(ISOM2500)[2019](f)quiz~jshihaa^_37816.pdf downloaded by lcyeungad from http://petergao.net/ustpastpaper/down.php?course=ISOM2500&id=12 at 2021-10-04 13:54:52. Academic use within HKUST only.

The Hong Kong University of Science and Technology

Department of ISOM
ISOM 2500 Business Statistics
(2019 Fall)
Sample Quiz 2

1. Let 𝑋 be a continuous random variable with the probability density function 𝑓(𝑥). The plot of
𝑓(𝑥) is given below:

It is known that 𝑓(𝑥) = 0 for 𝑥 > 10 or 𝑥 < 0. Find the value of h such that 𝑓(𝑥) is a well-
defined probability density function.
A. 0.1
B. 0.2
C. 0.3
D. 0.4

2. The Normal Quantile Plot of the S&P 500 daily log return is shown below. Which of the
following statements is correct?
Normal Quantile Plot for DSPLR
0.10
Sample Quantiles

0.00
-0.10
-0.20

-4 -2 0 2 4

Theoretical Quantiles

A. The shape of the distribution of S&P 500 daily log return is uniformly distributed.
B. There is no outlier on the data.
C. The S&P 500 daily log return is NOT normally distributed.
D. None of the above is true.
(ISOM2500)[2019](f)quiz~jshihaa^_37816.pdf downloaded by lcyeungad from http://petergao.net/ustpastpaper/down.php?course=ISOM2500&id=12 at 2021-10-04 13:54:52. Academic use within HKUST only.

3. The Mountain Dew bottling company fills “32-ounce” bottles with a process that produces
approximately a normal distribution of fill volume with a mean of 32.5 ounces and a standard
deviation of 0.5 ounces. In the long run, what is the proportion of the bottles that are filled with
less than 32 ounces?
A. 2.5%
B. 5%
C. 16%
D. 32%

4. The Central Limit Theorem is important in statistics because

A. for a large 𝑛, it says the population is approximately normal.
B. for any population, it says the sampling distribution of the sample mean is approximately
normal, regardless of the sample size.
C. for a large 𝑛, it says the sampling distribution of the sample mean is approximately
normal, regardless of the shape of the population.
D. for any sized sample, it says the sampling distribution of the sample mean is
approximately normal.

5. According to the past experience, the mean weight of an African bush elephant is 6000 kg and
standard deviation of the weight is 300 kg. Find the minimum sample size such that the marginal
error is less than 20 with 90% confidence.
A. 600
A. 900
B. 650
C. 400

6. Which of the following descriptions about the confidence interval of a population mean 𝜇 of a
normal population is correct?
I. A 99% confidence interval is wider than a 95% confidence interval for the same
sample.
II. If I randomly draw two samples from a population, two 95% confidence intervals
will be the same for those two samples.
III. If we draw 100 samples, we expect that around 95 samples will be covering 𝜇.

A. I
B. I, III
C. I, II
D. All of above
(ISOM2500)[2019](f)quiz~jshihaa^_37816.pdf downloaded by lcyeungad from http://petergao.net/ustpastpaper/down.php?course=ISOM2500&id=12 at 2021-10-04 13:54:52. Academic use within HKUST only.

7. A sample of size 𝑛 = 64 from 𝑁(𝜇, 𝜎 2 ) was collected and the sample mean 50. Suppose that 𝜎 =
5, find a 95% confidence interval of 𝜇.
A. [49.847, 50.153]
B. [48.775, 51.225]
C. [48.972, 51.028]
D. [49.200, 50.800]

8. Which of the following is NOT true about the sample proportion 𝑝̂ ?

A. The mean of the sampling distribution of 𝑝̂ is 𝑝.
𝑝(1−𝑝)
B. The standard error of the sampling distribution of 𝑝̂ is √ .
𝑛
𝑋
C. 𝑝̂ = 𝑛, where 𝑋 is the number of success and n is the sample size.
D. The sampling distribution of 𝑝̂ is Binomial distribution.

