Statistics For Managers Using Microsoft Excel 7th Edition Levine Test Bank 1

Test Bank for Statistics for Managers Using Microsoft
Excel 7th Edition Levine Stephan Szabat 0133061817

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Statistics for Managers Using Microsoft Excel, 7e (Levine)

Chapter 5 Discrete Probability Distributions
1) Thirty-six of the staff of 80 teachers at a local intermediate school are certified in Cardio-Pulmonary
Resuscitation (CPR). In 180 days of school, about how many days can we expect that the teacher on bus
duty will likely be certified in CPR?
A) 5 days
B) 45 days
C) 65 days
D) 81 days
Answer: D
Difficulty: Moderate
Keywords: binomial distribution, mean
2) A campus program evenly enrolls undergraduate and graduate students. If a random sample of 4
students is selected from the program to be interviewed about the introduction of a new fast food outlet
on the ground floor of the campus building, what is the probability that all 4 students selected are
undergraduate students?
A) 0.0256
B) 0.0625
C) 0.16
D) 1.00
Answer: B
Difficulty: Difficult
Keywords: binomial distribution
3) A probability distribution is an equation that

A) associates a particular probability of occurrence with each outcome.
B) measures outcomes and assigns values of X to the simple events.
C) assigns a value to the variability of the set of events.
D) assigns a value to the center of the set of events.
Answer: A
Keywords: probability distribution
4) The connotation "expected value" or "expected gain" from playing roulette at a casino means
A) the amount you expect to "gain" on a single play.
B) the amount you expect to "gain" in the long run over many plays.
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Copyright © 2014 Pearson Education, Inc.
C) the amount you need to "break even" over many plays.
D) the amount you should expect to gain if you are lucky.
Answer: B
Difficulty: Easy
Keywords: expected value
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5) Which of the following about the binomial distribution is not a true statement?
A) The probability of the event of interest must be constant from trial to trial.
B) Each outcome is independent of the other.
C) Each outcome may be classified as either "event of interest" or "not event of interest."
D) The variable of interest is continuous.
Answer: D
Difficulty: Easy
Keywords: binomial distribution, properties
6) In a binomial distribution,
A) the variable X is continuous.
B) the probability of event of interest π is stable from trial to trial.
C) the number of trials n must be at least 30.
D) the results of one trial are dependent on the results of the other trials.
Answer: B
Difficulty: Easy
7) Whenever π = 0.5, the binomial distribution will

A) always be symmetric.
B) be symmetric only if n is large.
C) be right-skewed.
D) be left-skewed.
Answer: A
8) Whenever π = 0.1 and n is small, the binomial distribution will be

A) symmetric.
B) right-skewed.
C) left-skewed.
D) None of the above.
Answer: B
9) If n = 10 and π = 0.70, then the mean of the binomial distribution is

A) 0.07.
B) 1.45.
C) 7.00.
D) 14.29.
Answer: C
Difficulty: Easy
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10) If n = 10 and π = 0.70, then the standard deviation of the binomial distribution is
A) 0.07.
B) 1.45.
C) 7.00.
D) 14.29.
Answer: B
Difficulty: Easy
Keywords: binomial distribution, standard deviation
11) If the outcomes of a variable follow a Poisson distribution, then their

A) mean equals the standard deviation.
B) median equals the standard deviation.
C) mean equals the variance.
D) median equals the variance.
Answer: C
Difficulty: Easy
Keywords: Poisson distribution, mean, standard deviation, properties
12) What type of probability distribution will the consulting firm most likely employ to analyze the
insurance claims in the following problem?
An insurance company has called a consulting firm to determine if the company has an unusually high
number of false insurance claims. It is known that the industry proportion for false claims is 3%. The
consulting firm has decided to randomly and independently sample 100 of the company's insurance
claims. They believe the number of these 100 that are false will yield the information the company
desires.
A) Binomial distribution
B) Poisson distribution
C) Hypergeometric distribution
D) None of the above
Answer: A
13) The covariance

