
The random variable z is known as standard normal variate (or variable) or standard normal
x−
deviate. It is given by z = .

5. Normal distribution is bell shaped.
6. It is unimodal.
7. The normal distribution is known as biparametric distribution as it is characterised by two
parameters μ and σ2. Once the two parameters are known, the normal distribution is
completely specified.
8. Since the normal distribution is symmetrical about its mean (μ), Mean = Median = Mode.
9. Mean Deviation = 0.8σ.
10. Quartile Deviation = 0.675σ.
11. Q1 and Q3 are equidistant from the median, therefore,

a. Q1 =  − 0.675 , and
b. Q3 =  + 0.675 .
12. Median − Q1 = Q3 − Median.
13. The normal distribution is symmetric about x =  . Therefore, its skewness is zero, i.e., the
curve is neither tilted towards right (negatively skewed), nor towards left (positively
skewed).
14. Points of inflexion – A normal curve has two inflexion points, i.e., the points where the
curve changes its shape from concave to convex, and from convex to concave. These two
points are given by:
a. x =  −  , and
b. x =  + 

15. In a normal distribution, μ ± 1σ covers 68.27% of area, μ ± 2σ covers 95.45% of area, and
μ ± 3σ covers 99.73% of area.


c. Page 3.891 – Question 93 – Homework
16. Under a normal distribution, the area enclosed between mean (μ) and 1σ is 0.34135; mean
and 2σ is 0.47725; and mean and 3σ is 0.49865.
17. In case of normal distribution
a. Highest Value = Mean + Half of Range, and
b. Lowest Value = Mean – Half of Range
18. Normal Distribution with X = 0 , and  = 1 is known as Standard Normal Distribution.
19. The height of normal curve is maximum at the Mean Value.

CHAPTER 18 – CORRELATION AND REGRESSION – UNIT 1 – CORRELATION
Chapter 18 – Correlation and Regression

Link for FREE Fast Track Lectures:
Link for Lecture on Correlation: https://youtu.be/L2r7Ciu7-BM
Link for Lecture on Regression: https://youtu.be/XiZQNYcPE0o
Unit 1 – Correlation
Introduction
Consider two variables x and y. If we need to find out the extent of relationship between these two
variables, we take help of correlation. For example, the demand of a commodity in the market
depends upon a lot of factors, such as price, number of consumers in the market, income of the
people, changes in prices of related goods, and so on. If we need to find out the effect on demand
due to a change in say, price, then we’ll use correlation. Therefore, correlation is used to find out
the extent to which two variables are related to each other.
Correlation is expressed using r. The value of correlation ranges from –1 to +1, both inclusive.
Therefore, –1 ≤ r ≤ 1. If:
1. r = –1, it is called a perfect negative correlation
2. –1 < r < 0, it is called a negative correlation
3. r = 0, it is called no correlation
4. 0 < r < 1, it is called a positive correlation
5. r = +1, it is called a perfect positive correlation
Measures of Correlation
1. Scatter Diagram
2. Karl Pearson’s Product Moment Correlation Coefficient
3. Spearman’s Rank Correlation Co-efficient
4. Co-efficient of Concurrent Deviations
Scatter Diagram
In this method, points a plotted on a graph paper for different values of x and y. Thereafter, the
shape of the diagram on the graph determines the kind of correlation between those two variables.

Question 1
If the plotted points in a scatter diagram lie from upper left to lower right, then correlation is:
(a) Positive (b) Negative (c) Zero (d) None of These

(November, 2019)
Solution
As can be seen from the diagrams above, if the points lie from upward to downward right, it is a
perfect negative correlation. Therefore, option (b) is the answer.
Karl Pearson’s Product Moment Correlation Coefficient

There are two methods to find out the correlation coefficient in this method:
1. Direct Method
2. Assumed Mean Method
Direct Method
Cov ( x, y ) Cov ( x, y )
Correlation coefficient is given by r = rxy = =
Sx  S y  x  y
Here,
1. Cov ( x, y ) means co-variance of x and y, and is given by:
Cov ( x, y ) =
 ( x − x )( y − y ) =  x y
i i
− x.y i i
n n
2. S x means the standard deviation of x ( x ) , and is given by:
( x − x ) x
2 2
Sx = i
= i
− x2
n n
3. S y means the standard deviation of y ( y ) , and is given by:
( y − y ) y
2 2
Sy = i
= i
− y2
n n
Alternatively, Correlation coefficient can also be directly calculated using the following formula:
n xi yi −  xi   yi
Correlation coefficient is given by r =
n xi 2 − (  xi ) n yi 2 − (  yi )
2 2


Assumed Mean Method

n dxi dyi −  dxi   dyi
Correlation coefficient is given by r = , where,
n dxi − (  dx ) n dyi − (  dy )
2 2
2 2
i i
dxi = xi − x ; dyi = yi − y , and x is the assumed mean of x, and y is the assumed mean of y.

