Solutions of homework of lecture 3

Exercise 3.1: The dividend yields for 15 listed property trusts in Australia are
recorded as percentages below.

7.34; 7.53; 8.62; 7.56; 8.63; 7.75; 6.40; 8.72; 7.44; 6.00; 8.35; 6.84; 7.43; 7.77; 8.92

a) Calculate the mean and the standard deviation of the 15 yields.

7.34 + 7.53 + … + 8.92
The mean of the 15 yields is x̄ = = 7.69
15
The variance is
1
s2 = (7.342 + 7.532 + … + 8.922 − 15 * 7.692) = 0.7361
15 − 1

Then the standard deviation is s = 0.7361 = 0.86

b) Calculate the coefficient of variation of the 15 yields.

s 0.86
The coefficient of variation of the 15 yields is CV = = = 0.112 = 11.2 %
x̄ 7.69
c) Construct a relative frequency histogram for the yields.

- The number of classes is k ≈ 1 + 3.3 log10 n ≈ 1 + 3.3 log10 15 ≈ 5

- The range of data is 8.92 - 6.00 = 2.92
range
- The length of each class is h = k
≈ 0.6

- The list of classes is chosen as the following: [6; 6.6), [6.6; 7.2), [7.2; 7.8), [7.8;
8.4), [8.4; 9]
- The relative frequency table is the following
Class Frequency Relative frequency

[6; 6.6) 2 2/15 = 0.133

[6.6; 7.2) 1 1/15 = 0.067

[7.2; 7.8) 7 7/15 = 0.467

[7.8; 8.4) 1 1/15 = 0.067

[8.4; 9) 4 4/15 = 0.266

1
- The relative histogram is the following

d) Find the median of the 15 yields, and locate the mean and the median on your
histogram.
- Arrange the data in increasing order:
6.00; 6.40; 6.84; 7.34; 7.43; 7.44; 7.53; 7.56; 7.75; 7.77; 8.35; 8.62; 8.63; 8.72; 8.92
- Since n = 15 is odd so the median is the 8th value and equals m = 7.56
- Locate the mean and the median on your histogram

2
Exercise 3.2: The ages of a sample of 25 stockbrokers were recorded as follows:

50; 64; 32; 55; 41; 44; 24; 46; 58; 47; 36; 52; 54;

44; 66; 47; 59; 51; 61; 57; 49; 28; 42; 38; 45

a) Construct a stem-and-leaf for the ages.

Arrange the data in increasing oder:

24, 28, 32, 36, 38, 41, 42, 44, 44, 45, 46, 47, 47, 49, 50, 51, 52, 54, 55, 57, 58, 59, 61,
64, 66

A stem-and-leaf for the ages is

Stem Ordered leaf

2 48

3 268

4 124456779

5 01245789

6 146

b) Find the median age for the sample data.

Arrange the data in increasing oder:

24, 28, 32, 36, 38, 41, 42, 44, 44, 45, 46, 47, 47, 49, 50, 51, 52, 54, 55, 57, 58, 59, 61,
64, 66

Since n = 25 is odd so the median is the 13th value and equals m = 47

c) Find the lower quartile of the ages.

P 25
The location of the lower quartile is L 25 = (n + 1) = (25 + 1) = 6.5
100 100
Arrange the data in increasing oder:

24, 28, 32, 36, 38, 41, 42, 44, 44, 45, 46, 47, 47, 49, 50, 51, 52, 54, 55, 57, 58, 59, 61,
64, 66

The lower quartile of the ages is Q1 = 41 + (42 − 41) * 0.5 = 41.5

d) Find the upper quartile of the ages.

3
 P 75
The location of the upper quartile is L 75 = (n + 1) = (25 + 1) = 19.5
100 100
Arrange the data in increasing oder:

24, 28, 32, 36, 38, 41, 42, 44, 44, 45, 46, 47, 47, 49, 50, 51, 52, 54, 55, 57, 58, 59, 61,
64, 66

The upper quartile of the ages is Q3 = 55 + (57 − 55) * 0.5 = 56

e) Find the 80th percentile of the ages.

P 80
The location of the 80th percentile is L80 = (n + 1) = (25 + 1) = 20.8
100 100
Arrange the data in increasing oder:

24, 28, 32, 36, 38, 41, 42, 44, 44, 45, 46, 47, 47, 49, 50, 51, 52, 54, 55, 57, 58, 59, 61,
64, 66

The 80th percentile of the ages is 57 + (58 − 57) * 0.8 = 57.8

f) Find the interquartile range of the ages.

