Name: Saptarshi Roy Roll Number: Learning Centre: ACES INFOTECH PRIVATE LIMITED (Code 02783) Subject: Statistics

for Management (MB0024) Assignment No.: Set 1 and 2. Date of Submission at the Learning Centre:

2008 Dec. 2008 Nov. 2008 Sept. 2008 Aug. 10 applications were automatically rejected as they were not satisfying the requirement of minimum balance. 2008 Oct. Monthly Minimum Balance in INR Month s A/C Holder 1 60000 70000 55000 90000 56000 80000 82000 79000 51000 95000 82000 83000 A/C Holder 2 56000 76000 11000 0 89000 88000 52000 58000 95000 86000 90000 82000 55000 A/C Holder 3 66000 74000 11200 0 90000 84000 57000 96000 55000 76000 95000 87000 56000 A/C Holder 4 86000 96000 19000 0 98000 84000 57000 66000 93000 74000 99000 84000 57000 A/C Holder 5 56000 76000 11000 0 89000 88000 52000 58000 95000 86000 90000 82000 55000 A/C Holder 6 59000 96000 12000 0 97000 98000 57000 56000 98000 88000 99000 88000 59000 A/C Holder 7 59000 78000 11500 0 87000 90000 55000 86000 99000 89000 95000 87000 59000 A/C Holder 8 52000 73000 11200 0 93000 89000 54000 55000 96000 97000 99000 88000 59000 A/C Holder 9 53000 98000 11300 0 66000 87000 59000 98000 59000 87000 95000 86000 52000 A/C Holder 10 56000 76000 12000 0 89000 86000 72000 98000 95000 84000 90000 82000 53000 Jan. 2008 You as an Assistant Branch Manager of the Bank are entrusted the task of selecting two account holders for sanctioning the loans. How you will select the two individuals among the 10 applicants to give the loan using appropriate statistical techniques? Give proper justification for your selection. 2008 Apr. the Bank decided that accountholder who had maintained a minimum balance of 50000 INR would only be considered for the loan. As a result. who are businessmen of the locality. Now. In order to reject some of the applications (as the fund was limited). 2008 Jun. the 10 applications remained and it was found that monthly minimum balance in all the cases were more than 50000 INR for the last 12 months. About 20 businessmen had applied for loan in order to develop their business further.Set 1 Case 1 ABC Branch of XYZ Bank has decided to give 10 Lakh of loan each on long term basis to only two of their customers (accountholders). 2008 Mar. 2008 Jul. Ans 1] Taking sum of the minimum balances for each month we get the following data. 2008 Feb. Their account details of monthly minimum balance are given below. 2008 May. Average Minimum Balance = Sum of minimum balances for the year / 12 Months A/C A/C Holde Holde r1 r2 Monthly Minimum Balance in INR A/C A/C A/C Holde Holder Holde r3 4 r5 A/C Holder 6 A/C Holde r7 A/C Holde r8 A/C Holde r9 A/C Holde r 10 .

84.0 00 73. Average Minimum Balance = Sum of min balances for the year / 12 Two account holders are selected who have maintained highest average minimum balance. 2008 Jul. 2008 Nov.583 during the period Jan.015.083 89000 97000 88000 98000 52000 57000 58000 56000 95000 98000 86000 88000 90000 99000 82000 88000 55000 59000 937. 2008. 2008 Jun. 000 84.0 00 78. A/C Holder 4 has maintained minimum average balance of Rs. From the above table we get. 2008 to Dec. 90.583 6600 0 8700 0 5900 0 9800 0 5900 0 8700 0 9500 0 8600 0 5200 0 89000 86000 72000 98000 95000 84000 90000 82000 53000 948.583 953. 2008 to Dec.250 9300 0 8900 0 5400 0 5500 0 9600 0 9700 0 9900 0 8800 0 5900 0 967. . 2008. 2008 Aug.417 90.0 00 79. 00 000 79. Bal 6000 56000 66000 86000 56000 59000 5900 5200 5300 56000 0 0 0 0 7000 76000 74000 96000 76000 96000 7800 7300 9800 76000 0 0 0 0 5500 0 9000 0 5600 0 8000 0 8200 0 7900 0 5100 0 9500 0 8200 0 8300 0 883.083 8700 0 9000 0 5500 0 8600 0 9900 0 8900 0 9500 0 8700 0 5900 0 999. 2008 Apr.001.583 110000 112000 190000 110000 120000 115000 112000 113000 120000 89000 90000 98000 88000 84000 84000 52000 57000 57000 58000 96000 66000 95000 55000 93000 86000 76000 74000 90000 95000 99000 82000 87000 84000 55000 56000 57000 937.000 1.0 00 1.0 00 83.084. 2008 May. 2008 Total Bal Avg. 2008 Mar. A/C Holder 6 has maintained minimum average balance of Rs.0 1.333 during the period Jan.0 00 78.0 00 80. 2008. 2008 Dec. A/C Holder 4 and A/C Holder 6 are selected for sanction of loan based on Average Minimum Balance maintained by them during the period Jan.333 By taking average minimum balance for the whole year of each customer we arrive at the following conclusion. 2008 Oct.Jan. 2008 Feb. 2008 to Dec.417 83. 2008 Sept.

