You are on page 1of 33

Question Paper

Quantitative Methods (CFA530): October 2007

• Marks are indicated against each question.

<
1. Which of the following statements is/are true with regard to the extrapolation in financial analysis? Answer
>
I. Forecasting future sales, cost and profit.
II. Long-term capital requirements.
III. Production of financial statements for financial institutions, banks, etc.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
(1 mark)
<
2. The sales of a consumer durable are ascertained as follows: Answer
>
Year 2000 2001 2002 2003 2005
Sales Units(in ’000 s) 9 11 18 23 31
Using linear approximation method of interpolation, find the sales in year 2004.
(a) 24,000 units
(b) 25,225 units
(c) 26,750 units
(d) 27,000 units
(e) 29,500 units.
(1 mark)
<
3. At K = 17%, the present value of cash flow of a project is Rs.255.76 and at K = 18%, the present value of cashAnswer
flow is Rs.249.19. At what value of K, the present value of cash flow is Rs.250? >
(a) 11.35%
(b) 15.67%
(c) 17.88%
(d) 19.01%
(e) 21.54%.
(1 mark)
<
4. Which of the following is false regarding the number and size of class intervals? Answer
>
(a) Every item of data or data point should be included in one and only one class
(b) Adjacent classes should not have intervals in between
(c) Classes should not overlap
(d) Class intervals should be of the same length to the extent possible
(e) The number of classes may be equal to the square of the number of data points.
(1 mark)
<
5. To determine the appropriate width of each class interval in a grouped frequency distribution, we Answer
>
(a) Take the square of the number of observations
(b) Divide the number of desired class intervals by the range of the data
(c) Take the square root of the number of observations
(d) Divide the range of the data by the number of desired class intervals
(e) Divide the range of the data by 2.
(1 mark)

1
<
6. Which of the following is/are true with regard to the negatively skewed distribution? Answer
>
I . In negatively skewed distribution curve, the most of the values are concentrated at higher end.
II. For negatively skewed distribution curve A.M < Median < Mode.
III. Negatively skewed distribution curve tails off towards the higher end.
(a) Only (I) above
(b) Only (III) above
(c) Both (I) and (II) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.
(1 mark)
<
7. If m = x 2 − 10x + 5 and n = 7x + 3, then m × n = Answer
>
(a) 7x 3 − 32x 2 + 9x + 15
(b) 7x 3 + 35x 2 + 7x + 18
(c) 7x 3 + 73x 2 + 65x + 15
(d) 7x 3 − 67x 2 + 5x + 15
(e) 7x 3 − 67x 2 + 30x + 17.
(1 mark)
<
8. Which of the following measures of dispersion is more sophisticated measure of risk, employed commonly inAnswer
finance? >
(a) Range
(b) Standard deviation
(c) Mean deviation
(d) Quartile deviation
(e) Coefficient of variation.
(1 mark)
<
9. According to Bienayme-Chebyshev rule, at least what percentage of the observations in a distribution of dataAnswer
will lie within ± 3 standard deviations of the mean? >

(a) 25%
(b) 50%
(c) 75%
(d) 89%
(e) 97%.
(1 mark)
<
10.Which of the following statements is/are true with regard to the computer? Answer
>
I. Computer is an electronic device.
II. Computer can perform long sequences of computations without human interventions.
III. Computer has the ability of storing and executing a given set of instructions for solving a particular
problem.
(a) Only (I) above
(b) Only (II) above
(c) Both (I) and (II) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.
(1 mark)
<
11.In a venn diagram, usually the sample space will be represented as Answer
>
(a) A circle
(b) A square
(c) A rectangle
(d) A triangle
(e) An oval.
(1 mark)
2
<
12.Which of the following is/are false with regard to the rules of probability? Answer
>
I. The probability of the entire sample space is one.
II. Maximum possible area of an event is one.
III. The probability of an event can be negative.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) Both (II) and (III) above.
(1 mark)
<
13.If two balls are drawn from a bag containing 6 red and 9 blue balls, then what is the probability that one is redAnswer
and the other is blue? >
(a) 0.4312
(b) 0.5143
(c) 0.6225
(d) 0.7314
(e) 0.8256.
(1 mark)
<
14.The probability that A will be alive for 15 years is 0.6 and the probability that B will be alive for 15 years is 0.7.Answer
What is the probability that both A and B will be alive for 15 years? >
(a) 0.12
(b) 0.24
(c) 0.28
(d) 0.35
(e) 0.42.
(1 mark)
<
15.The Central Processing Unit (CPU) consists of Answer
>
I. Control Unit.
II. Main Memory.
III. Arithmetic and Logic Unit.
(a) Only (I) above
(b) Only (II) above
(c) Both (I) and (II) above
(d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
(1 mark)
<
16.If the annual growth rates of sales of a factory in 5 years are 3.5%, 5.4%, 6.8%, 7.3% and 6.5% respectively,Answer
then the compounded growth of output per annum for the given period is >
(a) 5.89%
(b) 4.62%
(c) 3.55%
(d) 2.13%
(e) 1.98%.
(1 mark)

3
<
17.The following distribution shows the ages of 100 persons in a group: Answer
>
Age (in years) Number of persons
20 – 25 5
25 – 30 13
30 – 35 18
35 – 40 14
40 – 45 19
45 – 50 11
50 – 55 7
55 – 60 10
60 – 65 3
What is the average age of the persons in the group?
(a) 21.41
(b) 25.82
(c) 37.45
(d) 40.40
(e) 45.50.
(2 marks)
<
18.The following details are available with regard to a data set: Answer

∑ X = 100 ∑X
>
n=5, and
2
= 2, 442

If each observation in the data set is multiplied by 3, then the standard deviation of the resulting data set will be
equal to
(a) 9.40
(b) 17.35
(c) 28.21
(d) 32.28
(e) 39.71.
(1 mark)
<
19.Coefficients of variations of two series are 60% and 80%, and their standard deviations are 12 and 18Answer
respectively. The means of two series are >
(a) 15.5 and 21.0
(b) 17.0 and 23.5
(c) 18.5 and 30.0
(d) 20.0 and 22.5
(e) 22.0 and 25.4.
(1 mark)
<
20.If the sum of the deviations (taking signs into account) of the items from a measure of central tendency is zero,Answer
then that measure is known as >
(a) Harmonic mean
(b) Geometric mean
(c) Arithmetic mean
(d) Median
(e) Mode.
(1 mark)