A) must be between -1 and +1.
B) must be positive.
C) can be positive or negative.
D) must be less than +1.
Answer: C
Difficulty: Easy
Keywords: covariance, properties
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14) What type of probability distribution will most likely be used to analyze warranty repair needs on
new cars in the following problem?
The service manager for a new automobile dealership reviewed dealership records of the past 20 sales of
new cars to determine the number of warranty repairs he will be called on to perform in the next 90 days.
Corporate reports indicate that the probability any one of their new cars needs a warranty repair in the
first 90 days is 0.05. The manager assumes that calls for warranty repair are independent of one another
and is interested in predicting the number of warranty repairs he will be called on to perform in the next
90 days for this batch of 20 new cars sold.
Answer: A
15) What type of probability distribution will most likely be used to analyze the number of blue chocolate
chips per bag in the following problem?
The quality control manager of a candy plant is inspecting a batch of chocolate chip bags. When the
production process is in control, the average number of blue chocolate chips per bag is 6.0. The manager
is interested in analyzing the probability that any particular bag being inspected has fewer than 5.0 blue
chocolate chips.
Answer: B
Keywords: Poisson distribution, properties
16) What type of probability distribution will most likely be used to analyze the number of cars with
defective radios in the following problem?
From an inventory of 48 new cars being shipped to local dealerships, corporate reports indicate that 12
have defective radios installed. The sales manager of one dealership wants to predict the probability out
of the 8 new cars it just received that, when each is tested, no more than 2 of the cars have defective
radios.
Answer: C
Keywords: hypergeometric distribution, properties
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17) A stock analyst was provided with a list of 25 stocks. He was expected to pick 3 stocks from the list
whose prices are expected to rise by more than 20% after 30 days. In reality, the prices of only 5 stocks
would rise by more than 20% after 30 days. If he randomly selected 3 stocks from the list, he would use
what type of probability distribution to compute the probability that all of the chosen stocks would
appreciate more than 20% after 30 days?
Answer: C
18) A professor receives, on average, 24.7 e-mails from students the day before the midterm exam. To
compute the probability of receiving at least 10 e-mails on such a day, he will use what type of probability
distribution?
Answer: B
19) 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?
Answer: A
20) The portfolio expected return of two investments

A) will be higher when the covariance is zero.
B) will be higher when the covariance is negative.
C) will be higher when the covariance is positive.
D) does not depend on the covariance.
Answer: D
Difficulty: Easy
Keywords: portfolio, mean
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21) 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?
Answer: C
22) On the average, 1.8 customers per minute arrive at any one of the checkout counters of a grocery
store. What type of probability distribution can be used to find out the probability that there will be no
customer arriving at a checkout counter?
Answer: B
23) A multiple-choice test has 30 questions. There are 4 choices for each question. A student who has not
studied for the test decides to answer all questions randomly. What type of probability distribution can
be used to figure out his chance of getting at least 20 questions right?
Answer: A
24) 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.
A) Most of the weeks resulted in rat costs of $13.00.
B) The median cost for the distribution of rat costs is $13.00.
C) The expected or average cost for all weekly rat purchases is $13.00.
D) The rat cost that occurs more often than any other is $13.00.
Answer: C
Difficulty: Easy
Keywords: mean
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25) A lab orders 100 rats a week for each of the 52 weeks in the year for experiments that the lab conducts.
Prices for 100 rats follow the following distribution:
Price: $10.00 $12.50 $15.00