Sampling error is the degree to which a sample might differ from the population. Population is the totality all objects about which the study is proposed. The purpose of sampling is to reduce the cost and/or the amount of work that it would take to survey the entire target population. There are no strict rules to follow. which is selected using certain statistical principles called sampling designs (this is for guaranteeing that a representative sample is obtained for the study). but carefully chosen sample can be used to represent the population. the degree to which the sample differs from the population remains unknown. Sample survey can also be described as the technique used to study about a population with the help of a sample. Sampling is a tool which enables us to draw conclusions about the characteristics of the population. Each member of the population has an equal and known chance of being selected. It is incumbent on the researcher to clearly define the target population. the entire population will be sufficiently small. In non-probability sampling. Once the sample decided information will be collected from this sample. In probability samples. Sample is only a portion of this population. results are reported plus or minus the sampling error. quota sampling. judgment sampling. members are selected from the population in some non-random manner. When inferring to the population. The population is defined in keeping with the objectives of the study. each member of the population has a known non-zero probability of being selected. The advantage of probability sampling is that sampling error can be calculated. but in the context of survey sampling it most often refers to a questionnaire used to measure the characteristics and/or attitudes of people. A survey may refer to many different types or techniques of observation. and snowball sampling. These include convenience sampling. It is also called an Nth name selection technique. Sometimes. Usually. systematic sampling. and stratified sampling. In non-probability sampling. Probability Sampling Methods 1. Ans 1] Sample is a finite subset of a population drawn from it to estimate the characteristics of the population. Systematic sampling is often used instead of random sampling. Survey sampling describes the process of selecting a sample of elements from a target population in order to conduct a survey. the population is too large for the researcher to attempt to survey all of its members. so the pool of available subjects becomes biased. Probability methods include random sampling.Set 2 1. 2. it is often difficult or impossible to identify every member of the population. A small. When there are very large populations. and the researcher must rely on logic and judgment. Random sampling is the purest form of probability sampling. What do you mean by sample survey? What are the different sampling methods? Briefly describe them. MB 0025 –Set 2 Page 2 Sampling methods are classified as either probability or non-probability. and the researcher can include the entire population in the study. A survey that measures the entire target population is called a census. The sample reflects the characteristics of the population from which it is drawn. which process is called sample survey. This type of research is called a census study because data is gathered on every member of the population. After the required sample size has been .