4
<
21.The probability distribution of a random variable X is as follows: Answer
>
X 10 14 18 22
Probability 0.2 0.1 0.4 0.3
The expected value of X will be equal to
(a) 11.3
(b) 15.7
(c) 17.2
(d) 18.6
(e) 21.4.
(1 mark)
<
22.Consider the following sample of paired observations: Answer
>
X 4 4 5 6 7 10
Y 6 7 5 6 4 2
The covariance between X and Y is
(a) –4.5
(b) –3.8
(c) –1.9
(d) 2.7
(e) 4.6.
(2 marks)
<
23.Which of the following is/are the categories of decision making? Answer
>
I. Decision making under conditions of certainty.
II. Decision making under conditions of uncertainty.
III. Decision making under conditions of risk.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
(1 mark)
<
24.If the decision maker is optimistic, then he is likely to use Answer
>
(a) Maximax criterion
(b) Maximin criterion
(c) Regret criterion
(d) Hurwicz criterion
(e) Heuristic tables.
(1 mark)
<
25.If the marginal profit and marginal loss of a product are Rs.250 and Rs.125 respectively, the probability of salesAnswer
that will justify stocking the product is >
(a) 15%
(b) 24%
(c) 29%
(d) 33%
(e) 41%.
(1 mark)

5
<
26.In a hypothesis testing, which of the following indicates the power of the test? Answer
>
(a) β
(b) α
(c) γ
(d) 1– α
(e) 1– β.
(1 mark)
<
27.If a random sample of size 15 is drawn from a finite population of 65 units without replacement and theAnswer
population standard deviation is 13, then the standard error of the sample mean is >
(a) 0.89
(b) 1.27
(c) 2.31
(d) 2.97
(e) 3.15.
(1 mark)
<
28.Which of the following is not a type of random sampling? Answer
>
(a) Simple random sampling
(b) Stratified random sampling
(c) Systematic sampling
(d) Judgmental sampling
(e) Cluster sampling.
(1 mark)
<
29.If total sum of squares is 525 and regression sum of squares is 380, then the coefficient of determination is Answer
>
(a) 1.9838
(b) 0.7238
(c) 2.3438
(d) 3.0438
(e) 4.1138.
(1 mark)
<
30.A contingency table prepared for chi-square test contains 3 rows and 4 columns. The degrees of freedom in thisAnswer
case will be >
(a) 12
(b) 11
(c) 9
(d) 8
(e) 6.
(1 mark)
<
>
(a) Existence of correlation among independent variables
(b) Absence of correlation among independent variables
(c) Existence of correlation among dependent variables
(d) Absence of correlation among dependent variables
(e) Predictive power of the constants.
(1 mark)
<
32.
The upper control limit for R chart if n = 5 , R = 5.9 , d2 = 2.326 and d3 = 0.864 is Answer
>
(a) 12.739
(b) 16.826
(c) 10.125
(d) 18.224
(e) 20.478.
(1 mark)
6
<
>
(a) Conditions for certainty
(b) Conditions for uncertainty
(c) Conditions of risk
(d) Conditions of known probabilities
(e) Decision tree analysis.
(1 mark)
<
34.Which of the following techniques is suitable for testing whether there is a significant difference between moreAnswer
than two sample means? >
(a) Chi-square test
(b) Analysis of variance
(c) Simple regression analysis
(d) Multiple regression analysis
(e) Correlation analysis.
(1 mark)
<
35.The managers use sample statistics to estimate Answer
>
(a) Sampling distribution
(b) Population parameters
(c) Sample characteristics
(d) Population size
(e) Accuracy of the distribution.
(1 mark)
<
selling securities and rest of the calls are for other purposes. What is the probability that out of the first 10>
telephone calls received in a day, exactly six calls are for trading in securities?
(a) 12%
(b) 17%
(c) 20%
(d) 26%
(e) 33%.
(2 marks)
<
37.A random sample of 17 people is taken from a group in which 35% favor a particular political stand .What is theAnswer
probability that at least 5 individuals in the sample favor this political stand? >
(a) 0.9091
(b) 0.7652
(c) 0.6453
(d) 0.4215
(e) 0.2315.
(2 marks)
<
∑( )
38.
2
For a simple linear regression equation, and there are 13 pairs of observations. The>
standard error of estimate is
(a) 3.785
(b) 5.427
(c) 6.345
(d) 9.587
(e) 12.125.
(1 mark)

7
<
>
X 1 2 4 5 6 8 10 12
Y 2 3 5 6 7 4 3 10
The correlation coefficient is
(a) 0.45
(b) 0.56
(c) 0.60
(d) 0.73
(e) 0.80.
(2 marks)
<
40.The average height of 500 towers is noted as 180.40 ft. After observing the heights of towers for certain periodAnswer
of time, two of them were found to be wrongly taken as 297 ft and 165 ft against their correct height of 197 ft>
and 185 ft respectively. What is the correct average height of the towers?
(a) 167.00 ft
(b) 177.60 ft
(c) 181.90 ft
(d) 180.24 ft
(e) 178.65 ft.
(1 mark)
<
41.In how many ways can the letters of the word STRANGE be arranged so that the vowels occupy only the oddAnswer
places? >
(a) 1,200
(b) 1,440
(c) 2,200
(d) 3,780
(e) 3,840.
(1 mark)
<
42.Four numbers are in A.P. whose sum is 2 and the product of the first and the fourth terms is ten times theAnswer
product of the second and the third terms. The fourth number of the series is >
(a) –1
(b) 1
(c) 2
(d) 3
(e) Either – 4 or 5.
(2 marks)
<
43.A normal variable X has a mean of 96 and a standard deviation of 12. The Z value corresponding to the X valueAnswer
of 100 is >
(a) 12
(b) 96
(c) 100
1
(d)
3
1
(e) .
36
(1 mark)