Probability: 0.35 0.40 0.25
How much should the lab budget for next year's rat orders be, assuming this distribution does not
change?
A) $520
B) $637
C) $650
D) $780
Answer: B
Keywords: mean, probability distribution
26) The local police department must write, on average, 5 tickets a day to keep department revenues at
budgeted levels. Suppose the number of tickets written per day follows a Poisson distribution with a
mean of 6.5 tickets per day. Interpret the value of the mean.
A) The number of tickets that is written most often is 6.5 tickets per day.
B) Half of the days have less than 6.5 tickets written and half of the days have more than 6.5 tickets
written.
C) If we sampled all days, the arithmetic average or expected number of tickets written would be 6.5
tickets per day.
D) The mean has no interpretation since 0.5 ticket can never be written.
Answer: C
Difficulty: Easy
Keywords: mean, Poisson distribution
27) True or False: The Poisson distribution can be used to model a continuous random variable.
Answer: FALSE
Difficulty: Easy
28) True or False: Another name for the mean of a probability distribution is its expected value.
Answer: TRUE
Difficulty: Easy
Keywords: mean
29) True or False: The number of customers arriving at a department store in a 5-minute period has a
binomial distribution.
Answer: FALSE
Difficulty: Easy
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30) True or False: The number of customers arriving at a department store in a 5-minute period has a
Poisson distribution.
Answer: TRUE
Difficulty: Easy
31) True or False: The number of males selected in a sample of 5 students taken without replacement from
a class of 9 females and 18 males has a binomial distribution.
Answer: FALSE
Difficulty: Easy
32) True or False: The number of males selected in a sample of 5 students taken without replacement from
a class of 9 females and 18 males has a hypergeometric distribution.
Answer: TRUE
Difficulty: Easy
33) True or False: The diameters of 10 randomly selected bolts have a binomial distribution.
Answer: FALSE
Difficulty: Easy
34) True or False: The largest value that a Poisson random variable X can have is n.
Answer: FALSE
35) True or False: In a Poisson distribution, the mean and standard deviation are equal.
Answer: FALSE
36) True or False: In a Poisson distribution, the mean and variance are equal.
Answer: TRUE
37) True or False: If remains constant in a binomial distribution, an increase in n will increase the
variance.
Answer: TRUE
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38) True or False: If remains constant in a binomial distribution, an increase in n will not change the
mean.
Answer: FALSE
39) True or False: Suppose that a judge's decisions follow a binomial distribution and that his verdict is
incorrect 10% of the time. In his next 10 decisions, the probability that he makes fewer than 2 incorrect
verdicts is 0.736.
Answer: TRUE
Keywords: binomial distribution, probability
40) True or False: Suppose that the number of airplanes arriving at an airport per minute is a Poisson
process. The average number of airplanes arriving per minute is 3. The probability that exactly 6 planes
arrive in the next minute is 0.05041.
Answer: TRUE
Difficulty: Easy
Keywords: Poisson distribution, probability
41) True or False: The covariance between two investments is equal to the sum of the variances of the
investments.
Answer: FALSE
Difficulty: Easy
Keywords: covariance, variance
42) True or False: If the covariance between two investments is zero, the variance of the sum of the two
investments will be equal to the sum of the variances of the investments.
Answer: TRUE
Difficulty: Easy
43) True or False: The expected return of the sum of two investments will be equal to the sum of the
expected returns of the two investments plus twice the covariance between the investments.
Answer: FALSE
Keywords: mean, portfolio
44) True or False: The variance of the sum of two investments will be equal to the sum of the variances of
the two investments plus twice the covariance between the investments.
Answer: TRUE
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45) True or False: The variance of the sum of two investments will be equal to the sum of the variances of
the two investments when the covariance between the investments is zero.
Answer: TRUE
46) True or False: The expected return of a two-asset portfolio is equal to the product of the weight
assigned to the first asset and the expected return of the first asset plus the product of the weight
assigned to the second asset and the expected return of the second asset.
Answer: TRUE
Difficulty: Easy
TABLE 5-1
The probability that a particular type of smoke alarm will function properly and sound an alarm in the
presence of smoke is 0.8. You have 2 such alarms in your home and they operate independently.
47) Referring to Table 5-1, the probability that both sound an alarm in the presence of smoke is ________.
Answer: 0.64
48) Referring to Table 5-1, the probability that neither sound an alarm in the presence of smoke is
________.
Answer: 0.04
49) Referring to Table 5-1, the probability that at least one sounds an alarm in the presence of smoke is
________.
Answer: 0.96
TABLE 5-2
A certain type of new business succeeds 60% of the time. Suppose that 3 such businesses open (where
they do not compete with each other, so it is reasonable to believe that their relative successes would be
independent).
50) Referring to Table 5-2, the probability that all 3 businesses succeed is ________.
Answer: 0.216
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51) Referring to Table 5-2, the probability that all 3 businesses fail is ________.
Answer: 0.064
52) Referring to Table 5-2, the probability that at least 1 business succeeds is ________.
Answer: 0.936
53) Referring to Table 5-2, the probability that exactly 1 business succeeds is ________.
Answer: 0.288
54) If X has a binomial distribution with n = 4 and p = 0.3, then P(X = 1) = ________.
Answer: 0.4116
Difficulty: Easy
55) If X has a binomial distribution with n = 4 and p = 0.3, then P(X > 1) = ________.
Answer: 0.3483
56) If X has a binomial distribution with n = 5 and p = 0.1, then P(X = 2) = ________.
Answer: 0.0729
Difficulty: Easy
57) Suppose that past history shows that 60% of college students prefer Brand C cola. A sample of 5
students is to be selected. The probability that exactly 1 prefers brand C is ________.
Answer: 0.0768
Difficulty: Easy
students is to be selected. The probability that at least 1 prefers brand C is ________.
Answer: 0.9898
students is to be selected. The probability that exactly 3 prefer brand C is ________.
Answer: 0.3456
Difficulty: Easy
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students is to be selected. The probability that exactly 4 prefer brand C is ________.
Answer: 0.2592
Difficulty: Easy
students is to be selected. The probability that 2 or fewer prefer brand C is ________.
Answer: 0.3174
students is to be selected. The probability that more than 3 prefer brand C is ________.
Answer: 0.3370
students is to be selected. The probability that fewer than 2 prefer brand C is ________.
Answer: 0.0870
students is to be selected. The average number that you would expect to prefer brand C is ________.
Answer: 3
Difficulty: Easy
students is to be selected. The variance of the number that prefer brand C is ________.
Answer: 1.2
Difficulty: Easy
Keywords: binomial distribution, variance
TABLE 5-3
The following table contains the probability distribution for X = the number of retransmissions necessary
to successfully transmit a 1024K data package through a double satellite media.
X 0 1 2 3
P(X) 0.35 0.35 0.25 0.05
66) Referring to Table 5-3, the probability of no retransmissions is ________.

