MID-TERM EXAM

Statistics for Business and Economics

Time: 60 minutes for 40 questions

Student Name:________________________________________________Student ID: ____________________

Students are allowed to use textbooks, printed slides, their own notes on an A4 double sided sheet and calculators on the
exam, but programmable computers are not allowed.

MULTIPLE CHOICE.    Choose the one alternative that best completes the statement or answers the question.

THE NEXT QUESTION IS BASED ON THE FOLLOWING INFORMATION:

Investment A has an expected return of 8% with a standard deviation of 2.5%.    Investment B has an expected return of
6% with a standard deviation of 1.2%. Assume you invest equally in both investments and that the rates of return are
independent.

1
What is the standard deviation of the return on your portfolio?    Assume that the returns on the two investments are
independent.

1)

_______
A)
7.69

B)

6.25

C)

2.50

D)

2.77

2
To show how the price of a stock has changed over the last 3 months, the best type of chart to use is:

2)

_______
A)
a pie chart.

B)

a bar chart.

C)

a histogram.

D)

a line chart.

3
Under what circumstances is it necessary to use the coefficient of variation to compare relative variability between two or
more distributions?

3)

_______
A)
When the means of the distributions are equal
B)
When the standard deviations of the distributions are equal
C)
When the standard deviations of the distributions are not equal
D)
When the means of the distributions are not equal

4
Which of the following is most likely a population as opposed to a sample?

4)

_______
A)
every third person to arrive at the bank
B)
the first 5 students completing an assignment
C)
registered voters in a county
D)
respondents to a newspaper survey

5
A lab orders 100 rats a week for each of the 52 weeks in the year for experiments that the lab conducts. Suppose the mean
cost of rats used in lab experiments turned out to be $13.00 per week. Interpret this value.

5)

_______
A)
The expected or average cost for all weekly rat purchases is $13.00.
B)
The median cost for the distribution of rat costs is $13.00.
C)
The rat cost that occurs more often than any other is $13.00.
D)
Most of the weeks resulted in rat costs of $13.00.

6)
A financial analyst is presented with information on the past records of 60 start-up companies and told that in fact only 3
of them have managed to become highly successful. He selected 3 companies from this group as the candidates for
success. To analyze his ability to spot the companies that will eventually become highly successful, he will use what type
of probability distribution?
6)

_______
A)
Binomial distribution

B)

Poisson distribution
C)
Hypergeometric distribution

D)

None of the above.

7
Which of the following questions CANNOT be answered using a scatter diagram?

7)

_______
A)
Is there a positive or negative relation between the 2 variables?
B)
Is there a weak or strong relation between the 2 variables?
C)
Is there a curved or linear relation between the 2 variables?
D)
Is there a causal relationship between the 2 variables?

8
The chancellor of a major university was concerned about alcohol abuse on her campus and wanted to find out the
proportion of students at her university who visited campus bars on the weekend before the final exam week. Her
assistant took a random sample of 250 students. The total number of students in the sample who visited campus bars on
the weekend before the final exam week is an example of

8)

_______
A)
a continuous random variable.

B)

a parameter.
C)
a discrete random variable.

D)

a categorical random variable.

9
A recent study showed that the length of time required for customers to resolve their computer issues with online support
is normally distributed with a mean equal to 0.35 hours with a standard deviation of 0.2 hours. Given this information,
what is the probability of resolution will take between 10 and 15 minutes?

9)

_______
A)
About 0.87
B)
About 0.31
C)
Nearly 0.00
D)
About 0.13

1
The Canyon Water Company collects data on the number of gallons of water consumed during a month for each
customer. The production manager has divided the usage into 6 classes. To display these data effectively, she could use
which of the following types of graphs to convey information about the water usage?

10)

______
A)
A bar chart

B)

A histogram
C)
A stem and leaf diagram

D)

Either a histogram or a pie chart

1
When constructing charts, the following is plotted at the class midpoints:

11)

______
A)
percentage polygons.

B)

frequency histograms.
C)
cumulative relative frequency ogives.

D)

all of the above

1
The distribution of annual incomes of a sample of college graduates is normally distributed with a mean of $52,000 and a
standard deviation of 1,000.    About 68 percent of the incomes lie between what two income levels?

12)

______
A)
50,000 and 60,000

B)

53,000 and 57,000

C)
52,000 and 62,000

D)

51,000 and 53,000

TABLE 1

The
followin
g are the
duration
s in
minutes
of a
sample
of long-
distance
phone
calls
made
within
the
continent
al United
States
reported
by one
long-
distance
carrier.

13)
Referring to Table 1, if 100 calls were sampled, ________ of them would have lasted 20 minutes or more.