then they are said to be correlated. The researcher selects the sample based on judgment. What is the different between correlation and regression? What do you understand by Rank Correlation? When we use rank correlation and when we use Pearsonian Correlation Coefficient? Fit a linear regression line in the following data – X 12 15 18 20 27 34 28 48 Y 123 150 158 170 180 184 176 130 Ans 2] Correlation When two or more variables move in sympathy with other. Its only advantage over the random sampling technique is simplicity. As the name implies. every Nth record is selected from a list of population members. As long as the list does not contain any hidden order. Snowball sampling relies on referrals from initial subjects to generate additional subjects. This is usually extension of convenience sampling. Systematic sampling is frequently used to select a specified number of records from a computer file. Quota sampling is the non-probability equivalent of stratified sampling. Examples of stratums might be males and females. 3. 2. If both variables move in the same direction then they are said to be . 4. For example. "Sufficient" refers to a sample size large enough for us to be reasonably confident that the stratum represents the population. When MB 0025 –Set 2 Page 3 using this method. It may be extremely difficult or cost prohibitive to locate respondents in these situations. even though the population includes all cities. a researcher may decide to draw the entire sample from one "representative" city. Judgment sampling is a common non-probability method. The researcher first identifies the relevant stratums and their actual representation in the population. Random sampling is then used to select a sufficient number of subjects from each stratum. 3. without incurring the cost or time required to select a random sample. This non-probability method is often used during preliminary research efforts to get a gross estimate of the results. where the stratums are filled by random sampling. Like stratified sampling. the researcher first identifies the stratums and their proportions as they are represented in the population. Stratified sampling is often used when one or more of the stratums in the population have a low incidence relative to the other stratums. 2. the researcher must be confident that the chosen sample is truly representative of the entire population. Stratified sampling is commonly used probability method that is superior to random sampling because it reduces sampling error. the sample is selected because they are convenient. While this technique can dramatically lower search costs. or managers and non-managers. Non Probability Methods 1. Convenience sampling is used in exploratory research where the researcher is interested in getting an inexpensive approximation of the truth. A stratum is a subset of the population that share at least one common characteristic. This differs from stratified sampling. Snowball sampling is a special non-probability method used when the desired sample characteristic is rare. Then convenience or judgment sampling is used to select the required number of subjects from each stratum.calculated. this sampling method is as good as the random sampling method. it comes at the expense of introducing bias because the technique itself reduces the likelihood that the sample will represent a good cross section from the population.

” Correlation analysis attempts to study the relationship between the two variables x and y. If the variables move in opposite direction then they are said to be negatively correlated.e.) and the Y variable is something you measure. You simply quantify how well two variables relate to each other.g. say X and Y. Correlation analysis deals with 1) Measuring the relationship between variables. Xi = 0 or 1. which are used to code some nominal variables. With correlation you don't have to think about cause and effect. With regression.positively correlated. Regression Regression is defined as. You simply are computing a correlation coefficient (r) that tells you how much one variable tends to change when the other one does. MB 0025 –Set 2 Page 4 Different between correlation and regression Correlation and linear regression are not the same.. It rarely is appropriate when one variable is something you experimentally manipulate. 3) Giving confidence interval for population correlation measure. you do have to think about cause and effect as the regression line is determined as the best way to predict Y from X.e. in experiments. On the other hand. Consider these differences: Correlation quantifies the degree to which two variables are related. concentration. The correlation answers the STRENGTH of linear association between paired variables. in an experiment. X in terms of . 2) Testing the relationship for its significance. “the measure of the average relationship between two or more variables in terms of the original units of the data. You'll get the same correlation coefficient if you swap the two.. for example. (2b) Linear regression is used whenever: * at least one of the independent variables (Xi's) is to predict the dependent variable Y. * if one manipulates the X variable. * correlation is not used when the variables are manipulated. With linear regression. Linear regression are not symmetric in terms of X and Y. That is interchanging X and Y will give a different regression model (i. i. Correlation does not find a best-fit line (that is regression). e. The dependence is expressed in the form of the equations. it doesn't matter which of the two variables you call "X" and which you call "Y". (2a) Correlation is calculated whenever: * both X and Y is measured in each subject and quantifies how much they are linearly associated. * in particular the Pearson's product moment correlation coefficient is used when the assumption of both X and Y are sampled from normally-distributed populations are satisfied * or the Spearman's moment order correlation coefficient is used if the assumption of normality is not satisfied. If they move haphazardly then there is no correlation between them. as you'll get a different best-fit line if you swap the two. the regression tells us the FORM of linear association that best predicts Y from the values of X. Regression analysis attempts to predict the average x for a given y. In Regression it is attempted to quantify the dependence of one variable on the other. With correlation. Correlation is almost always used when you measure both variables. The line that best predicts Y from X is not the same as the line that predicts X from Y. the decision of which variable you call "X" and which you call "Y" matters a lot. With linear regression. Note: Some of the Xi's are dummy variables. the X variable is often something you experimental manipulate (time.