8
<
44.The following details are available with regard to a right tailed hypothesis test on population mean: Answer
X = 527, σ = 56, μ H0 = 525, n = 100 >
and significance level is 0.05. It is later known that the true population
mean is 530. Which of the following can be said with regard to the test?
(a) t-test should be used
(b) Test leads to Type I error
(c) Test leads to Type II error
(d) Test does not lead to either Type I error or Type II error
(e) Given information is insufficient to conclude.
(2 marks)
<
45.A finance company offers to pay a sum of Rs.32,000 at the end of 6 years to investors who deposit Rs.4,000Answer
>
annually for 6 years .The implicit interest rate is
(a) 11.75%
(b) 12.50%
(c) 11.43%
(d) 10.62%
(e) 14.15%.
(2 marks)
<
46. σ = 0.0884
If X1 = 51, X 2 = 50 and X1 − X2 , then the value of z-statistic for H 0 : μ1 = μ 2 is Answer
>
(a) 10.3122
(b) 11.3122
(c) 12.3122
(d) 13.3122
(e) 14.3122.
(1 mark)
<
47.A random sample of size 9 is selected from a symmetrical population with a unique mode. The sample mean andAnswer
standard deviation are 150 and 25 respectively. What is the 95% confidence interval in which the populations>
mean (µ) will lie?
(a) (120.78, 149.22)
(b) (125.78, 159.22)
(c) (130.78, 169.22)
(d) (135.78, 179.22)
(e) (140.78, 189.22).
(2 marks)
<
48.Which of the following statements is false? Answer
>
(a) If the primal formulation of a linear programming problem is a minimizing problem then the dual
formulation will be a maximizing problem
(b) If the primal formulation of a linear programming problem is a maximizing problem then the dual
formulation will be a minimizing problem
(c) The dual formulation is an inverse of the primal formulation in every respect
(d) The dual formulation cannot be solved for an optimal solution
(e) The dual formulation can be derived from the same data from which the primal is formulated.
(1 mark)
<
49.
lim x − 5x + 6 =
x →3 x −3 >

(a) 1
(b) 2
(c) 3
(d) 4
(e) 5.
(1 mark)

9
<
If y = x + 1 , then dx for x = 4 is >

(a) 1/25
(b) 2/32
(c) 1/27
(d) 2/45
(e) 3/52.
(2 marks)
<
51.The Bayes’ theorem helps the statistician to calculate Answer
>
(a) Subjective probability
(b) Classical probability
(c) Posterior probability
(d) Central tendency
(e) Dispersion.
(1 mark)
<
f −1 (y) is
If a function is defined such as y = f(x) = 5x + 4, then the inverse function >
(a) (y – 5) / 4
(b) (y – 4) / 5
(c) 5y + 4
(d) 4y + 5
(e) 4y – 5.
(1 mark)
<
53.Find the harmonic mean of the following data: Answer
>
xi 3 4 5 6 7 8 9 10
fi 2 3 10 12 17 7 4 2

(a) 3.2555
(b) 4.8265
(c) 5.7565
(d) 6.0865
(e) 7.4545.
(2 marks)
<
54.Which of the following is true with regard to the simplex method of solving linear programming problems? Answer
>
(a) This method cannot be applied for solving problems involving two decision variables
(b) At the optimal solution all the decision variables assume zero values
(c) Slack variables are used to convert ‘greater than or equal to’ type constraints into equations
(d) At the optimal solution all the slack variables assume zero values
(e) The Zj – Cj value at the bottom of the solution column shows the value of the objective function for any
solution.
(1 mark)

10
<
55.The following data pertains to the consumption of materials by a bakery: Answer
>
Price Quantities Used
Inputs Units (in Rs.) (Units)
2005 2006 2005 2006
Flour Kilogram 15 30 500 700
Eggs Dozen 8 14 100 70
Milk Litres 6 17 200 120
Sugar Kilogram 10 16 50 70
Laspeyre’s quantity Index for the year 2006 with the year 2005 as base year, is
(a) 120.4
(b) 124.8
(c) 198.2
(d) 206.0
(e) 210.1.
(1 mark)
<
>
2005 2006
Commodity Price (in Quantity Price (in Quantity
Rs.) (Kg) Rs.) (Kg)
Wheat 7.50 5000 10.25 4800
Rice 10.00 6000 14.00 5500
Pulses 25.00 3000 28.00 3500
Sugar 10.60 3000 14.50 2400
Salt 2.60 500 4.50 600
What is Fisher’s ideal price index for the year 2006 considering the year 2005 as the base year?
(a) 112.82
(b) 113.55
(c) 127.35
(d) 128.12
(e) 133.58.
(2 marks)
<
57.Which of the following tests is/are not satisfied by Fisher’s ideal index? Answer
>
I. Factor reversal test.
II. Time reversal test.
III. Circular test.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) Both (II) and (III) above.
(1 mark)
<
58.Which of the following price indices has a downward bias? Answer
>
(a) Laspeyre’s price index
(b) Fisher’s ideal price index
(c) Marshall-Edgeworth price index
(d) Paasche’s price index
(e) Laspeyre’s quantity index.
(1 mark)

11
<
59.Using the linear trend relationship between sales and year estimated by the method of least squares from the dataAnswer
given below, predict the sales for the year 2005. >

Year 1999 2000 2001 2002 2003

Sales of TV sets
12 18 20 23 27
(in ‘000 units)
(a) 34,000 units
(b) 35,300 units
(c) 36,400 units
(d) 37,500 units
(e) 38,600 units.
(2 marks)
<
60.The estimated value of a variable according to the trend equation is 84.5 in a particular year and the actual valueAnswer
of the variable is 86.4. The relative cyclical residual is >
(a) 0.84
(b) 1.16
(c) 1.54
(d) 1.96
(e) 2.25.
(1 mark)
<
61.The marks obtained by 10 students in a semester examination in statistics are Answer
>
80, 83, 68, 86, 75, 73, 70, 70, 70 and 65.
What is the mean absolute deviation?
(a) 6.6
(b) 5.6
(c) 2.6
(d) 7.5
(e) 5.5.
(1 mark)
<
62. 2n + 1 2n − 1
If Pn − 1 : Pn = 3 : 5, then the value of n is Answer
>
(a) 2
(b) 3
(c) 4
(d) 5
(e) 6.
(2 marks)
<
63.The number of permutations of the word ACCOUNTANT, taking all the letters at a time is Answer
>
(a) 2,20,860
(b) 2,26,800
(c) 2,06,280
(d) 2,08,600
(e) 2,86,200.
(1 mark)
<
64.A committee of 3 ladies and 4 gentlemen is to be formed from a group of 8 ladies and 7 gentlemen. In how manyAnswer
ways can the committee be formed if one lady and one gentleman refuse to join? >
(a) 120
(b) 800
(c) 420
(d) 1,540
(e) 1,960.
(2 marks)