Answer: 0.35
Difficulty: Easy
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67) Referring to Table 5-3, the probability of at least one retransmission is ________.
Answer: 0.65
Difficulty: Easy
68) Referring to Table 5-3, the mean or expected value for the number of retransmissions is ________.
Answer: 1.0
Difficulty: Easy
Keywords: probability distribution, mean
69) Referring to Table 5-3, the variance for the number of retransmissions is ________.
Answer: 0.80
Difficulty: Easy
Keywords: probability distribution, variance
70) Referring to Table 5-3, the standard deviation of the number of retransmissions is ________.
Answer: 0.894
Difficulty: Easy
Keywords: probability distribution, standard deviation
71) In a game called Taxation and Evasion, a player rolls a pair of dice. If, on any turn, the sum is 7, 11, or
12, the player gets audited. Otherwise, she avoids taxes. Suppose a player takes 5 turns at rolling the dice.
The probability that she does not get audited is ________.
Answer: 0.2373
72) In a game called Taxation and Evasion, a player rolls a pair of dice. If on any turn the sum is 7, 11, or
The probability that she gets audited once is ________.
Answer: 0.3955
The probability that she gets audited at least once is ________.
Answer: 0.7627
The probability that she gets audited no more than 2 times is ________.
Answer: 0.8965
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The expected number of times she will be audited is ________.
Answer: 1.25
Difficulty: Easy
The variance of the number of times she will be audited is ________.
Answer: 0.9375
Keywords: binomial distribution, variance
The standard deviation of the number of times she will be audited is ________.
Answer: 0.968
Keywords: binomial distribution, standard deviation
TABLE 5-4
The following table contains the probability distribution for X = the number of traffic accidents reported
in a day in Corvallis, Oregon.
X 0 1 2 3 4 5
P(X) 0.10 0.20 0.45 0.15 0.05 0.05
78) Referring to Table 5-4, the probability of 3 accidents is ________.

Answer: 0.15
Difficulty: Easy
79) Referring to Table 5-4, the probability of at least 1 accident is ________.