i. The raw scores are converted to ranks. however. then ρ is given by: where: di = xi − yi = the difference between the ranks of corresponding values Xi and Yi. it assesses how well an arbitrary monotonic function could describe the relationship between two variables. One has to assign the same rank to each of the equal values. 1.80 The same underlying distribution is assumed for all variables in linear regression. X 12 15 18 20 27 34 28 48 Y 123 150 158 170 180 184 176 130 Linear Regression Line for the above data can be plotted as : .Y) against the original Y in terms of X. Certain other measures of correlation are parametric in the sense of being based on possible relationships of a parameterized form.E can be used. If tied ranks exist. is a nonparametric measure of correlation – that is. MB 0025 –Set 2 Page 6 Conditions under which P. In principle. 2. Samples must have been selected at random. 3.e. if you interchange variables X and Y in the calculation of correlation coefficient you will get the same value of this correlation coefficient. classic Pearson's correlation coefficient between ranks has to be used instead of this formula. >= 0. It is an average of their positions in the ascending order of the values. MB 0025 –Set 2 Page 5 The "best" linear regression model is obtained by selecting the variables (X's) with at least strong correlation to Y. and n = the number of values in each data set (same for both sets). If there are no tied ranks. linear regression will underestimate the correlation of the independent and dependent when they (X's and Y) come from different underlying distributions. and the differences di between the ranks of each observation on the two variables are calculated. Spearman's rank correlation coefficient or Spearman's rho.80 or <= -0. Thus. In practice. The value of “r” must be determined from sample values. a simpler procedure is normally used to calculate ρ. On the other hand. such as a linear relationship. Samples should be drawn from a normal population. without making any other assumptions about the particular nature of the relationship between the variables. named after Charles Spearman and often denoted by the Greek letter ρ (rho) or as rs. ρ is simply a special case of the Pearson product-moment coefficient in which two sets of data Xi and Yi are converted to rankings xi and yi before calculating the coefficient.

The construction of business barometer consists of gross national product.Total Numbers : 8 Slope (b) :0. With the help of these business barometers the trend of fluctuations in business conditions are made known and by forecasting a decision can be taken relating to the problem.65 Regression Equation : 154. short term. MB 0025 –Set 2 Page 7 Following are the main methods of business forecasting:1. so they are also known as “Business Barometers” or “Economic Barometers‟. industrial production.16701 Y-Intercept (a) : 154. stock prices. consumer prices. As business indices are the indicators of future conditions. wholesale prices. Ans 3] Business forecasting refers to the analysis of past and present economic conditions with the object of drawing inferences about probable future business conditions. medium term or any specific term. bank deposits etc. The process of forecasting includes the use of statistical and mathematical methods for long term. These quantities may be concerted into relatives on a certain base.66 + 0. information and facts concerning to economic condition of business for past and present are analyzed. To forecast the future. What do you mean by business forecasting? What are the different methods of business forecasting? Describe the effectiveness of time-series analysis as a mode of business forecasting. various data. Describe the method of moving averages.17x 3. The relatives so obtained may be weighted and their . Business Barometers Business indices are constructed to study and analyze the business activities on the basis of which future conditions are predetermined.

