Introduction to Probability and Statistics

PGP Term - I
Quiz - 2
Date: September 04, 2018 Duration: 30 mins.

This is a closed-book examination, with total points 25. Attempt all questions. One
calculator is allowed.
1. According to a newpaper report, solar power now accounts for only 2% of total energy
produced. If this number was obtained based on a random sample of 9000 electricity
users, give a 95% confidence interval for the population proportion of users of solar
energy. [5]

2. An instructor has 50 exams that will be graded in sequence. The times required to
grade the 50 exams are independent, with a common distribution that has mean 20
minutes and standard deviation 4 minutes. Approximate the probability that the
instructor will grade 25 of the exams within the first 450 minutes of work. Leave your
answer in terms of Φ(·). [5]

3. Consider two discrete binary random variables X and Y with joint pmf given by

p(0, 0) = 0.3, p(0, 1) = 0.1, p(1, 1) = 0.5.

Find the conditional distribution of X given Y = y, y = 0, 1. [4]

4. The World Health Organization (WHO) collects data from various cities in the world
for their air quality monitoring project. One such data refers to the amount of sus-
pended particles (PM10) in µg/m3 . Data corresponding to 13 stations in Mumbai and
16 stations in New Delhi for the year 2017 are collected and the annual sample means
across the stations recorded as 136 and 286, with standard deviations of 25.6 and 23.8
respectively (all measurements in µg/m3 ). Find 95% confidence intervals for the mean
amount of PM10 concentration for the respective cities. [3 + 3 = 6]

5. Consider two stocks A and B with expected returns µA and µB respectively. A naive
investor wishes to invest in exactly one of A and B. Unable to decide which stock to
invest in, he plans to throw a coin and choose stock A if heads comes up, and choose
stock B otherwise. Further suppose that he chooses a biased coin with probability of
heads to be 0.7. Find the expected return from his investment if he follows the above
strategy. [5]

1
 Critical values

1. Z-values:
z0.05 = 1.645, z0.025 = 1.96.

2. t-values:

t0.025,12 = 2.178, t0.025,13 = 2.160, t0.025,15 = 2.131, t0.025,16 = 2.120.