Statistics (I) Final Exam Jan. 11, 2002 d d a d a , c c d d c Multiple Choice Questions (30%) 1.

Which of the following is not one of the sampling distribution of the sample mean? a. The mean of the sampling distribution is equal to the population mean. b. The standard deviation of the sampling distribution is equal to the standard deviation of the population divided by the square root of n. c. The shape of the sampling distribution is approximately normal if the sample size is sufficiently large. d. All of the above are properties of the sampling distribution of the sample mean. 2. Why is the Central Limit Theorem so important to the study of sampling distributions? a. It allows us to disregard the size of the sample selected when the population is approximately normal. b. It allows us to disregard the shape of the sampling distribution when the size of population is large. c. It allows us to disregard the size of the population we are sampling from. d. It allows us to disregard the shape of population when n is large. 3. A sample that does not provide a good representation of the population from which it was collected is referred to as a(n) ____ sample. a. Biased b. Empirical c. Statistic d. Inferential 4. Suppose a 95% confidence interval for turns out to be (1,000, 2,100). Based on the interval, do you believe the average is equal to 2,200? a. Yes, and I am 95% sure of it. b. Yes, and I am 100% sure of it. c. No, and I am 95% sure of it. d. 1,200 is a possible value for the mean. 5. In the construction of confidence intervals, if all other quantities are unchanged, an increase in the sample size will lead to a ______ interval. a. Narrower b. Wider c. Less significant d. Biased
1

6. The sample size formulas are useful for ___________. a. Calculating a value of the test statistic when testing n b. Calculating a p-value for a large sample test of n. c. Calculating the sample size to estimate a parameter to within a specified bound. d. Comparing different confidence intervals constructed using different sample sizes. 7. Suppose we wish to test H0: = 47 vs Ha: > 47. What will result if we conclude that the mean is greater than 47when its true value is really 52? a. We have made a Type II error. b. We have made a Type I error. c. We have made a correct decision. d. None of the above are correct. 8. Which of the following statements is Not true about the level of significance in a test of hypothesis? a. The larger the level of significance, the more likely you are to reject the null hypothesis. b. The level of significance is the maximum risk we are willing to accept in making a Type I error. c. The level of significance is also called the alpha level. d. The level of significance is another name for a p-value. 9. Which part of the test of hypothesis procedure determines the value of the p-value? a. The alternative hypothesis b. The test statistic c. The sampling distribution of the test statistic d. All of above 10. We have created a 95% confidence interval for with the result (10, 15). What conclusion will we make if we test H0: = 16 vs Ha: > 16 at = 0.05? a. Reject H0 in favor of Ha. b. Accept H0 in favor of H0. c. Fail to reject H0. d. We cannot tell what our decision will be with the information given.

Essay Questions 1. A local bank reported to the federal government that its 5,246 savings accounts have a mean balance of $1,000 and a standard deviation of $240. Government auditors have asked to randomly sample 64 of the banks accounts to assess the reliability of the mean balance reported by the bank. If the banks information is correct, find the probability that the sample mean balance would be less than $1,072. (8%) N=5246() 240 2 Nn ) 64 N 1 x 1000 1072 1000 < P( x <1072) = P( 240 5246 64 240 5246 64 ) = P(Z<2.4145)=0.992 8 5245 8 5245 n=64 x ~N(1000, 2. Let X and Y be independent random variables with E(X)=3, E(Y)=5, Var(X)=Var(Y)=2, find the value of M which makes M(X2 - Y2)+Y2 be an unbiased estimate of 2. (12%) M(X2 Y2)+Y2 2 E(X)=3, E(Y)=5 Var(X)=Var(Y)=2 E{ M(X2 Y2)+Y2} = M E(X2) + (1 M) E(Y2) Var(X)=E(X2) [E(X)]2 2=E(X2) E(X2)= 2+9 9 Var(Y)=E(Y2) [E(Y)]2 2=E(Y2) 25 E(Y2)= 2+25 E{ M(X2 Y2)+Y2} = M E(X2) + (1 M) E(Y2) = 2 () M [2+9] + (1 M) [ 2+25] = 2 2 16M + 25 = 2 16M = 25 M = 25/16 3. A normal population has unknown variance, 2. If (1.48, 8.5) is a 95% confidence interval for2 based on a random sample of size 12, find the value of ( x i x ) 2 . (10%)
i =1 12

2=(1.48, 8.5) 1.48< 2< 8.5

 2 2 = n=12, =0.05

(n 1)S 2 ~ 2(n-1) 2

(X X ) 2 (12 1)S i i 2 (0.975;11) < 2 (11) = = =1 2 < 2 (0.025;11) 2

2

12

2 (X i X ) 3.816 < 2 (11) = i =1 < 21.92 2

12

12

i =1

(X i X ) 2
12

12

> 3.816 2 <

i =1

(X i X ) 3.816
12

= 8.5
2

(X i X ) 2 =8.5 3.816=32.436
i =1

12

i =1

(X i X )

2 =1.48 21.92=32.4416

< 21.92 2 >

i =1

(X i X ) 21.92

= 1.48

(X i X ) 2
i =1

12

4. The branch manager of an outlet of a large, nationwide bookstore chain wants to study characteristics of customers of her store, which is located near the campus of a large state university. In particular, she decides to focus on two variables: the amount of money spent by customers and whether the customers would consider purchasing educational videotapes relating to specific courses such as statistics, accounting, or calculus. The results from a sample of 70 customers are as follows: * Amount spent: X = $28.52 , s = $11.39 . * 28 customers stated that they would consider purchasing educational videotapes. a. Set up a 95% confidence interval estimate of the population average amount spent in the bookstore. (7%) b. Set up a 90% confidence interval estimate of the population proportion of customers who would consider purchasing educational videotapes. (7%)

a. 28.52 1.96 b. 28 1.645 70

11.39 70 70

=(25.8517, 31.1883) = (0.3037, 0.4693)

28 42 ( ) 70 70

5. The beta coefficient of a stock is a measure of the stocks volatility (or risk) relative to the market as a whole. Stocks with beta coefficients greater than 1 generally bear greater risk than the market, whereas stocks with beta coefficients less than 1 are less risky than the overall market. A random sample of 15 hightechnology stocks was selected at the end of 1996, and the mean and standard deviation of the beta coefficients were calculated: X = 1.23, s = 0.37 a. Set up the appropriate null and alternative hypotheses to test whether the average high-technology stock is riskier than the market as a whole. (4%) b. Establish the appropriate test statistic and rejection region for the test. (8%) c. What assumptions are necessary to ensure the validity of the test? (4%) d. Calculate the test statistic and state your conclusion. (4%) e. What is the approximate p-value associated with this test? Interpret it. (6%) (a) H0: =1 H1: >1

x 0 (b) t= s ~t(n-1)=t(14) n {tt>t(0.05; 14)=1.761} (c) 1.23 1 = 2.408 (d) t= 0.37 >1.761 H0, ( ) 15 (e) p-value=P(t(14)>2.41), 0.01 0.025 =0.05, H0