The business barometers are of three types: i) Barometers relating to general business activities: it is also known as general index of business activity which refers to weighted or composite indices of individual index business activities. Extrapolation is the simplest method of business forecasting. With the help of general index of business activity long term trend and cyclical fluctuations in the „economic activities of a country are measured but in some specific cases the long term trends can be different from general trends. secular trend. Choice of a Method of Forecasting The selection of an appropriate method depends on many factors – the context of the forecast. Effectiveness of Time Series Analysis : Time series analysis is also used for the purpose of making business forecasting. . The term econometrics refers to the application of mathematical economic theory and statistical procedures to economic data in order to verify economic theorems. the relevance and availability of historical data. Models take the form of a set of simultaneous equations. 3. a businessman finds out the possible trend of demand of his goods and about their future price trends also. The forecasting through time series analysis is possible only when the business data of various years are available which reflects a definite trend and seasonal variation. iii) Business barometers concerning to individual business firm: This type of barometer is constructed to measure the expected variations in a specific individual firm of an industry. Regression relationship may involve one predicted or MB 0025 –Set 2 Page 8 dependent and one independent variables simple regression. The accuracy of extrapolation depends on two factors: i) Knowledge about the fluctuations of the figures. the cost benefit of the forecast to the company. analyzed and separated from the data of various years. which originated in the eighteenth century. or it may involve relationships between the variable to be forecast and several independent variables under multiple regressions. Exponential smoothing is a special kind of weighted average and is found extremely useful in short-term forecasting of inventories and sales. the time period for which forecasts are required. The forecasting through time series analysis is possible only when the business data of various years are available which reflects a definite trend and seasonal variation. ii) Business barometers for specific business or industry: These barometers are used as the supplement of general index of business activity and these are constructed to measure the future variations in a specific business or industry. seasonal and cyclical variations are ascertained. Statistical techniques to estimate the regression equations are often fairly complex and time-consuming but there are many computer programs now available that estimate simple and multiple regressions quickly. These types of index help in formation of country economic policies. have recently gained in popularity for forecasting. By time series analysis the long term trend. and the time available for making the analysis.average be computed. 4. 5. Time Series Analysis is also used for the purpose of making business forecasting. Exponential Smoothing Method This method is regarded as the best method of business forecasting as compared to other methods. 6. 7. the degree of accuracy desired. The index thus arrived at in the business barometer. Modern Econometric Methods Econometric techniques. Regression Analysis The regression approach offers many valuable contribution to the solution of the forecasting problem. The value of the constants in such equations are supplied by a study of statistical time series. By extrapolation. ii) Knowledge about the course of events relating to the problem under consideration. It is the means by which we select from among the many possible relationships between variables in a complex economy those which will be useful for forecasting. 2.

This sum is divided by the number of instances used in summation. Let’s consider the above example. the past 15 historical closing prices are summed up and then divided by 15. the price’s volatile movements are evened. Hence this makes exponential method more popular among traders. The term “moving average” means that the average moves or follows a certain trend. presentation. thus enabling the trader to understand the trend and its future direction more effectively. The difference between simple average and linear average method is the weightage that is provided to the position of the prices in the latter.Merits: i) It is an easy method of forecasting. Method of Moving Averages One of the most simple and popular technical analysis indicators is the moving averages method. The aim of this tool is to indicate to the trader if there is a beginning of any MB 0025 –Set 2 Page 9 new trend or if there is a signal of end to the old trend. This method rules out the daily fluctuation in the prices and helps the trader to go with the right trend. ‘Statistics is the science of collection. A simple moving average is the simplest way to calculate the moving price averages. The exponential moving average method shares some similarity with the linear moving average method. This method lays emphasis on the smoothing factor. Current price trend is always given a higher weightage. analysis and interpretation of data. if the moving average is calculated for 15 days. Still. This method is more receptive to any market news than the simple average method. What is definition of Statistics? What are the different characteristics of statistics? What are the different functions of Statistics? What are the limitations of Statistics? Ans 4] According to Croxton and Cowden. the closing price on the 15th day is multiplied by 15. 4. A linear moving average is the less used one out of all. linear and exponential. We come across different types of moving averages. thus ensuring that the trader trades in his own good. Traders use this method. Moving averages methods help to identify the correct trends and their respective levels of resistance. as it is relatively easy to understand the direction of the trends with the help of moving averages. Since the currency’s average price is considered. But it solves the problem of equal weightage. there by weighing recent data with higher points than the previous data. Characteristic of Statistics . Moving average method is supposed to be the simplest one. This method calculates the average price of the currency or stock over a period of time. For example. This method is effective when the number of prices considered is more. This method is known for its flexibility and user-friendliness. The three basic types of moving averages are viz.’ Thus. the basis of interpretation of averages is similar across all the types. These results are totaled and then divided by 15. analysis and interpretation of numerical data. the 14th day closing price by 14 and so on till the 1st day closing price by 1. In linear average method. as it helps to understand the chart patterns in an easier way. The computation of each type set itself different from other in terms of weightage it lays on the prices of the currencies. This definition is precise and comprehensive. Statistics contains the tools and techniques required for the collection. ii) By this method a comparative study of variations can be made. iii) Reliable results of forecasting are obtained as this method is based on mathematical model. The historical closing prices over certain time period are added. simple. which are based on the way these averages are computed. presentation.