Answer: 0.90
Difficulty: Easy
80) Referring to Table 5-4, the mean or expected value of the number of accidents is ________.
Answer: 2.0
Difficulty: Easy
Keywords: probability distribution, mean
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81) Referring to Table 5-4, the variance of the number of accidents is ________.
Answer: 1.4
Difficulty: Easy
Keywords: probability distribution, variance
82) Referring to Table 5-4, the standard deviation of the number of accidents is ________.
Answer: 1.18
Difficulty: Easy
Keywords: probability distribution, standard deviation
83) The number of power outages at a nuclear power plant has a Poisson distribution with a mean of 6
outages per year. The probability that there will be exactly 3 power outages in a year is ________.
Answer: 0.0892
Difficulty: Easy
Keywords: Poisson distribution
outages per year. The probability that there will be at least 3 power outages in a year is ________.
Answer: 0.9380
outages per year. The probability that there will be at least 1 power outage in a year is ________.
Answer: 0.9975
outages per year. The probability that there will be no more than 1 power outage in a year is ________.
Answer: 0.0174
outages per year. The probability that there will be between 1 and 3 inclusive power outages in a year is
________.
Answer: 0.1487
outages per year. The variance of the number of power outages is ________.
Answer: 6
Difficulty: Easy
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89) The number of 911 calls in Butte, Montana, has a Poisson distribution with a mean of 10 calls a day.
The probability of seven 911 calls in a day is ________.
Answer: 0.0901
Difficulty: Easy
The probability of seven or eight 911 calls in a day is ________.
Answer: 0.2027
The probability of 2 or more 911 calls in a day is ________.
Answer: 0.9995
92) The number of 911 calls in Butte, Montana, has a Poisson distribution with a mean of 10.0 calls a day.
The standard deviation of the number of 911 calls in a day is ________.
Answer: 3.16
Difficulty: Easy
93) An Undergraduate Study Committee of 6 members at a major university is to be formed from a pool
of faculty of 18 men and 6 women. If the committee members are chosen randomly, what is the
probability that precisely half of the members will be women?
Answer: 0.1213
Difficulty: Easy
Keywords: hypergeometric distribution
of faculty of 18 men and 6 women. If the committee members are chosen randomly, what is the
probability that all of the members will be men?
Answer: 0.1379
Difficulty: Easy
95) A debate team of 4 members for a high school will be chosen randomly from a potential group of 15
students. Ten of the 15 students have no prior competition experience while the others have some degree
of experience. What is the probability that none of the members chosen for the team have any
competition experience?
Answer: 0.1538
Difficulty: Easy
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of experience. What is the probability that at least 1 of the members chosen for the team have some prior
competition experience?
Answer: 0.8462
of experience. What is the probability that no more than 1 of the members chosen for the team have some
prior competition experience?
Answer: 0.5934
of experience. What is the probability that exactly half of the members chosen for the team have some
prior competition experience?
Answer: 0.3297
Difficulty: Easy
99) The Department of Commerce in a particular state has determined that the number of small
businesses that declare bankruptcy per month is approximately a Poisson distribution with a mean of 6.4.
Find the probability that more than 3 bankruptcies occur next month.
Answer: 0.8811
100) The Department of Commerce in a particular state has determined that the number of small
businesses that declare bankruptcy per month is approximately a Poisson distribution with a mean of 6.4.
Find the probability that exactly 5 bankruptcies occur next month.
Answer: 0.1487
Difficulty: Easy
101) The online access computer service industry is growing at an extraordinary rate. Current estimates
suggest that 75% of the home-based computers have access to online services. Suppose 20 people with
home-based computers were randomly and independently sampled. Find the probability that fewer than
10 of those sampled currently have access to online services.
Answer: 0.0039
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102) The online access computer service industry is growing at an extraordinary rate. Current estimates
suggest that 75% of the home-based computers have access to online services. Suppose 20 people with
home-based computers were randomly and independently sampled. Find the probability that more than
9 of those sampled currently do not have access to online services.
Answer: 0.0139
103) A national trend predicts that women will account for half of all business travelers in the next 3
years. To attract these women business travelers, hotels are providing more amenities that women
particularly like. A recent survey of American hotels found that 70% offer hairdryers in the bathrooms.
Consider a random and independent sample of 20 hotels. Find the probability that all of the hotels in the
sample offered hairdryers in the bathrooms.
Answer: 0.0008
Consider a random and independent sample of 20 hotels. Find the probability that more than 7, but less
than 13, of the hotels in the sample offered hairdryers in the bathrooms.
Answer: 0.2264
Consider a random and independent sample of 20 hotels. Find the probability that at least 9 of the hotels
in the sample do not offer hairdryers in the bathrooms.
Answer: 0.1133
mean of 6.4 tickets per day. Find the probability that less than 6 tickets are written on a randomly selected
day from this population.
Answer: 0.3837
Difficulty: Easy
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mean of 6.4 tickets per day. Find the probability that exactly 6 tickets are written on a randomly selected