12
<
65.In the following linear programming problem, Answer
>
Max. Z = 3x1 + 2x2 + 5x3
Subject to constraints
x1 + 2x2 + x3 < 430
3x1 + 2x3 < 460
x1 + 4x2 < 420
x1, x2, x3 > 0.
What is the maximum value of Z?
(a) 890
(b) 1,050
(c) 1,110
(d) 1,220
(e) 1,350.
(3 marks)
<
66.In a linear programming problem, the feasible region is bounded by the following system of inequalities: Answer
2x + y ≤12 >

x + 3y ≤ 21
x, y ≥ 0
Which of the following points is not a part of the feasible region?
(a) (6, 0)
(b) (0, 7)
(c) (3, 6)
(d) (4, 5)
(e) (0, 0).
(2 marks)
<
67.The Arithmetic Mean (A.M) of two numbers exceeds their Geometric Mean (G.M) by 15 and Harmonic MeanAnswer
(H.M) by 27. The lowest of the two numbers is >
(a) 20
(b) 25
(c) 30
(d) 40
(e) 50.
(2 marks)
<
magazines. What is the probability of finding a person in the group who reads neither magazine A nor magazine>
B?
(a) 0.15
(b) 0.35
(c) 0.65
(d) 0.80
(e) 0.85.
(1 mark)
<
69.The skewness of distribution is indicated by Answer
>
(a) Histogram
(b) Ogive
(c) Frequency polygon
(d) Cumulative frequency table
(e) Cumulative frequency curve.
(1 mark)

13
<
70.The standard deviation of the first ‘n’ natural numbers is Answer
>
(a) n2 −1
12

(b) n2 −1
2

(c) n −1
12

(d) n +1
12
n3 − 1
(e)
12 .
(1 mark)

( )
<
71. log log log x 2 − 4x + 85 = 1 Answer
8 2 3
If 3 , then x = >

(a) 5
(b) 4
(c) 3
(d) 2
(e) 1.
(1 mark)
<
72. log 2 x log 2 y log 2 z Answer
= =
3k and x y z = 1 , then k =
3 2
2 3 >
If
(a) −4
(b) −2
(c) 2
(d) 4
(e) 3.
(2 marks)
<
73.Linear programming cannot be used in Answer
>
(a) Selection of a product mix
(b) Determination of a capital budget
(c) Choice of mix of a short-term financing
(d) Determination of Net Present Value (NPV) of a project
(e) Problems where constraints are linear.
(1 mark)
<
74.In which of the following conditions a type I error is said to have occurred, in testing of hypothesis? Answer
>
(a) The sample statistic is incorrectly calculated
(b) The sample variance is incorrectly calculated
(c) Null hypothesis is rejected though it is true
(d) Null hypothesis is accepted though it is false
(e) The sample size is small.
(1 mark)

14
<
75.In a control chart there are some observations that lie outside the upper and lower control limits. These points areAnswer
referred as >
(a) Outliers
(b) Attributes
(c) Inherent variation
(d) Assignable variation
(e) Common variation.
(1 mark)
<
76.The demand for a particular product in a factory was observed to vary for every two months in a year. In aAnswer
sample study, the following information was obtained: >

Month Jan March May July Sep Nov

Products demanded 950 945 950 955 965 959

The value of the χ -statistic from the given data is

2

(a) 0.1358
(b) 0.2725
(c) 0.3645
(d) 0.4658
(e) 0.5642.
(2 marks)
<
77.The average cost of flats in Kolkata is Rs.7,00,000 with a standard deviation of Rs.60,000. What is theAnswer
probability that a flat in Kolkata costs at least Rs.7,36,000? (Assume that cost of flats follow a normal>
distribution.)
(a) 0.3085
(b) 0.2563
(c) 0.3550
(d) 0.2742
(e) 0.3265.
(1 mark)
<
78.If the degrees of freedom increases Answer
>
(a) The normal distribution approaches t-distribution
(b) The t-distribution approaches binomial distribution
(c) Binomial distribution approaches F-distribution
(d) F-distribution approaches t-distribution
(e) t-distribution approaches normal distribution.
(1 mark)
<
79.In a test involving ANOVA the following details are obtained: Answer
>
Estimated population variance based on the variance among the sample means = 20
Estimated population variance based on the variances within the samples = 14.77
The F-ratio for the above data is
(a) 0.739
(b) 1.354
(c) 5.230
(d) 34.770
(e) 295.400.
(1 mark)

15
Quantitative Methods (CFA530): October 2007

Reason : In financial analysis extrapolation is widely used for :

I. Forecasting future sales, cost and profit.
II. Long-term capital requirements.
III. Production of financial statements for financial institutions, banks, etc.
All statements are true. Hence, option (e) is correct.

Reason :
Year 2000 2001 2002 2003 2005
Sales Units(in ’000 s) 9 11 18 23 31
Here, the series is increasing series.
The sales in the year 2004 can be interpolated as follows:
Base value = 23,000 units
Lower limit = 23,000 units
Upper limit = 31,000 units
ts – tp = 2005 – 2003 = 2
ti – tp = 2004 – 2003 = 1
31000 − 23000
23000 + ×1
Sales in 2004 = 2
= 23000 + 4000
= 27,000 units.
Therefore, the sales in year 2004 is 27,000 units.

Reason : At K = 17%, present value of cash flow = 255.76

At k = 18%, present value of cash flow = 249.19

17% +
( 255.76 − 250 ) ×1
The internal rate of return = ( 255.76 − 249.19 )
= 17 + 0.88 = 17.88%.

Reason : Given option (e) is false. The number of classes may be equal to the square of the number
of data points. The correct one is the number of classes may be equal to the square
root of the number of data points.
Hence, option (e) is correct.

Reason : To determine the appropriate width of each class interval in a grouped frequency
distribution, we divide the range of the data by the number of desired class intervals.

Reason : For a negatively skewed distribution curve,

I. Most of the values are concentrated at the higher end.
II. For such a curve, A.M < Median < Mode.
The given statement (III), Negatively skewed distribution curve tails off towards the
higher end is false. the correct statement is Negatively skewed distribution curve tails off
towards the lower end.
Both (I) and (II) statements are true. Hence, option (c) is correct.

16

2

then m ×n = ( x 2 − 10x + 5 ) × (7x + 3)

= x (7x + 3) − 10x(7x + 3) + 5(7x + 3)
2

= 7x 3 + 3x 2 − 70x 2 − 30x + 35x + 15

= 7x 3 − 67x 2 + 5x + 15.

deviaton.