13)

______
A)
74

B)

26
C)
16

D)

none of the above

1
A store sells 6 different models of cell phones and have found that they sell an equal number of each model. The
probability distribution that would describe this random variable is called:

14)

______
A)
Poisson distribution.

B)

uniform distribution.
C)
continuous distribution.

D)

relative frequency distribution.

1
Suppose the light bulbs in a factory burn out at a rate of 50 bulbs per month. Which of the following distributions would
you use to determine the probability that the next two light bulbs will burn out 2 days apart?

15)

______
A)
Hypergeometric distribution

B)

Poisson distribution
C)
Uniform distribution

D)

Exponential distribution

1
Major league baseball salaries averaged $1.5 million with a standard deviation of $0.8 million in 1994. Suppose a sample
of 100 major league players was taken. Find the approximate probability that the average salary of the 100 players
exceeded $1 million.

16)

______
A)
approximately 1

B)

0.2357
C)
0.7357

D)

approximately 0

1
At a sawmill in Oregon, a process improvement team measured the diameters for a sample of 1,500 logs. The following
summary statistics were computed:

Given this information, for a box and whisker plot which of the following statements is appropriate?
17)

______
A)
No tree will have a diameter of more than 22.3 in.
B)
Virtually all of the data should fall between 0 in. and 25.65 in.
C)
Seventy-five percent of the trees in the sample have values between 8.9 in. and 15.6 in.
D)
Fifty percent of the trees will have diameters between 13.5 in. and 15.6 in.

18)
Most analysts focus on the cost of tuition as the way to measure the cost of a college education. But incidentals, such as
textbook costs, are rarely considered. A researcher at Drummand University wishes to estimate the textbook costs of first-
year students at Drummand. To do so, she monitored the textbook cost of 250 first-year students and found that their
average textbook cost was $300 per semester. Identify the population of interest to the researcher.
18)

______
A)
all first-year Drummand University students
B)
the 250 students that were monitored
C)
all college students
D)
all Drummand University students

1
A report on spending by adults on recreation stated the following: At least 75 percent of the people in the survey spend
between $750 and $1,250 per year. The report also said that at least 88 percent spend between $625 and $1,375 per year.
Given this information, which of the following is most apt to be true?

19)

______
A)
The distribution of spending on recreation can be assumed to be bell-shaped.
B)
The standard deviation is approximately $187.5.
C)
The standard deviation is approximately $250.
D)
The standard deviation is approximately $125.

2
If we know that the length of time it takes a college student to find a parking spot in the library parking lot follows a
normal distribution with a mean of 3.5 minutes and a standard deviation of 1 minute, find the probability that a randomly
selected college student will take between 2 and 4.5 minutes to find a parking spot in the library parking lot.

20)

______
A)
0.2255
B)
0.0919
C)
0.4938
D)
0.7745

2
The owner of a fish market has an assistant who has determined that the weights of catfish are normally distributed, with
mean of 3.2 pounds and standard deviation of 0.8 pound. If a sample of 25 fish yields a mean of 3.6 pounds, what is the Z-
score for this observation?

21)

______
A)
1.875
B)
18.750
C)
0.750
D)
2.500

2
In a survey, respondents were asked to indicate their favorite brand of cereal (Post or Kellogg's). They were allowed only
one choice. What is the probability concept that implies it is not possible for a single respondent to state both Post and
Kellogg's to be the favorite cereal?

22)

______
A)
Concept of mutually exclusive events

B)

Concept of dependent events

C)
Concept of independent events

D)

Concept of mutually inclusive events

2
Hubble Construction Company has submitted a bid on a state government project that is to be funded by the federal
government's stimulus money in Arizona. The price of the bid was predetermined in the bid specifications. The contract is
to be awarded on the basis of a blind drawing from those who have bid. Five other companies have also submitted bids.

What is the probability of the Hubble Construction Company winning the bid?
23)

______
A)
0.2778
B)
0.0278
C)
0.6944
D)
0.1667

THE NEXT QUESTION IS BASED ON THE FOLLOWING INFORMATION:

Investment A has an expected return of 8% with a standard deviation of 2.5%.    Investment B has an expected return of
6% with a standard deviation of 1.2%. Assume you invest equally in both investments and that the rates of return are
independent.

2
What is the expected return of your portfolio?

24)

______
A)
7%
B)
6%
C)
8%
D)
4%

25)
The city counsel has just voted to pass the city's budget for next year. If you were writing a report describing the budget
so the citizens could understand how the total tax dollars will be spent, which of the following graphs might be most
appropriate?
25)

______
A)
Ogive
B)
Pie chart
C)
Scatter diagram
D)
Histogram

2
A company has 125 personal computers. The probability that any one of them will require repair on a given day is 0.025.
To find the probability that exactly 20 of the computers will require repair on a given day, one will use what type of
probability distribution?