day from this population.
Answer: 0.1586
Difficulty: Easy
TABLE 5-5
From an inventory of 48 new cars being shipped to local dealerships, corporate reports indicate that 12
have defective radios installed.
108) Referring to Table 5-5, what is the probability out of the 8 new cars it just received that, when each is
tested, no more than 2 of the cars have defective radios?
Answer: 0.6863
tested, exactly half of the cars have defective radios?
Answer: 0.0773
Difficulty: Easy
tested, none of the cars have defective radios?
Answer: 0.0802
Difficulty: Easy
tested, at least half of the cars have defective radios?
Answer: 0.09388
tested, no more than half of the cars have defective radios?
Answer: 0.9834
tested, no more than 2 of the cars have defective radios?
Answer: 0.6863
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tested, exactly two of the cars have non-defective radios?
Answer: 0.001543
tested, at most three of the cars have non-defective radios?
Answer: 0.01661
tested, no more than half of the cars have non-defective radios?
Answer: 0.09388
TABLE 5-6
The quality control manager of Green Bulbs Inc. is inspecting a batch of energy saving compact
fluorescent light bulbs. When the production process is in control, the average number of bad bulbs per
shift is 6.0.
117) Referring to Table 5-6, what is the probability that any particular shift being inspected has produced
4.0 bad bulbs?
Answer: 0.1339
Difficulty: Easy
fewer than 5.0 bad bulbs?
Answer: 0.2851
at least 6.0 bad bulbs?
Answer: 0.5543
between 5.0 and 8.0 inclusive bad bulbs?
Answer: 0.5622
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121) Referring to Table 5-6, what is the probability that any particular shift being inspected has less than
5.0 or more than 8.0 bad bulbs?
Answer: 0.4378
TABLE 5-7
There are two houses with almost identical characteristics available for investment in two different
neighborhoods with drastically different demographic composition. The anticipated gain in value when
the houses are sold in 10 years has the following probability distribution:
122) Referring to Table 5-7, what is the expected value gain for the house in neighborhood A?
Answer: $ 12,550
Difficulty: Easy
Keywords: mean
123) Referring to Table 5-7, what is the expected value gain for the house in neighborhood B?
Answer: $21,300
Difficulty: Easy
Keywords: mean
124) Referring to Table 5-7, what is the variance of the gain in value for the house in neighborhood A?
Answer: 583,147,500 dollars2
Difficulty: Easy
Keywords: variance
125) Referring to Table 5-7, what is the variance of the gain in value for the house in neighborhood B?
Answer: 67,460,000 dollars2
Difficulty: Easy
Keywords: variance
126) Referring to Table 5-7, what is the standard deviation of the value gain for the house in
neighborhood A?
Answer: $24,148.45
Difficulty: Easy
Keywords: standard deviation
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127) Referring to Table 5-7, what is the standard deviation of the value gain for the house in
neighborhood B?
Answer: $8,213.40
Difficulty: Easy
128) Referring to Table 5-7, what is the covariance of the two houses?
Answer: -190,040,000
Difficulty: Easy
Keywords: covariance
129) Referring to Table 5-7, what is the expected value gain if you invest in both houses?
Answer: $33,850
Keywords: mean of the sum
130) Referring to Table 5-7, what is the total variance of value gain if you invest in both houses?
Answer: 270,527,500
Keywords: variance of the sum
131) Referring to Table 5-7, what is the total standard deviation of value gain if you invest in both houses?
Answer: $16,447.72
Keywords: standard deviation of the sum
132) Referring to Table 5-7, if you can invest half of your money on the house in neighborhood A and the
remaining on the house in neighborhood B, what is the portfolio expected return of your investment?
Answer: $16,925
133) Referring to Table 5-7, if you can invest half of your money on the house in neighborhood A and the
remaining on the house in neighborhood B, what is the portfolio risk of your investment?
Answer: $8,223.86
Keywords: standard deviation, risk, portfolio
134) Referring to Table 5-7, if you can invest 10% of your money on the house in neighborhood A and the
Answer: $20,425
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Answer: $5,125.12
Answer: $18,675
Answer: $2,392.04
Answer: $15,175
Answer: $14,560.11
Answer: $13,425
Answer: $20,947.96
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142) Referring to Table 5-7, if your investment preference is to maximize your expected return while
exposing yourself to the minimal amount of risk, will you choose a portfolio that will consist of 10%, 30%,
50%, 70%, or 90% of your money on the house in neighborhood A and the remaining on the house in
neighborhood B?
Answer: 30%
Keywords: mean, standard deviation, risk, portfolio, coefficient of variation
143) Referring to Table 5-7, if your investment preference is to maximize your expected return and not
worry at all about the risk that you have to take, will you choose a portfolio that will consist of 10%, 30%,
50%, 70%, or 90% of your money on the house in neighborhood A and the remaining on the house in
neighborhood B?
Answer: 10%
144) Referring to Table 5-7, if your investment preference is to minimize the amount of risk that you have
to take and do not care at all about the expected return, will you choose a portfolio that will consist of
10%, 30%, 50%, 70%, or 90% of your money on the house in neighborhood A and the remaining on the
house in neighborhood B?
Answer: 30%
TABLE 5-8
Two different designs on a new line of winter jackets for the coming winter are available for your
manufacturing plants. Your profit (in thousands of dollars) will depend on the taste of the consumers
when winter arrives. The probability of the three possible different tastes of the consumers and the
corresponding profits are presented in the following table.
Probability Taste Design A Design B