Reason : According to Bienayme-Chebyshev rule, at least 89% of the observations in a distribution

of data will lie within ± 3 standard deviations of the mean.

Reason : I. A computer is an electronic device which accepts input data, performs operations or
computations on the data in a pre-arranged sequence of program and provides the
result as an output or action.
II. The basic difference between the computer and calculator is that the computer can
perform long sequences of computations without human interventions.
III. Computer has the ability of storing and executing a given set of instructions for
solving a particular problem.
All are true. So, option (e) is the correct.

Reason : A venn diagram is a pictorial representation of the sample space of an experiment. It is

usually drawn as a rectangular figure representing the sample space.

Reason : Given (III) statement ,The probability of an event can be negative is false. The correct one
is
The probability of an event cannot be negative.
So, option (c) is correct.

Reason : we have 6 red balls and 9 blue balls

Two balls are drawn at random.
15
Total events = C 2 = 105
Selecting one red ball from 6 red balls C1 = 6ways
6

9
Selecting one blue ball from 9 blue balls C1 = 9 ways
6
C1 × 9 C1 54
15
P(One red ball and One blue ball ) = C2 = 105 = 0.5143.

17

Reason : joint probability of two independent events is equal to the product of their marginal
probabilities.
probability that A will be alive for 15 years is 0.6 and the probability that B will be alive
for 15 years is 0.7
The probability that both will be alive in 15 years is 0.6 × 0.7 = 0.42.

Reason : The control unit along with the main memory and arithmetic-logic unit is called the
Central
Processing Unit (CPU).

Reason : It follows geometric mean.

Product of quantity ratio = 1.035 × 1.054 × 1.068× 1.073×1.065 = 1.3314

1/ n
1/ 5

The compounded growth rate = geometric mean – 1 = 1.0589 – 1 = 0.0589 = 5.89%.

Reason :
Age group (in years) Number of persons Mid value (m) f×m
(f)
20 – 25 5 22.5 112.5
25 – 30 13 27.5 357.5
30 – 35 18 32.5 585
35 – 40 14 37.5 525
40 – 45 19 42.5 807.5
45 – 50 11 47.5 522.5
50 – 55 7 52.5 367.5
55 – 60 10 57.5 575
60 – 65 3 62.5 187.5
Total 100 4040
∑ f × m = 4040 = 40.4.
Arithmetic mean = ∑f 100

2

If every item multiplied by 3 then it becomes

∑ X = 3 ×100 = 300
∑ X = 9 × 2, 442 = 21978
2

∑X ⎛∑X⎞
2 2

−⎜
n ⎜ n ⎟⎟
Standard deviation of the resulting data set = ⎝ ⎠
2
21978 ⎛ 300 ⎞
−⎜ ⎟
= 5 ⎝ 5 ⎠

= 4395.6 − 3600

18

Reason : let the two series be designated as I and II

For series I
Coefficient of variation V1 is
σ1
× 100
V1 = X1
Substituting the values , we have
12
× 100
60 = X1
1200
X1 = = 20
60
Similarly , for series II
σ2
× 100
V2 = X 2
Substituting the values, we have
18
× 100
80 = X 2
1800
X2 = = 22.5.
80

Reason : The sum of deviations (along with their signs) of data items from the arithmetic mean is
zero.

Reason : E(X) = ∑ X.P(X)

= 10 × 0.2 + 14 × 0.1 + 18 × 0.4 + 22 × 0.3
= 17.2.

Reason :
X Y X– X Y– Y (X – X ) (Y – Y )
4 6 –2 1 –2
4 7 –2 2 –4
5 5 –1 0 0
6 6 0 1 0
7 4 1 –1 –1
10 2 4 –3 –12
36 30 –19
X = 36/6 = 6 Y = 30/6 = 5

∑ ( X − X )( Y − Y ) −19 −19
= = −3.8.
Cov xy = n −1 = −1
6 5

19

Reason : Decision making can be of three categories:

I. Decision making under conditions of certainity.
II. Decision making under conditions of uncertainity.
III. Decision making under conditions of risk.
All are true. hence, option (e) is correct.

Reason : If the decision maker is optimistic, the decision maker identifies the maximum profit
associated with the selection of each alternative and the maximum of these is chosen as
decision .This criteria is known as Maximax Criterion.

ML
Reason : P =*
ML + MP , where P* represents the minimum required probability of selling at least
Marginal Loss(ML) = 125
Marginal Profit (MP) = 250
125 1
= = 0.33 = 33%
P = 125 + 250 3
*

Reason : population size ,N = 65

Sample size, n = 15
population standard deviation, σ = 13
If The sample is drawn without replacement, then
σ N−n
σX = .
Standard error of the sample mean, n N −1

13 65 − 15
.
σX = 15 65 − 1
Substitute all the values, we get
=2.97.

Reason : judgmental sampling is not a type of random sampling. In judgmental sampling the
sample is selected according to the judgment of the investigators or experts. Hence, there
is a degree of subjectivity in the selection.

Reason : given that, total sum of squares (TSS) = 525

regression sum of squares (RSS) = 380
coefficient of determination, R =2 TSS(Total sum of squares)

380
= 525 = 0.7238.

20

Reason : In chi-square test the degrees of freedom for contingency table = (number of rows – 1) ×
(number of columns –1)
Here , number of rows = 3
Number of columns = 4
Degree of freedom = (3 – 1) × (4 – 1) = 2 × 3 = 6.

Reason : upper control limit in R chart is given by

3d 3 R
R+
Upper Control Limit = d2

Given , n = 5 , R = 5.9 , d2 = 2.326 and d3 = 0.864

3 × 0.864 × 5.9
5.9 +
Upper Control Limit = 2.236
= 12.739.

Reason : When decisions are to be taken under conditions of uncertainty, simulation can be used.

Reason : Analysis of variance (ANOVA) is suitable for testing whether there is significant
difference between more than two sample means.

Reason : sample statistics is used by the managers to estimate population parameters , that are
useful for decision –making.

Reason : The probability of getting a call for buying or selling (p) = 70% = 0.70
Probability of getting a call for other purposes (q) = 30% = 0.30
It follows binomial distribution
n = 10
Probability of getting exactly six calls is
n r n −r
P(r = 6) = C r p q
10 6 4
= C 6 (0.7) (0.3)
= 0.20 = 20%.