Properties
1. Karl Pearson’s method is the best method for finding correlation between two variables
provided the relationship between the two variables is linear.
2. The Coefficient of Correlation is a unit-free measure.
3. The coefficient of correlation remains invariant under a change of origin and/or scale of
the variables under consideration depending on the sign of scale factors.
In other words, let there be two variables x and y. Let the correlation coefficient between
them be rxy . Now, if they are changed to another set of variables, say, u and v, then,
ruv = rxy , if b and d have the same sign, or
ruv = − rxy , if b and d have opposite signs.
Here,
−Coefficient of u −Coefficient of v
b= , and d =
Coefficient of x Coefficient of y

Spearman’s Rank Correlation Coefficient

This method is used to find the correlation between two qualitative characteristics, say, beauty and
intelligence. Let’s see the following questions to understand Spearman’s Rank Correlation
Coefficient.
Question 2
Compute the coefficient of rank correlation between sales and advertisement expressed in
thousands of rupees from the following data:
Sales 90 85 68 75 82 80 95 70
Advertisement 7 6 2 3 4 5 8 1

Solution
Let sales be denoted by x, and advertisement be denoted with y. The largest value of x is given the
rank 1, and thereafter, the next largest value is given the rank 2, and so on. Rank of x is denoted
by Rx. Similarly, largest value of y is given the rank 1, and thereafter, the next largest value is given
the rank 2, and so on. Rank of y is denoted by Ry. Thereafter, the difference between the two ranks
is calculated, which is denoted by d.
Following table is prepared:
x y Rx Ry d = Rx – Ry d2
90 7 2 2 0 0
85 6 3 3 0 0
68 2 8 7 1 1
75 3 6 6 0 0
82 4 4 5 –1 1
80 5 5 4 1 1
95 8 1 1 0 0
70 1 7 8 –1 1
Total 4
6 d i 2
Spearman’s Rank Correlation Coefficient is given by rR = 1 − .
n ( n 2 − 1)
6 di 2 6 4 24
Therefore, rR = 1 − = 1− = 1− = 0.95
n ( n − 1)
2
8 (8 − 1)
2
8 ( 64 − 1)

Co-efficient of Concurrent Deviations

This method is used when we are not serious about the magnitude of the two variables, i.e., we
just need to determine whether there exists a positive or a negative correlation. Let’s understand it
with the help of a question.

Question 3
Find the coefficient of concurrent deviations from the following data:
Year 1990 1991 1992 1993 1994 1995 1996 1997
Price 25 28 30 23 35 38 39 42
Demand 35 34 35 30 29 28 26 23
Solution
We’ll make a list of price as follows:
Price Sign of deviation from the previous figure
25
28 +
30 +
23 –
35 +
38 +
39 +
42 +
In the above table, the second column shows the sign of deviation from the previous figure. Look
at the second figure in the column “Price”. This figure is more than the previous figure, and hence
a positive sign is attached to it in the second column. Now, look at the third figure in the column
“Price”. Again, since it is more than the second figure, a positive sign is attached to it in the
corresponding column. Now, look at the fourth figure in the column “Price”. Here, this figure is
less than the previous figure. Therefore, a negative sign is attached to it in the corresponding
column. Similarly, signs have been attached to each figure of “Price” (except the first one),
depending upon whether it is more or less than its preceding figure.
Similarly, following is the list of demand and the corresponding signs of deviations:
Demand Sign of deviation from the previous figure
35
34 –
35 +
30 –
29 –
28 –
26 –
23 –
Putting these tables together, we get:
Year Price Sign of deviation Demand Sign of deviation Product of
from the previous from the previous deviation (a ×
figure (a) figure (b) b)
1990 25 35
1991 28 + 34 – –
1992 30 + 35 + +
1993 23 – 30 – +

1994 35 + 29 – –
1995 38 + 28 – –
1996 39 + 26 – –
1997 42 + 23 – –
From the above table, we can see that we have calculated the deviations 7 times. These are called
the total number of deviations, denoted by the letter m. Therefore, m = 7.
It can also be seen that the last column (product of deviation) contains 2 positive signs. These are
known as the concurrent deviations, denoted by the letter c. Therefore, c = 2.
The coefficient of concurrent deviation is given by:
( 2c − m ) , if
rc = ( 2c − m )  0 ; or
m
( 2c − m ) , if
rc = − − ( 2c − m)  0 .
m
In our question, we have 2c − m = 2 ( 2 ) − 7 = 4 − 7 = −3 .
Since ( 2c − m )  0 , the coefficient of concurrent deviation is given by:
rc = − −
( 2c − m ) = − −
−3
=−
3
= −0.65
m 7 7
Therefore, there is a negative correlation between Price and Demand.

CHAPTER 18 – CORRELATION AND REGRESSION – UNIT 2 – REGRESSION
Unit 2 – Regression
Introduction
In regression analysis, we are concerned with the estimation of one variable for a given value of
another variable on the basis of an average mathematical relationship between the two variables.
For example, consider the following data:
x y
2 5
4 9
6 13
8 17
We can see that the values of y are related to the values of x by y = 2x + 1. Using this, we can easily
find out the value of y for any given value of x. Similarly, y = 2x + 1  2x = y – 1  x = (y – 1)/2.
Using this, we can easily find out the value of x for any given value of y.
When there are two variables x and y and if y is influenced by x i.e. if y depends on x, then we get
a simple linear regression or simple regression. y is known as dependent variable or regression or
explained variable and x is known as independent variable or predictor or explanator.
In case of a simple regression model:
1. if y depends on x, then the regression line of y on x is given by y = a + bx , where,
n xi yi − (  xi )(  yi ) y Cov ( x, y )
a. b = byx = , or, byx = r , or, byx = , and
n xi 2 − (  xi ) x ( x )
2 2
b. a = ayx = y − ( x  byx )
byx is known as the regression coefficient.
2. if x depends on y, then the regression line of x on y is given by x = a + by , where,
n xi yi − (  xi )(  yi ) x Cov ( x, y )
a. b = bxy = , or, bxy = r , or, bxy = , and
n yi 2 − (  yi ) y ( y)
2 2

b. a = axy = x − ( y  bxy )
bxy is known as the regression coefficient.