0.2 more conservative 180 520
0.5 no change 230 310
0.3 more liberal 350 270
145) Referring to Table 5-8, the table above is called the ________ for the two designs.
Answer: probability distribution
Difficulty: Easy
146) Referring to Table 5-8, what is your expected profit when Design A is chosen?
Answer: $256 thousands or $256,000
Difficulty: Easy
Keywords: mean
5-25
147) Referring to Table 5-8, what is your expected profit when Design B is chosen?
Difficulty: Easy
Keywords: mean
148) Referring to Table 5-8, what is the variance of your profit when Design A is chosen?
Answer: 4,144 × 1,0002 or 4,144,000,000
Keywords: variance
149) Referring to Table 5-8, what is the variance of your profit when Design B is chosen?
Answer: 8,400 × 1,0002 or 8,400,000,000
Keywords: variance
150) Referring to Table 5-8, what is the standard deviation of your profit when Design A is chosen?
Answer: $64.37391 thousands or $64,373.91
Difficulty: Easy
151) Referring to Table 5-8, what is the standard deviation of your profit when Design B is chosen?
Difficulty: Easy
152) Referring to Table 5-8, what is the covariance of the profits from the two different designs?
Answer: -4,320 × 1,0002 or -4,320,000,000
Keywords: covariance
153) Referring to Table 5-8, what is the expected profit if you increase the shift of your production lines
and choose to produce both designs?
Keywords: mean of the sum
154) Referring to Table 5-8, what is the total variance of the profit if you increase the shift of your
production lines and choose to produce both designs?
Answer: 3,904 × 1,0002 or 3,904,000,000
Keywords: variance of the sum
155) Referring to Table 5-8, what is the total standard deviation of the profit if you increase the shift of
your production lines and choose to produce both designs?
Keywords: standard deviation of the sum
5-26
156) Referring to Table 5-8, if you decide to choose Design A for half of the production lines and Design B
for the other half, what is your expected profit?
for the other half, what is the risk of your investment?
Answer: $31.241 thousands or $31,241
for the other half, what is the coefficient of variation of your investment?
Answer: 10.48%
Keywords: coefficient of variation, portfolio
159) Referring to Table 5-8, if you decide to choose Design A for 10% of the production lines and Design B
for the remaining production lines, what is the expected profit?
for the remaining production lines, what is the risk of your investment?
for the remaining production lines, what is the coefficient of variation of your investment?
Answer: 23.49%
5-27
Answer: 16.42%
Answer: 11.09%
Answer: $51.60465 thousands or $ 51,604.65
Answer: 19.52%
5-28
171) Referring to Table 5-8, if your investment preference is to maximize your expected profit while
exposing yourself to the minimal amount of risk, will you choose a production mix that will consist of
10%, 30%, 50%, 70%, or 90% of your production lines for Design A and the remaining for Design B?
Answer: 50%
NOTE: 50% yields the lowest coefficient of variation.
Keywords: mean, standard deviation, risk, portfolio, coefficient of variation
172) Referring to Table 5-8, if your investment preference is to maximize your expected profit and not
worry at all about the risk that you have to take, will you choose a production mix that will consist of
10%, 30%, 50%, 70%, or 90% of your production lines for Design A and the remaining for Design B?
Answer: 10%
173) Referring to Table 5-8, if your investment preference is to minimize the amount of risk that you have
to take and do not care at all about the expected profit, will you choose a production mix that will consist
of 10%, 30%, 50%, 70%, or 90% of your production lines for Design A and the remaining for Design B?
Answer: 70%
TABLE 5-9
A major hotel chain keeps a record of the number of mishandled bags per 1,000 customers. In a recent
year, the hotel chain had 4.06 mishandled bags per 1,000 customers. Assume that the number of
mishandled bags has a Poisson distribution.
174) Referring to Table 5-9, what is the probability that in the next 1,000 customers, the hotel chain will
have no mishandled bags?
Answer: 0.0172
Difficulty: Easy
175) Referring to Table 5-9, what is the probability that in the next 1,000 customers, the chain will have at
least one mishandled bag?
Answer: 0.9828
Difficulty: Easy
have at least two mishandled bags?
Answer: 0.9127
Difficulty: Easy
5-29
have no more than three mishandled bags?
Answer: 0.4218
Difficulty: Easy
have no more than four mishandled bags?
Answer: 0.6171
Difficulty: Easy
have fewer than six mishandled bags?
Answer: 0.7757
Difficulty: Easy
have fewer than eight mishandled bags?
Answer: 0.9452
Difficulty: Easy
have more than eight mishandled bags?
Answer: 0.02320
Difficulty: Easy
have more than ten mishandled bags?
Answer: 0.003172
Difficulty: Easy
have between two and four inclusive mishandled bags?
Answer: 0.5298
have more than five but less than eight mishandled bags?
Answer: 0.1695
5-30
have less than two or more than eight mishandled bags?
Answer: 0.1105
have no more than two or at least eight mishandled bags?
Answer: 0.2842
have less than two and more than eight mishandled bags?
Answer: 0
have no more than two and at least eight mishandled bags?
Answer: 0
189) The probability that a particular brand of smoke alarm will function properly and sound an alarm in
the presence of smoke is 0.8. You have 5 such alarms in your home and they operate independently.
Which of the following distributions would you use to determine the probability that all of them will
function properly in case of a fire?
C) Normal distribution
D) Hypergeometric distribution
Answer: A
Difficulty: Easy
Keywords: choice of distribution
190) A certain type of new business succeeds 60% of the time. Suppose that 3 such businesses open
(where they do not compete with each other, so it is reasonable to believe that their relative successes
would be independent). Which of the following distributions would you use to determine the probability
that all of them will fail?
Answer: A
Difficulty: Easy
5-31
191) Suppose that past history shows that 60% of college students prefer Coca-Cola. A sample of 10
students is to be selected. Which of the following distributions would you use to figure out the
probability that at least half of them will prefer Coca-Cola?
Answer: A
Difficulty: Easy
192) Suppose the probability of a power outage at a nuclear power plant on a single day is the same every
day of the year. Also the probability of having a power outage on a single day does not increase or
decrease the probability of a power outage on another day. Which of the following distributions would
you use to determine the probability that a power outage will occur next Monday?
Answer: B
Difficulty: Easy
193) The probability of receiving a 911 call on a university campus is the same every day. The probability