21

Reason : It follows binomial distribution

n = 17
Favorable to the particular political stand , p = 35% = 0.35
Unfavorable to the particular political stand , q = 1-0.35 = 0.65
the probability that at least 5 individuals in the sample favor this
political stand is
P(r ≥ 5) = 1 – P(r ≤ 4 )
= 1 − { 17 C0 ( 0.35 ) . ( 0.65 ) + 17 C1 ( 0.35 ) . ( 0.65 ) + 17 C 2 ( 0.35 ) . ( 0.65 ) + 17 C3 ( 0.35 ) . ( 0.65 )
0 17 1 16 2 15 3 14

+ 17 C 4 ( 0.35 ) . ( 0.65 ) }
4 13

=1– 0.2348 = 0.7652.

∑ ( Y − Y )
2
= 157.63
Reason : Given that,
n = 13

∑ ( Y − Y )
2

The standard error of estimate for the simple regression relationship = n−2

157.63
= 14.33 = 3.785.
= 13 − 2

Reason :
X Y X– X Y– Y (X – X )2 (Y– Y )2 (X – X ) (Y– Y )
1 2 –5 –3 25 9 15
2 3 –4 –2 16 4 8
4 5 –2 0 4 0 0
5 6 –1 1 1 1 –1
6 7 0 2 0 4 0
8 4 2 –1 4 1 –2
10 3 4 –2 16 4 –8
12 10 6 5 36 25 30
48 40 0 0 102 48 42

X = 48/8 = 6 and Y = 40/8 = 5

cov(x, y)
∑ ( X − X )( Y − Y )
∑ ( X − X ) .∑ ( Y − Y )
2 2

r =
σ x .σ y =
42
=
102 × 48 = 0.60.

22

X =
∑X
Reason : Let the variable x denote the height of a tower. Then we are given that 500 =180.40

implies ∑ X =90,200 ft.

Which is the total sum of heights of towers observed.
Using ao and bo for the two wrong heights and a and b for the correct heights,
we have ao + bo = 297+165=462 ft.
and a + b =197+185 = 382 ft.

The corrected total heights of towers is then ∑ X = 90,200 – 462 +382

= 90,120 ft.
and the corrected average height is

xc =
∑x =
n 90,120 / 500 = 180.24 ft.

Reason : Since the number of letters in the word STRANGE are 7, the total number of places are 7,
and the number of odd places are 4(1, 3, 5, 7). The two vowels A and E are to occupy two
4
of these 4 odd places which they can occupy in P2 ways.
When the vowels have been placed in one way, there remain five places to be filled by the
5 4
remaining 5 consonants which can be done in P5 ways. Now each of the P2 ways of
5
arranging the vowels can be associated with each of the P5 ways of arranging the
consonant.
4 5
∴ The total number of arrangements = P2 × P5 = 12 × 120 = 1440.

Reason : Let the 4 numbers in A.P. be (a – 3d) + (a – d) + (a + d) + (a + 3d) = 2

i.e., a = ½
Also, product of extremes = 10 x Product of intermediaries
(a – 3d) (a + 3d) = 10 (a – d) ( a + d)

= a -9d = 10 (
2 2 a 2 -d 2 )
2 2
⎛1⎞ ⎛1⎞
⎜ ⎟ ⎜ ⎟
⇒ ⎝ ⎠ – 9d = 10 { ⎝ 2 ⎠ – d }
2 2
2

9 3
2 ±
⇒ d = 4 or d = 2
3
For d = + 2 , the series is –4, –1, 2, 5
3

For d = 2 , the series is 5, 2, –1, –4
∴ The fourth term is either –4 or 5.

23

X −μ
Z=
σ
100 − 96
=
12
4
=
12
1
= .
3

X = 527, σ = 56, μ H0 = 525, n = 100

Reason : Given that: .
It is later known that the true population mean is 530.
Given that test is right tailed and significance level is 0.05.
H0: μ = 525
H1: μ > 525
Here sample size is large. We have to use z-statistic.
This is a right tailed test and significance level is 0.05.
From the Normal Distribution table, we can find that the critical region is z > 1.645 .
X −μ
z=
σX
σ 56
σX = = = 5.6
n 100
527 − 525
z= = 0.3571.
5.6
Since the observed z value is less than the critical z value and falls in acceptance region,
we can accept H0.
Thus test leads to Type II error. Hence ,option (c) is correct.

Reason : We know that 32,000 = 4000×FVIFA(k,6)

Where FVIFA is future value interest factory of an annuity, and k is the implicit rate.
32000
FVIFA(k,6) = 4000 = 8
If we refer to the FVIFA tables,
At k = 11% ,FVIFA(11,6) = 7.913 and
At k = 12% ,FVIFA(12,6) = 8.115
So, k must be greater than 11% but lower than 12%.
For an ascent of (8.115 – 7.913), the ascent in rate is 1. For a required ascent of
(8.000 − 7.913),the ascent rate is
8.000 − 7.913
×1
8.115 − 7.913
8.000 − 7.913
×1
The implicit rate of interest = 11 + 8.115 − 7.913
= 11 + 0.43 = 11.43%.

24

Reason : z-statistic is given by

z=
(X 1 )
− X 2 − ( μ1 − μ 2 )
σ X1 − X2
( 51-50 ) − 0 1
= = =11.3122.
0.0884 0.0884

Reason : Here, X =150

s=25
n=9
Degrees of freedom = n-1=9-1=8
If we refer to the t table we see that for 8 degrees of freedom, the area in both tails
combined is 0.05 or 5%, when t=2.306.
⎛ s ⎞ ⎛ s ⎞
X − t⎜ ⎟ and X + t ⎜ ⎟ is 95% when t=2.306.
Hence, area under the curve between ⎝ n⎠ ⎝ n⎠
⎡ 25 ⎤ ⎡ 25 ⎤
150 − ⎢ 2.306 × ⎥ to 150 + ⎢ 2.306 × ⎥ .
So, the 95% confidence interval is ⎣ 9⎦ ⎣ 9⎦
Hence, we are 95% confident that the population mean lies in the interval 130.78 to
169.22.