9. An electrical firm manufactures light bulls that have a length of life that is approximately
normally distributed with a standard deviation of 40 hours. If a sample of 30 bulbs has an average
life of 780 hours, find a 95% confidence interval for the population mean of all bulbs produced by
this firm.
A. [770, 800]
B. [740, 760]
C. [768, 798]
D. [766, 794]

10. Let 𝑋1 , 𝑋2 , … , 𝑋𝑛 be a sample of size n from a normally distributed population. What is the
minimum value of 𝑛 required so that 𝑋̅ is normally distributed?
A. 1
B. 10
C. 100
D. 1000

11. Value at Risk (VaR) is used to describe the worst case scenario over some time horizon with a
specific probability. Suppose that an investment on a stock is expected to grow during the year by
10% with SD 35%. Assume a normal model for the change in value. What is the VaR for an
investment of $500,000 at 5%?
A. $357, 750
B. $237, 875
C. $174, 000
D. $405, 345
(ISOM2500)[2019](f)quiz~jshihaa^_37816.pdf downloaded by lcyeungad from http://petergao.net/ustpastpaper/down.php?course=ISOM2500&id=12 at 2021-10-04 13:54:52. Academic use within HKUST only.

12. You want to find out whether a coin is biased. You conduct an experiment by flipping a coin for
100 times. Out of 100 flips, you got 40 heads. Applying Central Limit Theorem, will you say that
this coin is a fair coin with 99% confidence level?
A. No, since 0.5 is fall outside the 99% confidence interval
B. No, since the sample proportion is not equal to 0.5
C. Yes, since 0.5 is fall inside the 99% confidence interval
D. Yes, since the sample proportion is very close to 0.5

13. Consider that in a survey, we want to find out the proportion of Trump’s supporter in America. In
order for us to apply the central limit theorem, what is the minimum requirement for 𝑛𝑝̂ ? where 𝑛
is the sample size and 𝑝̂ is the sample proportion.
A. No requirement.
B. Larger than 5.
C. Larger than 10.
D. Larger than 30.

14. A biased coin was tossed 100 times and the number of heads obtained is 32. Construct an
approximated 90% confidence interval for the probability of obtaining a tail in a toss of the above
biased coin.
A. [0.6011, 0:7589]
B. [0.6033, 0.7567]
C. [0:2432, 0:3967]
D. [0:2402, 0:3997]

15. A manufacturer of fitness equipment inspects a random sample of the welds that are done on
various pieces of equipment in an effort to monitor the quality and strength of the equipment. The
production manager states that he has computed a 95% confidence interval for the population
proportion of defective welds, and that “the margin of error is 0.035.” Which of the following is
an appropriate interpretation for the margin of error in this case?
A. The sample proportion he computed is within 0.035 of the population proportion.
B. He is 95% confident that the population proportion is between 0 and 0.07.
C. He is 95% confident that the population proportion is within 0.035 of the sample
proportion he computed.
D. The population cannot differ from the sample proportion by more than 0.035 in either
direction.

16. The long-distance calls made by the employees of a company are normally distributed with a
mean of 6.3 minutes and a standard deviation of 2.2 minutes. What is the maximum time that the
shortest 10% of calls last?
A. 3.484 minutes
B. 2.681 minutes
C. 1.988 minutes
D. 1.790 minutes
(ISOM2500)[2019](f)quiz~jshihaa^_37816.pdf downloaded by lcyeungad from http://petergao.net/ustpastpaper/down.php?course=ISOM2500&id=12 at 2021-10-04 13:54:52. Academic use within HKUST only.

17. Heights of 20 randomly selected HKUST students were measured. The average and standard
deviation were 173 and 5 respectively. Find a 99% confidence interval for the population height
of HKUST students.
A. [170.12, 175.89]
B. [169.80, 176.20]
C. [169.72, 176.28]
D. [170.05, 175.95]

18. Insurance company records indicate that 10% of its policyholders file claims involve theft or
robbery of personal property from their homes. Suppose a random sample of 400 policyholders is
selected. The probability that the sample proportion of policyholders filing claims involving theft
or robbery from their homes is less than 8% is closest to:
A. 0.0918
B. 0.1333
C. 0.4082
D. 0.0517

19. The label on 1-gallon cans of paint states that the amount of paint in the can is sufficient to paint
500 square feet. However, this number is quite variable. In fact, the amount of coverage is known
to be approximately normally distributed with a standard deviation of 16 square feet. How large a
sample should be taken to estimate the true mean coverage of all 1-gallon cans to within 5 square
feet with 95% confidence?
A. 38
B. 39
C. 40
D. 41

20. Battery manufacturers compete on the basis of the amount of time their products last in cameras
and toys. A manufacturer of alkaline batteries has observed that its batteries last for an average of
26 hours when used in a toy racing car. The amount of time is normally distributed with a
standard deviation of 2.5 hours. If a battery last less than a critical value 𝑘, it will be regarded as
underperformed. If there is 10% chance for the manufacturer to produce underperformed
batteries, what is the value of 𝑘?
A. 29.2
B. 23.9
C. 22.8
D. 21.9