Properties
1. The two lines of regression intersect at the point ( x , y ) , where x and y are the variables
under consideration. We know that the point of intersection of two straight lines can be
obtained by solving the equations of those lines simultaneously. Therefore, on solving the
two regression equations simultaneously, we arrive at ( x , y ) .
e. Page 3.912 – Question 13
2. The coefficient of correlation between two variables x and y is the simple geometric mean
of the two regression coefficients. The sign of the correlation coefficient would be the
common sign of the two regression coefficients.
r =  byx  bxy
If both the regression coefficients are negative, r would be negative and if both are positive,
r would assume a positive value.
e. Page 3.943 – Question 71
f. Page 3.942 – Question 70
g. Page 3.941 – Question 67
h. Page 3.939 – Question 64
i. Page 3.938 – Question 62
j. Page 3.936 – Question 57
k. Page 3.933 – Question 53
l. Page 3.931 – Question 47
m. Page 3.929 – Question 44
n. Page 3.927 – Question 39
o. Page 3.924 – Question 34
p. /Page 3.922 – Question 30
q. Page 3.920 – Question 27
r. Page 3.917 – Question 24
s. Page 3.916 – Question 22
t. Page 3.914 – Question 18
u. Page 3.907 – Question 5
v. Page 3.919 – Question 25

Probable Error
1− r2
Probable Error (P.E.) is given by P.E. = 0.674 
n
Limits of the correlation coefficient of the population is given by p = r  P.E.

Important Points
1. If r < P.E., there is no evidence of correlation.
2. If the value of r is more than 6 times of the probable error, then the presence of correlation
coefficient is certain.
3. Since r lies between –1 and +1 (–1 < r < 1), the probable error is never negative, i.e.,
Probable Error is always a positive figure.
4. Coefficient of Determination ( r 2 ) =
Explained Variance
Total Variance
5. Coefficient of Non-Determination = 1 − r 2
6. The two lines of regression coincide, i.e., become identical when r = –1 or 1. In other
words, if there is a perfect negative or positive correlation between the two variables under
discussion, the two lines of regression coincide.
7. If r = 0, regression lines are perpendicular to each other.
8. If two variables x and y are independent or uncorrelated, then, obviously, the correlation
coefficient between x and y is zero. However, the converse of this statement is not
necessarily true, i.e., if the correlation coefficient, due to Pearson, between two variables
comes out to be zero, then we cannot conclude that the two variables are independent. All
we can conclude is that no linear relationship exists between the two variables. This,
however, does not rule out the existence of some non-linear relationship between the two
variables.


CHAPTER 19 – INDEX NUMBERS AND TIME SERIES – UNIT 1 – INDEX NUMBERS
Chapter 19 – Index Numbers and Time

Series
Lecture 1 of Index Numbers and Time Series: https://youtu.be/SdxyWarJr44
Lecture 2 of Index Numbers and Time Series: https://youtu.be/JTm35qRWl8w
Unit 1 – Index Numbers
Introduction
An index number is a ratio of two or more time periods, one of which is the base time period. The
value at the base time period serves as the standard point of comparison.
The base time period is that time period from which the comparisons are to be made. For example,
in 2009 the price of a McAloo Tikki burger was ₹20; in 2020, it’s ₹40. Now, if I need to compare
the price of 2020 with the price of 2009, 2009 will be the base time period, and 2020 will be current
time period. The price in the base time period is denoted as P0 . The price in the current time period
is denoted as P1. The ratio of the price of the current period (2020, i.e., P1 ) to the price of the base
period (or reference period, i.e., 2009, i.e., P0 ), is known as the Price Relative, and is denoted as
P1
P01 . Therefore, P01 = .
P0
Pn
Therefore, Price Relative = . It is expressed as a percentage as follows: Price Relative
P0
Pn
=  100.
P0


Simple Aggregative Method
Simple Aggregative Price Index = 

Pn
100
P 0

1. Question 38
Simple Average of Price Relatives

 P1 
  P 100 
Index =  0 
N
Weighted Average Method

In this method, we assign a weight to the prices of the commodities. Thereafter, the average is
calculated as follows:
𝑆𝑢𝑚 𝑜𝑓 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑠
𝐺𝑒𝑛𝑒𝑟𝑎𝑙 𝐼𝑛𝑑𝑒𝑥 =
𝑆𝑢𝑚 𝑜𝑓 𝑊𝑒𝑖𝑔ℎ𝑡𝑠

1. Question 8
The weights are usually the quantities of the commodities. These indices can be classified into two
broad groups:
1. Weighted Aggregative Index
2. Weighted Average of Relatives
Weighted Aggregative Index

In this method, weights are assigned to the prices of the commodities. The weights are usually
either the quantities or the value of goods, sold either during the base year, or the given year, or an
average of some years. Various alternative formulae used are as follows:
1. Laspeyres’ Index: In this Index, base year quantities are used as weights:
Laspeyres Index =  n 0 100

PQ
 P0Q0
Questions to be solved from Scanner:
a. Question 93
b. Question 2 – Homework

c. Question 62
d. Question 80 – Homework
e. Question 88 – Homework
2. Paasche’s Index: In this Index current year quantities are used as weights:
Passche's Index =  n n 100

PQ
 P0Qn
a. Question 65
c. Question 32 – Homework
d. Question 42 – Homework
3. Methods based on some typical Period:
Index =  n t 100 , where t stands for some typical period of years, the quantities of
PQ
 P0Qt
which are used as weights.
The Marshall-Edgeworth index uses this method by taking the average of the base year and
the current year.
Marshall-Edgeworth Index =  n 0
P ( Q + Qn )
100
 P0 ( Q0 + Qn )
a. Question 11
4. Bowley’s Price Index: This index is the arithmetic mean of Laspeyres’ and Paasche’s.
Laspeyres' + Paasche's
Bowley’s Index =
2
a. Question 47
b. Question 30
5. Fisher’s ideal Price Index: This index is the geometric mean of Laspeyres’ and Paasche’s.
Fisher's Index =
PQ  PQ
n 0 n n
100
PQ PQ
0 0 0 n

a. Question 86
c. Question 43
d. Question 55
e. Question 41 – Homework
f. Question 6
g. Question 16
Weighted Average of Relatives

In this method, weighted arithmetic mean is used to calculate the index.