26)

______
A)
Binomial distribution

B)

Poisson distribution
C)
Hypergeometric distribution

D)

None of the above.

2
In a recent survey, 70% of human resource directors thought that it was very important for business students to take a
course in business ethics.    For a sample of 12 human resource directors, what is the probability that at least one of them
does not think it very important for business students to take a business ethics course?

27)

______
A)
0.9862
B)
0.9714
C)
0.9833
D)
0.9521

2
The incomes of trainees at a local mill are normally distributed with a mean of $1100 and a standard deviation of $150.
What percentage of trainees earn less than $900 a month?

28)

______
A)
35.31%
B)
40.82%
C)
90.82%
D)
9.18%

TABLE 2

The following are the durations in minutes of a sample of long-distance phone calls made within the continental United
States reported by one long-distance carrier.

2
Referring to Table 2, if 100 calls were randomly sampled, how many calls lasted 15 minutes or longer?

29)

______
A)
10
B)
26
C)
14
D)
74

3
Referring to Table 2, what is the cumulative relative frequency for the percentage of calls that lasted 10 minutes or more?

30)

______
A)
0.41
B)
0.90
C)
0.24
D)
0.16

3
In a survey of 100 large corporations, it was found that 72% offer some form of tuition assistance plan for their workers.   
64% of the 100 corporations offer both a tuition assistance plan as well as provide dental insurance for dependents.    What
is the probability that a corporation that offers a tuition assistance plan also offers dental insurance for dependents?

31)

______
A)
0.89
B)
0.64
C)
0.68
D)
0.46

32)
A sample of people who have attended a college football game at your university has a mean = 3.2 members in their
family. The mode number of family members is 2 and the median number is 2.0. Based on this information:
32)

______
A)
the distribution is left-skewed.

B)

the distribution is right-skewed.

C)
the population mean exceeds 3.2.

D)

the distribution is bell-shaped.

3
In a tennis match, a player must win three of five sets to win the match.    If a player wins the first two sets, what is the
probability that the player will win the match, assuming that each player is equally likely to win each set?

33)

______
A)
0.25
B)
0.50
C)
0.875
D)
0.125

3
Investment A has an expected return of 7.8% with a standard deviation of 2%.    Investment B has an expected return of
7.2% with a standard deviation of 3.1%.    Assume the returns on both of these stocks are normally distributed.    Which
stock is more likely to have a return greater than 10%?

34)

______
A)
Stock A
B)
Stock B
C)
The probability is the same for both A and B.
D)
Unable to determine.

3
The table below shows the soft drinks preferences of people in three age groups.

If one of the 255 subjects is randomly selected, find the probability that the person is over 40 years of age given that they
drink root beer.
35)

______
A)
 B)

C)
 D)

None of the above is correct.

3
Consider the following probability distribution.    Which of the following is true?

x 0 1 2 3 4 5 6 7
P(x) 0.05 0.16 0.19 0.24 0.18 0.11 0.05 0.02

36)

______
A)
P(X ≥    3) = 0.64

B)

P(X > 6) = 0.07

C)
P(X ≤    6) = 0.93

D)

P(2 < X < 5) = 0.42

3
In one region, the September energy consumption levels for single-family homes are found to be normally distributed
with a mean of 1050 kWh and a standard deviation of 218 kWh. For a randomly selected home, find the probability that
the September energy consumption level is between 1100 kWh and 1225 kWh.

37)

______
A)
0.0910
B)
0.2881
C)
0.3791
D)
0.1971

3
The manager at a local movie theater has collected data for a long period of time and has concluded that the revenue from
concession sales during the first show each evening is normally distributed with a mean equal to $336.25 and a variance
equal to 1,456. Based on this information, what are the chances that the revenue on the first show will exceed $800?

38)

______
A)
0.1255
B)
0.3745
C)
0.9999
D)
Essentially zero

3
The process of using sample statistics to draw conclusions about true population parameters is called

39)

______
A)
descriptive statistics.

B)

sampling.
C)
statistical inference.

D)

the scientific method.

4
Which of the following is sensitive to extreme values?

40)

______
A)
the interquartile range

B)

the 1st quartile

C)
the median

D)

the arithmetic mean

1)
 D
2)
D
3)
D
4)
C
5)
A
6)
C
7)
D
8)
C
9)
D
10)
D
11)
A
12)
D
13)
C
14)
B
15)
D
16)
A
17)
B
18)
A
19)
D
20)
D
21)
D
22)
A
23)
D
24)
A
25)
B
26)
A
27)
A
28)
D
29)
B
30)
A
31)
A
32)
B
33)
C
34)
B
35)
B
36)
D
37)
D
38)
D
39)
C
40)
D