It refers to area to be covered. Statistics does not deal with qualitative data. only related facts which are arranged in logical order can be called statistics. 2. Otherwise. they are likely to be wrong and misleading. c. while measuring the heights of students in a class. It deals only with quantitative data. Objectives of investigation should be stated at the outset. 3.a. 1. Thus. identification of units to be studied. d. They are probabilistic statements. etc. Statistics are collected for a pre-determined purpose: There must be a definite purpose for collecting facts. It makes comparison easier 3. Common men cannot handle Statistics properly: Only statisticians can handle statistics properly. e. In measuring the length of screws. Ans 5] The planning stage consists of the following sequence of activities. Therefore. The degree of accuracy differs from purpose to purpose. facts as ‘price decreases with increasing production’ cannot be called statistics. Statistics are placed in relation to each other: The facts must be placed in such a way that a comparative and analytical study becomes possible. Statistical inferences (conclusions) are not exact: Statistical inferences are true only on an average. 5. an accuracy upto a millimeter may be required. b. Statistics are affected to a marked extent by multiplicity of causes: The statistics of yield of paddy is the result of factors such as fertility of soil. quality of seed used. 4. What are the different stages of planning a statistical survey? Describe the various methods for collecting data in a statistical survey. Statistics Deals with aggregate of facts: Single figure cannot be analyzed. Eg. 3.ambiguous manner. Functions of Statistics 1. Movement of wholesale price of a commodity. 5. Statistics are numerically expressed: Only numerical facts can be statistically analyzed. Statistics are collected in a systematic manner: The facts should be collected according to planned and scientific methods. 5. Decision making process becomes easier. It simplifies mass data 2. whereas. MB 0025 –Set 2 Page 11 Major limitations of Statistics are: 1. Statistics does not deal with individual fact: Statistical methods can be applied only to aggregate to facts. It brings out trends and tendencies in the data 4. Objectives could be to obtain certain estimates or to establish a theory or to verify a existing statement to find relationship between characteristics etc. quality and quantity of fertilizer used. nature of characteristics to . It brings out hidden relations between variables. Statistics can be misused and misinterpreted: Increasing misuse of Statistics has led to increasing distrust in statistics. amount of rainfall. g. The scope of investigation has to be made clear. Nature of the problem to be investigated should be clearly defined in an un. f. Statistics are enumerated or estimated according to reasonable standards of accuracy: The facts should be enumerated (collected from the field) or estimated (computed) with required degree of accuracy. 2. accuracy upto a centimeter is enough.

iii. Whether to use data collected from primary or secondary source should be determined in advance. To To To To To To simplify complex data highlight important characteristics present data in minimum space facilitate comparison bring out trends and tendencies facilitate further analysis . Table is nothing but logical listing of related data in rows and columns. Collection of primary data can be done by anyone of the following methods. Exhaustive: every unit should be allotted to one and only one class iii. vi. i. v. It renders the data ready for any statistical analysis Requisites of good classification are : observed. ii. iv. Objectives of tabulation are:i. Suitability: It should be suitable to objectives of survey. It encompasses the determination of number of investigators required. accuracy of measurements. v. iii. analytical methods. Stability: It should remain stable through out the investigation vii. Revealing: Should bring out essential features of the collected data. Homogeneity: Similar units are placed in the same class. v. supervision work needed. cost and other resources required. It facilitates comparison of characteristics d. It reduce the bulk data b. Direct personal observation Indirect oral interview Information through agencies Information through mailed questionnaires Information through schedule filled by investigators 6. The organization of investigation is the final step in the process. their training. b. iv. Mutually exclusive: There should not be any overlapping. 4. vi. Flexibility: It should be capable of being adjusted to changing situation. viii. Unambiguous: It should not lead to any confusion ii. iv. time. ii. funds required etc. It simplifies the data and makes the data more comprehensible c. 5. What are the functions of classification? What are the requisites of a good classification? What is Table and describe the usefulness of a table in mode of presentation of data? Ans 6] The functions of classification are: a.

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