 Pn 
  P  ( P Q )
0 0
Index =  0   100
PQ 0 0
The Chain Index Numbers

Till now, we have been taking a fixed base; however, when conditions change rapidly, the fixed
base does not suit the required needs. In such a case, changing base is more suitable. For example,
the base for the year 1999 could be 1998; the base for the year 2000 could be 1999 (not 1998), the
base for the year 2001 could be 2000 (neither 1998, nor 1999), and so on. If it is desired to associate
these relatives to a common base, the results are chained. Thus, under this method the relatives of
each year are first related to the preceding year, called the link relatives, and then they are chained
together by successive multiplication to form a chain index.
𝐿𝑖𝑛𝑘 𝑅𝑒𝑙𝑎𝑡𝑖𝑣𝑒 𝑜𝑓 𝑡ℎ𝑒 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑌𝑒𝑎𝑟 × 𝐶ℎ𝑎𝑖𝑛 𝐼𝑛𝑑𝑒𝑥 𝑜𝑓 𝑡ℎ𝑒 𝑃𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝑌𝑒𝑎𝑟
𝐶ℎ𝑎𝑖𝑛 𝐼𝑛𝑑𝑒𝑥 =
100
For example,
Year Price Link Relatives Chain Indices
(Taking Previous Year as Base Year) (Taking 1991 as Base Year)
1991 50 100.00 100.00
60 120
1992 60  100 = 120.00  100 = 120.00
50 100
62 103.33
1993 62  100 = 103.33 120 = 124.00
60 100
65 104.84
1994 65  100 = 104.84 124 = 129.90
62 100
Quantity Index Numbers

1. Simple Aggregate of Quantities
Index =  n 100
Q
 Q0
2. Simple Average of Quantity Relatives:
 Qn
Index =  0 100
Q
n
3. Weighted Aggregate Quantity Indices:
a. With base year weight (Laspeyre’s index)
Index =  n 0 100
QP
 Q0 P0
b. With current year weight (Paasche’s index)

Index = 
Qn Pn
100
Q P 0 n
c. Fisher’s Ideal (Geometric mean of the above)
Index =
Q P  Q P
n 0 n n
100
Q P Q P
0 0 0 n
4. Base-year weighted average of quantity relatives

Q 
  Qn  ( P0Q0 )
Index =  0   100
 P0Q0
Value Indices
Value = Price × Quantity
Value Index =  PQ

Vn
= n n
V 0 PQ0 0
Limitations and Usefulness of Index Numbers

Limitations
1. As the indices are constructed mostly from deliberate samples, chances of errors creeping
in cannot be always avoided.
2. Since index numbers are based on some selected items, they simply depict the broad trend
and not the real picture.
3. Since many methods are employed for constructing index numbers, the result gives
different values and this at times creates confusion.
Usefulness
1. Framing suitable policies in economics and business: They provide guidelines to make
decisions in measuring intelligence quotients, research etc.
2. They reveal trends and tendencies in making important conclusions in cyclical forces,
irregular forces, etc.
3. They are important in forecasting future economic activity. They are used in time series
analysis to study long-term trend, seasonal variations and cyclical developments.
4. Index numbers are very useful in deflating i.e., they are used to adjust the original data for
price changes and thus transform nominal wages into real wages.
5. Cost of living index numbers measure changes in the cost of living over a given period.
Deflating Time Series Using Index Numbers

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑉𝑎𝑙𝑢𝑒
𝐷𝑒𝑓𝑙𝑎𝑡𝑒𝑑 𝑉𝑎𝑙𝑢𝑒 =
𝑃𝑟𝑖𝑐𝑒 𝐼𝑛𝑑𝑒𝑥 𝑜𝑓 𝑡ℎ𝑒 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑌𝑒𝑎𝑟
or

𝐵𝑎𝑠𝑒 𝑃𝑟𝑖𝑐𝑒 (𝑃0 )

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑉𝑎𝑙𝑢𝑒 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑃𝑟𝑖𝑐𝑒 (𝑃𝑛 )
Year Wholesale Price Gross National Product at Real Gross National
Index Current Prices Product
7499
1970 113.1 7499  100 = 6630
113.1
7935
1971 116.3 7935  100 = 6823
116.3
8657
1972 121.2 8657 100 = 7143
121.2
9323
1973 127.7 9323  100 = 7301
127.7
10. Page 3.966 – Question 63 - Homework
Shifting and Splicing of Index Numbers

Shifting of Index Numbers
𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑃𝑟𝑖𝑐𝑒 𝐼𝑛𝑑𝑒𝑥
𝑆ℎ𝑖𝑓𝑡𝑒𝑑 𝑃𝑟𝑖𝑐𝑒 𝐼𝑛𝑑𝑒𝑥 = × 100
𝑃𝑟𝑖𝑐𝑒 𝐼𝑛𝑑𝑒𝑥 𝑜𝑓 𝑡ℎ𝑒 𝑌𝑒𝑎𝑟 𝑜𝑛 𝑤ℎ𝑖𝑐ℎ 𝑖𝑡 ℎ𝑎𝑠 𝑡𝑜 𝑏𝑒 𝑠ℎ𝑖𝑓𝑡𝑒𝑑
Year Original Price Index Shifted Price Index to Base 1990
125
1988 125 100 = 89.3
140
131
1989 131 100 = 93.6
140
140
1990 140 100 = 100.0
140
147
1991 147 100 = 105.0
140
Splicing of Index Numbers
Splicing means combining two index covering different bases into a single series. Splicing two
sets of price index numbers covering different periods of time is usually required when there is a
major change in quantity weights. It may also be necessary on account of a new method of
calculation or the inclusion of new commodity in the index.

