BUSINESS STATISTICS: DCM 214

1. a) State three
i) Advantages of using secondary sources of data in data collection. (3 marks)
ii) Disadvantages of using secondary sources of data in data collection.
(3 marks)
b) List six factors that to be considered in the design of a questionnaire. (6 marks)

c) Explain four qualities of a good sample. (8 marks)

2. a) The following distribution table shows the marks of 50 students who sat for a
continuous assessment test.

Table 1

Marks 0 - 10 10 - 20 20 - 30 30 - 40 40 – 50
Number of students 7 6 15 12 10

Calculate:

i) Mean Mark (4 marks)

ii) Modal mark (4 marks)

iii) Standard deviation. (4 marks)

iv) Coefficient of variation. (4 marks)

b) Outline four characteristics of Statistical data. (4 marks)

3. a) Explain the meaning of the following terms as used in probability:

i) Outcome (2 marks)

ii) Experimental probability. (2 marks)

iii) Theoretical probability. (2 marks)

iv) Independent probability. (2 marks)

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 b) A mobile telephone service provider is undertaking a promotion in which 40% of the
scratch cards reveal a prize. A customer has in possession three promotional scratch
cards.

Required:
i) A tree diagram to represent the customer’s probability space. (4 marks)

ii) The probability of receiving one prize. (2 marks)

iii) The probability of receiving no prize (2 marks)

iv) The probability of receiving two prizes (2 marks)

v) The probability of winning a prize. (2 marks)

4. a) State five factors that should be considered in the construction of index numbers.
(5 marks)
b) The data in table 2 shows items used by a household in the period 2013 and 2017

Table 2.
2013 2017
Price(shs) Quantity (kgs) Price(shs) Quantity (kgs)

Maize 65 20 135 30
Wheat 95 8 160 7
Beans 150 5 320 8

By taking 2013 as base period, compute price indices using the following methods:

i) Laspeyre’s (5 marks)

ii) Paasche’s (5 marks)

iii) Fisher’s ideal (5 marks)

5. a) Illustrate with an aid of diagram the following types of correlation:

i) Perfect positive correlation. (2 marks)

ii) Perfect negative correlation. (2 marks)

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 iii) High degree of positive correlation. (2 marks)

iv) High degree of negative correlation. (2 marks)

v) Zero correlation. (2 marks)

b) Calculate the rank correlation coefficient for the data in table three below showing
marks of two tests given to candidates for clerical job.

Table 3

Preliminary test 92 89 87 86 83 77 71 63 53 50
Final test 86 83 91 77 68 85 52 82 37 57
(10 marks)

6. a) Differentiate between measure of dispersion and skewness. (6 marks)

b) The following data relates to the profits of 1000 companies.

Profits (Sh ‘000’) Number of companies

100 – 120 17
120 – 140 53
140 – 160 199
160 – 180 194
180 – 200 327
200 – 220 208
220 – 240 2

Required:
Calculate the coefficient of skewness and comment on its value. (14 marks)

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STATISTICAL FORMULAE

MEASURES OF LOCATION MEASURES OF DISPERSION

𝑄3−𝑄1
Quartile deviation =
∑ 𝑓𝑥 ∑ 𝑓𝑑 2
MEAN (𝑋)= ∑ ≡ W.M ± ∑𝑓 ∑(𝑋− 𝑥)² 𝑓
𝑓
=√
𝑛
𝑖(𝑚−𝑐)
MEDIAN = L1+
𝑓
∑ 𝑓𝑑 2 ∑ 𝑓𝑑
Standard deviation = √ ∑𝑓
− ( ∑ )2
𝑓
MODE = Mean- 3 (Mean-Median)
𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 𝑥 100
𝑓1−𝑓0 Coefficient of variation =
MODE = L1 + x𝑖 𝑀𝑒𝑎𝑛
2𝑓1−𝑓
0−𝑓2
Correlation coefficient
Correlation and Regression
∑ 𝑥𝑦−𝑥 𝑋 𝑦
Pearson’s r=
Product moment correlation coefficient 𝑛𝜕𝑥 𝜕𝑦

6 ∑ 𝑑2
𝑛 ∑ 𝑥𝑦 − ∑ 𝑥 ∑ 𝑦 Spearman’s r = 1-
𝑛(𝑛²−1)
𝑟= 2
√(𝑛 ∑ 𝑥² − (∑ 𝑥)²[ 𝑛 ∑ 𝑦 − (∑ 𝑦)²]
Least Square Regression Line Y=a+bx

a = 𝑦 –b 𝑥
Index Numbers 𝑛 ∑ 𝑥𝑦−∑ 𝑥 ∑ 𝑦
∑ 𝑃1 𝑊 b = ∑ 2 (∑
Weighted aggregative average= ∑ 𝑃0 𝑊
X 100 𝑛 𝑥 − 𝑥)²

3 ( 𝑀𝑒𝑎𝑛−𝑀𝑒𝑑𝑖𝑎𝑛)
∑ 𝑃1 𝑄1 Coefficient of Skewness =
Paashe’s Price Index = ∑ 𝑃0 𝑄1
X 100 𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛

∑ 𝑃1 𝑄1
Paashe’s Quantity Index = ∑ 𝑃1 𝑄0
X 100

∑ 𝑃1 𝑄0
Laspeyre’s Price Index = ∑ 𝑃0 𝑄0
X 100

∑ 𝑃0 𝑄1
Laspeyre’s Quantity Index = ∑ 𝑃0 𝑄0
X 100

Fishers Index =
′
√𝑃𝑎𝑎𝑠ℎ𝑒 𝑠 𝑥 𝑙𝑎𝑠𝑝𝑒𝑦𝑟𝑒𝑠 𝐼𝑛𝑑𝑒𝑥𝑒𝑠

𝐶1
NPV = ∑[ ]
(1+𝑌)

Simple Interest = P(𝐼 + 𝑚)

Compound Interest = P(𝐼 + 𝑟)n

1−(1+𝑟)𝑛
Annuity = P=A [ ]
𝑟

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