Reason : The given option (d), The dual formulation cannot be solved for an optimal solution is
false. The correct one is The dual formulation can also be solved for the optimal solution.

x 2 − 5x + 6 x 2 − 3x − 2x + 6
lim = lim
Reason : x →3 x −3 x →3 x −3
x(x − 3) − 2(x − 3) (x − 3)(x − 2)
lim = lim for(x ≠ 3)
= x →3 x −3 x →3 x −3
lim x − 2 = 3 − 2 = 1.
= x →3

x
Reason : y = x + 1
u = x and v = (x + 1)
du dv
=1 =1
dx and dx
du dv
v. − u.
dy dx dx
=
dx v2
(x + 1). 1 − x .1 x +1− x 1
( x + 1) = (x + 1) = ( x + 1)
2 2
2
=
1 1 1
dy = .
For x = 4, dx = ( x + 1) = ( 4 + 1)
2 2
25

25

Reason : Bayes’ theorem is useful the statistician to calculate posterior or (revised) probability .

−1
Reason: If the given function y = 5 x + 4 then, the inverse function f (y) = (y – 4)/5. Therefore

Reason :
x f f/x
3 2 0.667
4 3 0.75
5 10 2.00
6 12 2.00
7 17 2.429
8 7 0.875
9 4 0.444
10 2 0.20
Total 57 9.365
N
⎛f ⎞
∑ ⎜⎝ x ⎟⎠ 9.365
57
= 6.0865.
Harmonic mean = =

Reason : The Zj – Cj value at the bottom of the solution column shows the value of the objective
function for any solution. Hence, option (e) is correct.

∑Q P 1 0
× 100
Reason : Laspeyre’s Quantity Index for the given data is ∑Q P 0 0

700×15+70×8+120×6+70×10 12480
× 100 = × 100 =
i.e., 500×15+100×8+200×6+50×10 10000 124.8.

26

∑PQ × ∑PQ
1 0 1 1
×100
Reason : Fisher’s ideal price index = ∑P Q ∑P Q
0 0 0 1

∑PQ 1 0 = (10.25 × 5000) + (14.00 × 6000) + (28.00 × 3000) +

(14.50 × 3000) + (4.50 × 500) = 265000

∑PQ 1 1 = (10.25 × 4800) + (14.00 × 5500) + (28.00 × 3500) +

(14.50 × 2400) + (4.50 × 600) = 261700

∑P Q0 0 =(7.5 × 5000) + (10.00 × 6000) + (25.00 × 3000) +

(10.60 × 3000) + (2.60 × 500) = 205600

∑P Q0 1 = (7.5 × 4800) + (10.00 × 5500) + (25.00 × 3500) +

(10.60 ×2400) + (2.60 × 600) = 205500
265000 261700
× × 100
∴ Fisher’s ideal price index = 205600 205500
= 128.12.

Reason : Factor reversal test and Time reversal tests are satisfied by Fisher’s ideal index and it does
not satisfy Circular test.
So, option (c) is the correct answer.

ΣP Q
1 1
ΣP Q
Reason : Paasche’s price index = 0 1 × 100 where P1 and P0 are the prices in the current year
and the base year while Q1 is the quantity consumed in the current year. Now as the price
of an item increases, the amount of consumption for that item correspondingly decreases.
For this reason, one may conclude that Paasche’s price index has some downward bias.
Laspeyre’s price index has upward bias, Fisher’s ideal price index is free from bias and
Marshall-Edgeworth index closely approximates the Fisher’s price index.

Reason : The estimating equation can be calculated as below:

Year (X) Sales (Y) x = X- xY x2
X
1999 12 -2 -24 4
2000 18 -1 -18 1
2001 20 0 0 0
2002 23 1 23 1
2003 27 2 54 4
Total 100 0 35 10
X = 2001
The equation of the straight line trend is Y = a + bx

∑ Y = 100 =20 b=
∑ xY = 35 =3.5
Since ∑x = 0,
a=
N 5 and ∑ x 102

= a+ bx= 20 + 3.5x
Thus the equation of the straight line trend is : Y
For year 2005, the value of x = 2005 – 2001 = 4,

Hence , for year 2005 the value of Y = 20 + 3.5 (4) = 20 +14 = 34 (in thousands)
Thus the estimated sales of television sets for the year 2005 is 34,000.

27

Y−Y
× 100

Reason : The Relative cyclical residual measure = Y
86.4 − 84.5
× 100
= 84.5 = 2.25.

Reason : For x = 74 , the absolute deviations x i − x are 6, 9, 6, 12, 1, 1, 4, 4, 4 and 9

Their sum being ∑ i
x − x = 56, the mean absolute deviation

∑x i −x
=
56
= 5.6
Mean Absolute Deviation = n 10 .

Reason :
2n+1 2n - 1
Pn-1 : Pn = 3 : 5
2n+1
Pn-1 3
Or, 2n - 1
=
Pn 5
(2n+1)! (2n-1)!
Or, 5 × = 3×
(n+2)! (n-1)!
(2n+1)! (n+2)!
Or, 5 × = 3×
(2n-1)! (n-1)!
Or, 5 × 2n × (2n+1) = 3 × n × (n+1)(n+2)
Or, 10 × (2n+1) = 3(n + 3n + 2)
2

2
Or, 20n + 10 = 3n + 9n + 6
2
Or, 3n - 11n - 4 = 0
Or, 3n - 12n + n - 4 = 0
2

Or, 3n(n - 4) +1(n - 4) = 0

Or, (n - 4)(3n + 1) = 0
So, the value of n is 4.

Reason : The word ACCOUNTANT has 10 letters, of which 2 are A’s, 2 are C’s, 2 are N’s, 2 are
T’s,and the rest are different.
10!
Therefore, the number of permutations is ( 2!2!2!2!)
10 × 9 × 8 × 7 × 6 × 5 × 4 × 3 × 2 × 1
= 2.2.2.2 = 2,26,800.

28
8
Reason : 3 ladies can be selected out of 8 ladies in C3 ways and 4 gentlemen can be selected out of
7
7 gentlemen in C 4 ways
∴ The number of ways of choosing the party
8! 7!
8
C3 ×7 C4 = × = 1960
= 3!× 5! 4!3!
If 1 lady and 1 gentleman are members on the same party, there remains to be selected 2
ladies from 7 ladies and 3 gentlemen from 6 gentlemen. This can be done in
7! 6!
7
C 2 ×6 C3 = × = 420 ways
2!4! 3!3!
∴The number of ways of forming the party in which 1 lady and 1 gentleman refuse to join
together = 1960 – 420 = 1,540.