Year Old Price Index Revised Price Index Spliced Price Index
[1900 = 100] [1995 = 100] [1995 = 100]
100
1990 100.0 100 = 87.6
114.2
102.3
1991 102.3 100 = 89.6
114.2
105.3
1992 105.3 100 = 92.2
114.2
107.6
1993 107.6 100 = 94.2
114.2
111.9
1994 111.9 100 = 98.0
114.2
1995 114.2 100.0 100.0
1996 102.5 102.5
1997 106.4 106.4
1998 108.3 108.3
1999 111.7 111.7
2000 117.8 117.8
Test of Adequacy
There are four tests:
1. Unit Test –
a. This test requires that the formula should be independent of the unit in which (or,
for which) prices and quantities are quoted.
b. All the formulae satisfy this test, except for the simple (unweighted) aggregative
index.
2. Time Reversal Test –
a. It is a test to determine whether a given method will work both ways in time,
forward and backward.
b. The test provides that the formula for calculating the index number should be such
that two ratios, the current on the base and the base on the current should multiply
into unity.
c. In other words, the two indices should be reciprocals of each other. Symbolically,
P P
P01  P10 = 1 , where, P01 = 1 , and P10 = 0 .
P0 P1
d. Check of Different Methods
i. Laspeyres’ method
P01 =
 PQ
1 0
, P10 =  0 0
PQ
 P0Q0  PQ
1 0
P01  P10 =
 PQ   P Q
1 0 0 0
1
 P Q  PQ
0 0 1 0
Therefore, Laspeyres’ Method does not satisfy this test.

ii. Paasche’s method
P01 =
 PQ
1 n
, P10 =  0 n
PQ
 P0Qn  PQ
1 n
P01  P10 =
 PQ   P Q1 n 0 n
1
 P Q  PQ 0 n 1 n
Therefore, Paasche’s Method does not satisfy this test.

iii. Fisher’s Ideal
P01 =
 PQ   PQ , P 1 0 1 1
=
PQ  PQ
0 1 0 0
PQ PQ  PQ  PQ
10
0 0 0 1 1 1 1 0
P01 P =
 PQ   PQ 1 0 1 1

PQ  PQ
0 1 0 0
=1
PQ PQ  PQ  PQ
10
0 0 0 1 1 1 1 0
Therefore, Fisher’s Idea does satisfy this test.

3. Factor Reversal Test –
a. This states that the product of price index and the quantity index should be equal to
the corresponding value index, i.e.,  1 1 .

PQ
 P0Q0
b. Symbolically, P01  Q01 = V01 .
c. Check for Fisher’s Method
P01 =
 PQ   PQ , Q =  Q P   Q P
1 0 1 1 1 0 1 1
PQ PQ Q P Q P
01
0 0 0 1 0 0 0 1
P01 Q =
 PQ   PQ   Q P   Q P
1 0 1 1 1 0 1 1
 P Q  P Q Q P Q P
01
0 0 0 1 0 0 0 1
P01 Q =
 PQ   PQ   Q P   Q P
1 0 1 1 1 0 1 1
 P Q  P Q Q P Q P
01
0 0 0 1 0 0 0 1
(  PQ )
2
Q =
1 1
P01
( P Q )
01 2
0 0
P01 Q =
 PQ 1 1
PQ
01
0 0
Therefore, Fisher’s Method satisfies this test as well.

d. While selecting an appropriate index formula, the Time Reversal Test and the
Factor Reversal test are considered necessary in testing the consistency.
e. Since Fisher’s Index number satisfies both the tests (Time Reversal, as well as
Factor Reversal), it is called an Ideal Index Number.
4. Circular Test –
a. As per this test, P01  P12  P20 = 1 .
For example,
Question

If the 1970 index with base 1965 is 200, and 1965 index with base 1960 is 150,
what will be the index of 1970 on base 1960?
(May, 2018)
Solution
Let the year 1960 be P0 , the year 1965 be P1 , and the year 1970 be P2 .
We need to find out the index of 1970 ( P2 ) , on base 1960 ( P0 ) . Therefore, we need
to find P02 .
As per the question,
i. the 1970 index with base 1965 is 200. This means that P12 = 200.
ii. the 1965 index with base 1960 is 150. This means that P01 = 150.
As per the circular test, we know that P01  P12  P20 = 1 .
1 1
Therefore, 150  200  P20 = 1  P20 = 100 = .
150  200 300
1
Therefore, P02 = = 300.
P20
b. Therefore, this property enables us to adjust the index values from period to period
without referring to the original base every time.
c. The test of this shiftability of base is called the circular test.
d. This test is not met by Laspeyres, or Paasche’s or the Fisher’s ideal index.
e. The simple geometric mean of price relatives and the weighted aggregative with
fixed weights meet this test.