of having received a 911 call on a single day does not change the probability of receiving a 911 call on any
other day. Which of the following distributions would you use to determine the probability that a 911 call
will be received the next day?
Answer: B
Difficulty: Easy
of faculty of 18 men and 6 women. Which of the following distributions would you use to determine the
probability that half of the members will be women?
A) Hypergeometric distribution
C) Uniform distribution
D) Binomial distribution
Answer: A
Difficulty: Easy
5-32
of experience. Which of the following distributions would you use to determine the probability that none
of the members chosen for the team have any competition experience?
Answer: A
Difficulty: Easy
196) The probability of a small business declaring bankruptcy was believed to be the same in any month.
Also the number of small businesses that declared bankruptcy was the same every month. Which of the
following distributions would you use to determine the probability that more than 3 bankruptcies will
occur next month?
Answer: B
Difficulty: Easy
197) From an inventory of 48 new cars being shipped to local dealerships, corporate reports indicate that
12 have defective radios installed. Which of the following distributions would you use to determine the
probability that out of the 8 new cars it just received that, when each is tested, no more than 2 of the cars
have defective radios?
Answer: A
Difficulty: Easy
5-33
198) The quality control manager of a candy plant is inspecting a batch of chocolate chip bags. When the
production process is in control, the average number of blue chocolate chips per bag is 6.0. Suppose that
the probability of a blue chocolate chip in a bag is constant across bags and the number of blue chocolate
chips in one bag is independent of the number in any other bag. Which of the following distributions
would you use to figure out the probability that any particular bag being inspected has 4.0 blue chocolate
chips?
Answer: A
Difficulty: Easy
199) The probability that a particular brand of smoke alarm will malfunction in the presence of smoke is
0.002. A batch of 100,000 such alarms was produced by independent production lines. Which of the
following distributions would you use to figure out the probability that at most 5,000 of them will
malfunction in case of a fire?
C) Binomial distribution
D) Uniform distribution
Answer: B
200) Suppose that past history shows that 6% of college students prefer Brand A Cola. A sample of 10,000
students is to be selected. Which of the following distributions would you use to compute the probability
that at least half of them will prefer Brand A cola?
A) Hypergeometric distribution.
C) Binomial distribution
D) Uniform distribution
Answer: B
TABLE 5-10
An accounting firm in a college town usually recruits employees from two of the universities in town.
This year, there are fifteen graduates from University A and five from University B and the firm decides
to hire six new employees from the two universities.
201) Referring to Table 5-10, what is the probability that two of the new employees will be from
University A?
Answer: 0.0135 or 1.35%
Difficulty: Easy
5-34
202) Referring to Table 5-10, what is the probability that all six of the new employees will be from
University A?
Answer: 0.1291 or 12.91%
Difficulty: Easy
203) Referring to Table 5-10, what is the probability that none of the new employees will be from
University B?
Answer: 0.1291 or 12.91%
204) Referring to Table 5-10, what is the probability that none of the new employees will be from
University A?
Answer: 0 or "it can never happen"
205) Referring to Table 5-10, what is the probability that all of the new employees will be from University
B?
Answer: 0 or "it can never happen"
206) Referring to Table 5-10, what is the probability that at least one of the new employees will be from
University A?
Answer: 1.0 or 100%
207) Referring to Table 5-10, what is the probability that no more than four of the new employees will be
from University A?
Answer: 0.4835 or 48.35%
208) Referring to Table 5-10, what is the probability that at least two of the new employees will be from
University B?
Answer: 0.4835 or 48.35%
209) Referring to Table 5-10, what is the probability that more than four of the new employees will be
from University A?
Answer: 0.5165 or 51.65%
5-35
210) Referring to Table 5-10, what is the probability that no more than two of the new employees will be
from University B?
Answer: 0.5165 or 51.65%
TABLE 5-11
Subscribers to Investment Advice White Letters perform security transactions at the rate of five trades per
month. Assume that one of the subscribers performs transactions at this rate and the probability of a
transaction for any two months is the same and the number of transactions in one month is independent
of the number of transactions in another month.
211) Referring to Table 5-11, what is the mean number of transactions per month for this subscriber?
Answer: 5
Difficulty: Easy
212) Referring to Table 5-11, what is the variance of the number of transactions per month for this
subscriber?
Answer: 5
Difficulty: Easy
213) Referring to Table 5-11, what is the probability that exactly ten security transactions will be
conducted in one month?
Answer: 0.0181
Difficulty: Easy
214) Referring to Table 5-11, what is the probability that at least five security transactions will be
Answer: 0.5595
215) Referring to Table 5-11, what is the probability that no more than five security transactions will be
Answer: 0.6160
216) Referring to Table 5-11, what is the probability that no security transaction will be conducted in one
month?
Answer: 0.0067
5-36
217) Referring to Table 5-11, what is the probability that more than two security transactions will be
Answer: 0.8753
218) Referring to Table 5-11, what is the probability that fewer than two security transactions will be
Answer: 0.0404
5-37

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Test Bank for Statistics for Managers Using Microsoft

Excel 7th Edition Levine Stephan Szabat 0133061817

Statistics for Managers Using Microsoft Excel, 7e (Levine)

3) A probability distribution is an equation that

7) Whenever π = 0.5, the binomial distribution will

8) Whenever π = 0.1 and n is small, the binomial distribution will be

9) If n = 10 and π = 0.70, then the mean of the binomial distribution is

11) If the outcomes of a variable follow a Poisson distribution, then their

13) The covariance

20) The portfolio expected return of two investments

Price: $10.00 $12.50 $15.00

66) Referring to Table 5-3, the probability of no retransmissions is ________.

78) Referring to Table 5-4, the probability of 3 accidents is ________.

79) Referring to Table 5-4, the probability of at least 1 accident is ________.

Probability Taste Design A Design B

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