Reason : Max. Z = 3x1 + 2x2 + 5x3

Subject to constraints
x1 + 2x2 + x3 < 430
3x1 + 2x3 < 460
x1 + 4x2 < 420
x1, x2, x3 > 0.
Convert the inequalities in to equalities by adding slack variables with cost coefficient is
zero in objective function
Max. Z = 3x1 + 2x2 + 5x3 + 0.S1 + 0.S2 + 0.S3
Subject to constraints
x1 + 2x2 + x3 + S1 = 430
3x1 + 2x3 +S2 = 460
x1 + 4x2 + S3 = 420
x1, x2, x3, S1, S2,S3 > 0.
Cj 3 2 5 0 0 0
Min Ratio (XB/Xt)
Basic variables CB XB X1 X2 X3 S1 S2 S3
S1 0 430 1 2 1 1 0 0 430/1 = 430
← S2 0 460 3 0 2 0 1 0 460/2 = 230 ←
S3 0 420 1 4 0 0 0 1 –
X1=X2=X3=0 Z=0 –3 –2 –5* 0 0 0 ←Δj

← S1 0 200 –½ 2 0 1 –½ 0 200/2 = 100 ←
→ X3 5 230 3/2 0 1 0 ½ 0 –
S3 0 420 1 4 0 0 0 1 420/4 = 105
X1=X2=S2=0 Z = 1150 9/2 –2* 0 0 5/2 0 ← Δj

X2 2 100 –¼ 1 0 ½ –¼ 0
X3 5 230 3/2 0 1 0 ½ 0
S3 0 20 2 0 0 –2 1 1
X1=S2=S3=0 Z = 1350 4 0 0 1 2 0 ←Δj > 0
Since all Δj > 0, the solution is
X1 = 0
X2 = 100
X3 = 230
Max.Z = 1,350.

29

Reason : The constraints are

2X+Y ≤ 12 and the terminal line of feasibility is 2X+Y=12 …….(i)
X+3Y ≤ 21 and the terminal line of feasibility is X+3Y=21 …….(ii)
Line (i) crosses x-axis at (6, 0) and line (ii) crosses x-axis at (21, 0). So the point, which is
part of feasible region, is (6, 0).
Line (i) crosses y-axis at (0, 12) and line (ii) crosses x-axis at (0, 7). So the point, which is
part of feasible region, is (0, 7).
Both lines would intersect each other at (3, 6).

So, the vertices are

(6, 0), (0, 7), (0,0) and (3, 6).

Reason : Let the numbers be a, b. Let the A.M be A, GM be G and HM be H

As A.M. exceeds GM by 15. So, A – G = 15; Or, (A –15)2 = G2 ……..(i)
As AM exceeds HM by 27. So, A – H = 27 Or, H = A – 27
We know that ,G2 = AH = A(A – 27) Putting this value of G2 in equation (i) we get
(A –15)2 = A(A – 27)
Or, – 30A + 225 = –27A
Or, 3A = 225
Or, A = 75. Or, (a+b) = 150

So, G = 60 Or, ab = 60 i.e ab = 3600

3600
So, a + a = 150
Or, a2 –150a + 3600 = 0.
Or, a2 –120a – 30a+ 3600 = 0.
Or, a(a – 120) – 30(a – 120) = 0
Or, (a – 30)(a – 120) = 0
So the vale of the numbers would be (30, 120) or (120, 30)
So the lowest value is 30.

30

50 30
Reason : P(A) = 100 = 0.50 P(B) = 100 = 0.30
15
P(A and B) = 100 = 0.15
P(A or B) = P(A) + P(B) – P(A and B)
= 0.50 + 0.30 – 0.15 = 0.65
∴ P(Neither A nor B) = 1 – P (A or B) = 1 – 0.65 = 0.35.

Reason : First n natural numbers are 1, 2, 3, ………n

n(n + 1)
Sum of n natural numbers = 2
sum of n natural numbers n(n + 1) n + 1
= =
Mean = total numbers 2.n 2
n(n + 1)(2n + 1)
Sum of squares of n natural numbers = 6

1
∑ xi2 − x ( )
2

Std.deviation = n

1 n(n + 1)(2n + 1) ⎛ n + 1 ⎞
2

( )−⎜ ⎟
= n 6 ⎝ 2 ⎠

( n + 1) ( n + 1) (n − 1) n2 −1
[4n + 2 − 3n − 3]
= 12 = 12 = 12 .

Reason : According to the given equation we can say that

log 2 log 3 ( x − 4 x + 85) = (8) =2
2 1/ 3

or , log 3 ( x − 4 x + 85) = 2 = 4
2 2

or , x − 4 x + 85 = 3 = 81
2 4

or , x − 4 x + 4 = 0
2

⇒ ( x − 2) = 0
2

∴x = 2

31

Reason : The given equality can be written as,

log 2 x log 2 y log 2 z
= = = p(say)
2 3 3k
then, log 2 x = 2p
⇒ x = 22p andsimilarly, y = 23p and z = 23pk
given that x 3 y 2 z = 1
or, 26p .26p .23pk = 20
or, 212p + 3pk = 20
or,12 + 3k = 0
therefore, k = −4.

Reason : linear programming is a method for selecting an optimum combination of factors from a
series of interrelated alternatives, each subjective to limitation . These models are
concerned with the problem of allocating limited resources in such a way that the defined
objectives are optimized.

Reason : A type –I error occurs if the null hypothesis is rejected though it is true.
So, option (c) is correct.

Reason : In a control chart there are some observations that lie outside the upper and lower control
limits. These points are referred to as the outliers

Reason : Here we set up the null hypothesis, H0 that the number of products demanded does not
depend on the months of the year.
Under the null hypothesis, the expected frequencies of the products demanded on each of
the six months would be:
1 5724
( 950 + 945 + 950 + 955 + 965 + 959 ) = = 954
6 6
This is a chi-square test of independence and the contingency table is given as:
month Frequency (fi-ei)2 (fi − ei )2
ei
Observed (fi) Expected
(ei)
Jan 950 954 16 0.0168
March 945 954 81 0.0849
May 950 954 16 0.0168
July. 955 954 1 0.0010
Sep 965 954 121 0.1268
Nov. 959 954 25 0.0262
Total 5724 5724 0.2725
Then the value of chi-square statistic is given by:

(fi − ei )2
χ2 = ∑ = 0.2725
i.e. ei

32

Now, μ = 7,00,000 and σ = 60,000

7, 36, 000 − 7, 00, 000

P(X ≥ 7,36,000 ) = P( Z 60, 000 )

= P(Z ≥ 0.6)

= 1 – P(Z ≤ 0.6)
= 1 – 0.7258
= 0.2742.