CHAPTER 19 – INDEX NUMBERS AND TIME SERIES – UNIT 2 – TIME SERIES
Unit 2 – Time Series
Introduction
A Time Series is a set of observations taken at specified times, usually at equal intervals.
Components of Time Series

There are various forces that affect the values of a phenomenon in a time series; these may be
broadly divided into the following four categories, commonly known as the components of a time
series.
1. Long term movement or Secular Trend
2. Seasonal variations
3. Cyclical variations
4. Random or irregular variations
Long term movement or Secular Trend or Simple Trend

1. Secular trend is the long-term tendency of the time series to move in an upward or
downward direction.
2. It indicates how it has behaved over the entire period under reference.
3. A general tendency of a variable to increase, decrease or remain constant in long term is
called trend of a variable. However, in a small interval of time, the variable may increase
or decrease.
4. Some examples are:
a. Population of a country has an increasing trend over the years.
b. Due to modern technology, agricultural and industrial production is increasing.
c. Due to modern technology and health facilities, death rate is decreasing and life
expectancy is increasing.
5. These are results of long-term forces that gradually operate on the time series variable.
6. A few examples of theses long term forces (which make a time series to move in any
direction over long period of the time) are:
a. long term changes per capita income,
b. technological improvements of growth of population,
c. changes in Social norms etc.
7. Most of the time series relating to Economic, Business and Commerce might show
a. an upward tendency in case of
i. population,
ii. production & sales of products,
iii. incomes,
iv. prices; or
b. a downward tendency in case of
i. share prices,

ii. death,
iii. birth rate etc.
due to global meltdown, or improvement in medical facilities etc.
Seasonal Variations
1. Over a span of one year, seasonal variation takes place due to the rhythmic forces which
operate in a regular and periodic manner.
2. These forces have the same or almost similar pattern year after year.
3. It is common knowledge that the value of many variables depends in part on the time of
year.
4. For Example, Seasonal variations could be seen and calculated if the data are recorded
quarterly, monthly, weekly, daily or hourly basis.
5. So, if in a time series data, only annual figures are given, there will be no seasonal
variations.
6. The seasonal variations may be due to various seasons or weather conditions; for example,
sale of cold drink would go up in summers & go down in winters.
7. These variations may also be due to
a. man-made conventions,
b. habits,
c. customs, or
d. traditions.
For example, sales might go up during Diwali & Christmas or sales of restaurants &
eateries might go down during Navratri’s.
8. The methods of seasonal variations are:
a. Simple Average Method
b. Ratio to Trend Method
c. Ratio to Moving Average Method
d. Link Relatives Method
Cyclical variations
1. Cyclical variations are the periodic movements. These are also generally termed as
business cycles.
2. These variations in a time series are due to ups & downs recurring after a period from
Season to Season.
3. Though they are more or less regular, they may not be uniformly periodic.
4. These are oscillatory movements which are present in any business activity, and is termed
as business cycle.
5. It has got four phases consisting of
a. prosperity (boom),
b. recession,
c. depression, and
d. recovery.
6. All these phases together may last from 7 to 9 years may be less or more.
Random or Irregular Variations

1. These are irregular variations which occur on account of random external events.

2. These variations either go very deep downward or too high upward to attain peaks abruptly.
3. These fluctuations are a result of unforeseen and unpredictable forces which operate in
absolutely random or erratic manner.
4. They do not have any definite pattern and it cannot be predicted in advance.
5. These variations are due to floods, wars, famines, earthquakes, strikes, lockouts, epidemics
etc.
Models of Time Series

There are two models which are generally used for decomposition of time series into its four
components. The objective is to estimate and separate the four types of variations and to bring out
the relative impact of each on the overall behaviour of the time series.
1. Additive model
2. Multiplicative model
Additive Model
In additive model, it is assumed that the four components are independent of one another. Under
this assumption, the four components are arithmetically additive, i.e., magnitude of time series is
the sum of the separate influences of its four components, i.e., Yt = T + C + S + I , where,
Yt is time series;
T is trend variation;
C is cyclical variation;
S is seasonal variation;
I is random or irregular variation.
Multiplicative Model
In this model, it is assumed that the forces that give rise to four types of variations are
interdependent, so that the overall pattern of variations in the time series is a combined result of
the interaction of all the forces operating on the time series. Therefore, time series is the product
of its four components, i.e., Yt = T  C  S  I .
Multiplication model which is used more frequently.
Measurement of Secular Trend

The following are the methods most commonly used for studying & measuring the trend
component in a time series:
1. Graphic or a Freehand Curve Method
2. Method of Semi Averages
3. Method of Moving Averages
4. Method of Least Squares
Graphic or a Freehand Curve Method

• The data of a given time series is plotted on a graph and all the points are joined together
with a straight line.

• This curve would be irregular as it includes short run oscillations.

• These irregularities are smoothened out by drawing a freehand curve or line along with the
curve previously drawn.
• This curve would eliminate the short run oscillations and would show the long period
general tendency of the data.
• While drawing this curve, it should be kept in mind that the curve should be smooth and
the number of points above the trend curve should be more or less equal to the number of
points below it.
• Merits:
o It is very simple and easy to understand.
o It does not require any mathematical calculations.
• Disadvantages:
o This is a subjective concept. Hence different persons may draw freehand lines at
different positions and with different slopes.
o If the length of period for which the curve is drawn is very small, it might give
totally erroneous results.
Question 1
The following are figures of a Sale for the last nine years. Determine the trend by line by the
freehand method.
Year 2000 2001 2002 2003 2004 2005 2006 2007 2008
Sale in lac units 75 95 115 65 120 100 150 135 175
Solution
Sale in lac units

Sale in lac units Linear (Sale in lac units)
200 175
150
Sale in Lac Units
150 135
115 120
95 100
100 75 65
50
0
2000 2002 2004 2006 2008
Years
Method of Semi Averages

• Under this method, the whole time series data is classified into two equal parts and the
averages for each half are calculated.

