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1. The cost of a Masala Dosa in Kamat Restaurant in Dubai is Dhs.5.50.

According to Kamat
Restaurant the cost of making Masala Dosa has the following cost function
C=100+0.0085X2
where X is the number of Dosas sold on any given day. If on an average Kamat Restaurant
sells 530 Masala Dosas with the standard deviation of 69

1) What is the expected revenue of Kamat Restaurant?


2) What is the expected profit of Kamat Restaurant?

2. An investor has Rs.10,000 to invest and two investment opportunities , each requiring a
minimum of Rs.5000/-. The profit per Rs.1000 from the first investment and the second
investment are represented by the random variables X and Y respectively having the
probability functions respectively.

-----------------------------------------------------
X PX(x) Y PY(y)
-----------------------------------------------------
-5 0.4 0 0.6
20 0.6 25 0.4
----------------------------------------------------
The random variables X and Y are independent. The investor has the following three
possible strategies to choose one from them.
i. Rs.10,000 in the first investment
ii. Rs.10,000 in the second investment
iii. Rs.5,000 in each investment
Determine the best investment decision for the investor.

3. Historically, Ram Automobile Company has produced defective doors with a certain relative
frequency. It has been found that the probability of a four-door model's having four
defective doors is .0016. Assuming independence and a constant probability associated with
a single defective door, what is the probability that a certain four-door car produced by this
company would have
1. exactly one defective door.
2. at least one door defective. (10)

4. A multiple choice test has 10 questions. for each question there are four alternative
answers from which to choose. Three points are awarded for each correct answer and
points are not deducted for incorrect answers. The instructor awards a bonus point if
the students spells his or her name correctly ( usually happens in QT exams!). A student
who has not studied for this test decides to choose at random an answer for each
question. (That is why I avoid multiple choice tests in QT exams, as these concepts will
backfire like this!).

i. Find the expected value and the standard deviation of number of correct
answers for the student on these questions.
ii. The student spells his or her name correctly. Find the expected value and
standard deviation of the total score of the student in this test.

5. An analyst predicts that 3.5% of all small companies will file for bankruptcy in the coming
year. For a random sample of 100 companies, estimate the probability that at least two will
file for bankruptcy in the next year assuming that the analyst’s prediction is correct.

6. A seed distributor finds that on the average 8% of his seeds will not germinate. He puts
them up in packages of 100 and guarantees 90% germination. Find the probability of
that a given package will violate the guarantee.

7. The table given below shows the probabilities of investors categorised according to the
annual rate of return expected and the level of risk acceptable.
Let X be the random variable denoting the expected annual rate of return (ARR) and Y
be the random variable denoting the acceptable level of risk(LOR).

X = 0 if the ARR < 10%


1 if the ARR is between 10%-15%
2 if the ARR >15%

let Y = 0 if the LOR is high


1 if the LOR is Medium
2 if the LOR is low
3 if the LOR is is none

Y \ X 0 1 2 Total
0 1/6 1/12 1/24
1 1/4 1/40 ¼
2 1/20 1/8 0
3 1/120 0 0
Total

Find
i. P( X=1 , Y=2)
ii. P(X+Y <= 2)
iii. P(X > Y)
iv. COV(X,Y)