The interquartile range of the ages is IQ R = Q3 − Q1 = 56 − 41.5 = 14.5

g) Do the data have any outliers?

We have

[Q1 − 1.5IQ R; Q3 + 1.5IQ R] = [41.5 − 1.5 * 14.5; 56 + 1.5 * 14.5] = [19.75; 77.75]

All values of the data are in [Q1 − 1.5IQ R; Q3 + 1.5IQ R] so the data have not any
outliers.

h) Draw a box-plot for this sample.

4
Exercise 3.3: The number of items returned to a leading Brisbane retailer by its
customers were recorded for the last 25 days and are as follows:

21; 18; 6; 12; 24; 8; 19; 21; 16; 6; 17; 14; 25;

16; 21; 22; 17; 19; 10; 20; 19; 11; 9; 29; 25

a) Draw a frequency distribution for these data. Use five class intervals, with the
lower boundary of the first class being 5 days.
- We choose five class intervals as the following: [5; 10); [10; 15); [15;20); [20;
25); [25; 30].
- Arrange the data in increasing order:
6, 6, 8, 9, 10, 11, 12, 14, 16, 16, 17, 17, 18, 19, 19, 19, 20, 21, 21, 21, 22, 24, 25, 25,
29
- The frequency distribution table is
Class Frequency

[5; 10) 4

[10; 15) 4

[15; 20) 8

[20; 25) 6

[25; 30] 3

b) Draw a relative frequency histogram for these data.

- The relative frequency distribution table is
Class Relative Frequency

[5; 10) 4/25 = 0.16

[10; 15) 4/25 = 0.16

[15; 20) 8/25 = 0.32

[20; 25) 6/25 = 0.24

[25; 30] 3/25 = 0.12

5
A relative frequency histogram for these data is

c) What is the relationship between the areas under the histogram you have drawn
and the relative frequencies of the observations?

The areas under the histogram you have drawn and the relative frequencies of
the observations are proportional. The proportion equals the length of each class
interval.

d) Find the sample mean, the median, the mode, the sample variance and the sample
standard deviation for these data.
21 + 18 + … + 25
- The mean is x̄ = 25
= 17

- Arrange the data in increasing order:

6, 6, 8, 9, 10, 11, 12, 14, 16, 16, 17, 17, 18, 19, 19, 19, 20, 21, 21, 21, 22, 24, 25, 25,
29

Since n = 25 is odd so the median is the 13th values and equals m = 18.
- The mode equals 19 or 21 since these values occurs the most frequently (3 times)
2 1 2 2 2 2
- The sample variance is s = 25 − 1 (21 + 18 + … + 25 − 25 * 17 ) = 38.5

- The sample standard deviation is s = s2 = 38.5 = 6.205

6
e) What proportion of items falls in the interval x̄ ∓ 2s ?
- Arrange the data in increasing order:
6, 6, 8, 9, 10, 11, 12, 14, 16, 16, 17, 17, 18, 19, 19, 19, 20, 21, 21, 21, 22, 24, 25, 25,
29

The interval x̄ ∓ 2s = 17 ∓ 2 * 6.205 = [4.59; 29.41] so the proportion of items falls

in the interval x̄ ∓ 2s is 25/25 = 100% (smallest value 6 and largest value 29 are in
this interval).

f) Does it appear that the population from which this sample was taken has a mound-
shaped distribution?

The population from which this sample was taken has not a mound-shaped
distribution since the histogram is not bell-shaped.

g) Compare the actual proportion of items falling into the intervals x̄ ∓ s and x̄ ∓ 2s
with the proportion suggested by the empirical rule.

By the empirical rule, the proportions of items falling into the intervals x̄ ∓ s and
x̄ ∓ 2s are 68% and 95%, respectively.
- Arrange the data in increasing order:
6, 6, 8, 9, 10, 11, 12, 14, 16, 16, 17, 17, 18, 19, 19, 19, 20, 21, 21, 21, 22, 24, 25, 25,
29

We have x̄ ∓ s = 17 ∓ 6.205 = [10.795; 23.205]

and x̄ ∓ 2s = 17 ∓ 2 * 6.205 = [4.59; 29.41]

So the actual proportions of items falling into the intervals x̄ ∓ s and x̄ ∓ 2s are 16/25
= 64% and 25/25 = 100%.

The actual proportions of items falling into the intervals x̄ ∓ s and x̄ ∓ 2s are different
with the proportions suggested by the empirical rule.