• If the data is for even number of years, it is easily divided into two. If the data is for odd
number of years, then the middle year of the time series is left and the two halves are
constituted with the period on each side of the middle year.
• The arithmetic mean for a half is taken to be representative of the value corresponding to
the midpoint of the time interval of that half.
• Thus, we get two points. These two points are plotted on a graph and then are joined by
straight line which is our required trend line.
Question 2
Fit a trend line to the following data by the method of Semi-averages.
Year 2000 2001 2002 2003 2004 2005 2006
Sale in lac units 100 105 115 110 120 105 115
Solution
Here, since there are 7 years (odd), we’ll leave out the middle one, i.e., the year 2003, and take the
average of the first three years and the last three years.
100 + 105 + 115
Average for the first three years = = 106.67 . This is taken to be representative of
3
the value corresponding to the midpoint of the time interval of the first half, i.e., the year 2001.
120 + 105 + 115
Average for the last three years = = 113.33 . This is taken to be representative of
3
the value corresponding to the midpoint of the time interval of the second half, i.e., the year 2005.
Sale in Lac Units

114 113.33
113
Sale in Lac Units
112
111
110
109
108
106.67
107
106
2000 2002 2004 2006 2008
Year
Method of Moving Averages

• A moving average is an average (Arithmetic mean) of fixed number of items (known as
periods) which moves through a series by dropping the first item of the previously averaged
group and adding the next item in each successive average.

• The value so computed is considered the trend value for the unit of time falling at the centre
of the period used in the calculation of the average.
• 3 Year Moving Average:
For computing 3 yearly moving average, the value of 1st, 2nd and 3rd years are added up,
and arithmetic mean is found out and the answer is placed against the 2nd year; then value
of 2nd, 3rd and 4th years are added up, and arithmetic mean is derived and this average is
placed against 3rd year (i.e. the middle of 2nd, 3rd and 4th) and so on.
For computing 4 yearly moving average, the values of 1st, 2nd, 3rd and 4th years are added
up, and the total is written between the second and the third year in the third column.
Thereafter, the values of the 2nd, 3rd, 4th, and 5th years are added up, and the total is written
between the 3rd and the 4th year in the third column. Thereafter, a fourth column is prepared,
which contains the totals of groups of two values in the third column. A fifth column is
then prepared to calculate the average, which is given by dividing the figure in the fourth
column by the total number of years.
For computing 5 yearly moving average, the values of the 1st, 2nd, 3rd, 4th, and 5th years are
added up, and arithmetic mean is found out and answer is placed against the 3rd year; then
value of 2nd, 3rd, 4th, 5th, and 6th years are added up, and the arithmetic mean is derived and
this average is placed against 4th year, and so on.
• This technique is called centring & the corresponding moving averages are called moving
average centred.
Question 3
The wages of certain factory workers are given as below. Using 3 yearly moving average, indicate
the trend in wages.
Year 2004 2005 2006 2007 2008 2009 2010 2011 2012
Wages 1200 1500 1400 1750 1800 1700 1600 1500 1750
Solution
Year Wages 3 Yearly Moving Totals 3 Yearly Moving Average, i.e., Trend
2004 1200
2005 1500 (1200 + 1500 + 1400) = 4100 4100 ÷ 3 = 1366.67
2006 1400 (1500 + 1400 + 1750) = 4650 4650 ÷ 3 = 1550.00
2007 1750 (1400 + 1750 + 1800) = 4950 4950 ÷ 3 = 1650.00
2008 1800 (1750 + 1800 + 1700) = 5250 5250 ÷ 3 = 1750.00
2009 1700 (1800 + 1700 + 1600) = 5100 5100 ÷ 3 = 1700.00
2010 1600 (1700 + 1600 + 1500) = 4800 4800 ÷ 3 = 1600.00
2011 1500 (1600 + 1500 + 1750) = 4850 4850 ÷ 3 = 1616.67
2012 1750
Question 4
Calculate 4 yearly moving average of the following data.

Year 2005 2006 2007 2008 2009 2010 2011 2012

Wages 1150 1250 1320 1400 1300 1320 1500 1700
Solution
Calculation of 4 Year Centred Moving Average
2 Year Moving Total of 4 Year Moving
Year Wages 4 Year Moving Total
Column 3 (Centred) Average (Centred)
(1) (2) (3)
(4) (5) = (4) ÷ 8
2005 1,150 – – –
2006 1,250 – – –
1,150 + 1,250 + 1,320
+ 1,400 = 5,120
2007 1,320 5,120 + 5,270 = 10,390 10,390 ÷ 8 = 1,298.75
1,250 + 1,320 + 1,400
+ 1,300 = 5,270
2008 1,400 5,270 + 5,340 = 10,610 10,610 ÷ 8 = 1,326.25
5,340
2009 1,300 10,860 1,357.50
5,520
2010 1,320 11,340 1,417.50
5,820
2011 1,500
2012 1,700
Question 5
Calculate five yearly moving averages for the following data.
Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Value 123 140 110 98 104 133 95 105 150 135
Solution
Value 5 Year Moving Totals 5 Year Moving Average
Year
(’000 ₹) (’000 ₹) (’000 ₹)
2003 123 – –
2004 140 – –
2005 110 123 + 140 + 110 + 98 + 104 = 575 575 ÷ 5 = 115.0
2006 98 140 + 110 + 98 + 104 + 133 = 585 585 ÷ 2 = 117.0
2007 104 110 + 98 + 104 + 133 + 95 = 540 540 ÷ 2 = 108.0
2008 133 98 + 104 + 133 + 95 + 105 = 535 535 ÷ 2 = 107.0
2009 95 104 + 133 + 95 + 105 + 150 = 587 587 ÷ 2 = 117.4
2010 105 133 + 95 + 105 + 150 + 135 = 618 618 ÷ 2 = 123.6
2011 150 – –
2012 135 – –

Method of Least Squares

This method is used for finding a straight-line equation which represents the given data. The
straight-line equation is given by Yc = a + bX .
The values of a and b can be found as follows:
a=
 Y , b =  XY
N X 2
Here,
Y = Sum of actual values of Y variable, i.e. Sales, Profit, etc.

N = No. of years or months or any other period
 X = Sum of values of X.
Note: When the number of years is odd, then X is the deviation of every year from the central year;
however, if the number of years is even, then, first the deviations are taken from the average of the
two middle most years, and then these deviations are multiplied by 2. This gives us the value of X.
 XY = Sum of the products X and Y
X 2
= Sum of squares of deviations from X
Question 6
Fit a straight-line trend to the following data by Least Square Method and estimate the sale for the
year 2019.
Year 2013 2014 2015 2016 2017
Sales (₹ in lakhs) 10 20 30 50 40
Solution
Year Sales (Y) Deviations of the Years from 2015 (X) XY X2
2013 10 2013 – 2015 = –2 –20 4
2014 20 2014 – 2015 = –1 –20 1
2015 30 2015 – 2015 = 0 0 0
2016 50 2016 – 2015 = 1 50 1
2017 40 2017 – 2015 = 2 80 4
Total 150 0 90 10
Now, we’ll find out the values of a and b as follows:
a=
 Y  a = 150 = 30
N 5
b=
 XY  b = 90 = 9
X 2
10
Therefore, the best fit line is Yc = 30 + 9 X .

Now, 2019 means that X is 2019 – 2015 = 4. Therefore, estimated sales of 2019 is given by
Y2019 = 30 + ( 9  4 ) = 30 + 36 = 66.
Question 7
Fit a straight-line trend to the following data by Least Square Method and estimate the sale for the
year 2012.
Year 2005 2006 2007 2008 2009 2010
Sale (in ’000s) 70 80 96 100 95 114
Solution
Year Sale (in ’000s) (Y) Difference from 2007.5 X = Deviations × 2 XY X2
2005 70.00 2005 – 2007.5 = –2.50 –5.00 –350.00 25.00
2006 80.00 2006 – 2007.5 = –1.50 –3.00 –240.00 9.00
2007 96.00 –0.50 –1.00 –96.00 1.00
2008 100.00 0.50 1.00 100.00 1.00
2009 95.00 1.50 3.00 285.00 9.00
2010 114.00 2.50 5.00 570.00 25.00
Total 555.00 0.00 0.00 269.00 70.00
Now, we’ll find out the values of a and b as follows:
a=
 Y  a = 555 = 92.5
N 6
b=
 XY  b = 269 = 3.843
X 2
70
Therefore, the best fit line is Yc = 92.5 + 3.843 X .
Now, 2012 means that the deviation from 2007.5 is 2012 – 2007.5 = 4.5, and therefore, X is 4.5 ×
2 = 9. Therefore, estimated sales of 2012 is given by Y2012 = 92.5 + (3.843 × 9) = 127.09.

Maths Fast Track Notes - CA Nishant Kumar - StepFly (Gvwz160521)

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Maths Fast Track Notes - CA Nishant Kumar - StepFly (Gvwz160521)

Uploaded by

Copyright:

Available Formats

CA Foundation

Chapter 1 – Ratio and Proportion, Indices,

Chapter 1 – Lecture 1 – https://youtu.be/Drou7FrzFMg

8447757167 CA NISHANT KUMAR 1

8447757167 CA NISHANT KUMAR 2

8447757167 CA NISHANT KUMAR 3

Integral Exponents of a Real Number

Negative Integral Power

8447757167 CA NISHANT KUMAR 4

Cyclic Order Tricks

8447757167 CA NISHANT KUMAR 5

log a ( mn ) = log a m + log a n

4. Fourth Law (Base Change Formula)

8447757167 CA NISHANT KUMAR 6

Chapter 2 – Equations and Matrices

Link for Lecture 1 of Equations and Matrices: https://youtu.be/IMoRIfP82FU

Questions to be Solved from Scanner

Simultaneous Linear Equations in Two Unknowns

Questions to be Solved from Scanner

8447757167 CA NISHANT KUMAR 1

3. Page 3.124 – Question 50 – Homework

We’ll mostly be using the method only.

8447757167 CA NISHANT KUMAR 2

1. If b 2 − 4ac = 0 , the roots are real and equal;

8447757167 CA NISHANT KUMAR 3

Questions to be Solved from Scanner

8447757167 CA NISHANT KUMAR 4

22. Page 3.104 – Question 19 – Homework

Questions to be Solved from Scanner

8447757167 CA NISHANT KUMAR 5

Unit 2 – Matrices and Determinants

The above information can be expressed as follows:

First Column Second Column Third Column

8447757167 CA NISHANT KUMAR 6

Zero Matrix or Null Matrix

Square Matrix and Rectangular Matrix

8447757167 CA NISHANT KUMAR 7

Upper Triangle Matrix

Lower Triangle Matrix

obtained by deleting the third row and the first column.

8447757167 CA NISHANT KUMAR 8

Questions to be Solved from Scanner

Multiplication of Two Matrices

Questions to be Solved from Scanner

8447757167 CA NISHANT KUMAR 9

Properties of Transpose of a Matrix

Questions to be Solved from Scanner

Skew Symmetric Matrix

8447757167 CA NISHANT KUMAR 10

A = a1 (b2c3 − c2b3 ) − a2 (b1c3 − c1b3 ) + a3 (b1c2 − c1b2 )

Questions to be Solved from Scanner

8447757167 CA NISHANT KUMAR 11

In other words, Cij = Cofactor of aij in A

In other words, Cij = ( −1)

Shortcut for Constructing a Cofactor Matrix

1. Copy the 3 × 3 matrix as it is:

8447757167 CA NISHANT KUMAR 12

2. Repeat Columns 1 and 2 after Column 3:

= (–5 × 2) – (5 × 6) = –10 – 30 = –40

8447757167 CA NISHANT KUMAR 13

= (5 × –2) – (3 × 2) = –10 – 6 = –16

8447757167 CA NISHANT KUMAR 14

Solving Equations using Matrices and Determinants