1.

Solution:

For the school of Business and Management, clearly, “Relevant” has the largest percentage (i.e. 43.2%), there it
is the mode.

Also, if we sort the groups in a sequence in “Very Relevant”, “Relevant”, “Neutral”, “Irrelevant” and “Very
Irrelevant”, we will see that the position of 50% is in the group “Relevant”, i.e., it is the median.

2. C

Solution:

(c) is false because the success rate of treatment A must be higher than that of Treatment B when considering small size
only or large size only.

3. C

Solution:

(c) is false because the box-plot indicates that the maximum value in the data is 90+, there are no students who get the
perfect score of 100.

4. D

Solution:

(a) is incorrect because those ‘dots’ in the box-plots represent the potential outliers, obviously, there are more than one
outlier.

(b) is incorrect because removing outlier(s) would decrease SD.

Generally, the median is larger than the mean for the left-skewed distribution; therefore (c) is incorrect.

From the box-plot, we see that Q1 is 50 and Q3 is 70+, i.e., there are 50% of students scored between 50 and 70+, hence
more than 50% of the students score between 50 and 80, (d) is correct.

5. D

Solution:

(d). Since the pattern of the date is curved, they are associated. Moreover, the pattern of the data is not linear; the
correlation between the two variables is close to 0.

6. D

Solution: the size of blaze, explains the superficial correlation.

7. A

Solution:

If the mean and SD of variable X are x and s respectively, then the mean and SD of variable a+bX are a  bx and | b | s
respectively, where a and b are constants.

Let X be the variable of the number of right questions.

Then 10  X is the variable of the number of wrong questions.

Therefore, we have mean = 10 – 8.13 = 1.87 and SD = | 1 | 1.1  1.1 .

8. D

Solution:

E[( A   A )( R   R )]
By the formula, correlation = .
 A R

If the units for is recorded in terms of thousands of dollars, the numerical values of the new R will be just 0.001 times of
the old ones. And so,

the new correlation

E[( A   A )(0.001R  0.001 R )]

=
 A  (0.001) R

(0.001) E[( A   A )( R   R )]
=
(0.001) A R

E[( A   A )( R   R )]
=
 A R
The correlation has no changes.

9. C

Solution:

P(sum is 6) = P({1,5}) + P({2,4}) + P({3,3}) + P({4,2}) + P({5,1}) = 1/36 + 1/36 + 1/36 + 1/36 + 1/36 = 5/36

10. D

Solution:

P(A) = 0.5, P(B) = 0.125 + 0.375 = 0.5

P(B|A) = 0.125/0.5 = 0.25, P(B|Not A) = 0.375/0.5 = 0.75

P(A and B) = 0.25(0.5) = 0.125 ≠ 0.25 = P(A) P(B), therefore (d) is false.
11. D

Solution:

P(one question is answered correctly) = 1/4 = 25%

P(at least one question is answered wrongly)

= 1 – P(no question is answered wrongly) = 1 – (0.25)(0.25)(0.25) = 98.4375% (which is closest to 100%)

12. D

Solution:
Denote that
A = event representing a candidate who has working experience,
B = event representing a candidate who has computer skills.
Checking:
(a) P(B|A) = 80/140 = 4/7 = 0.5714
(b) P(A’ and B) = 40/210 = 0.1905
(c) P(A and B) = 80/210 = 8/21
P(A) = 140/210 = 2/3
P(B) = 120/210 = 4/7
P(A)P(B) = 8/21 which is the same as P(A and B), so A and B are independent.
(d) P(A’ or B’) = 1 – P(A and B) = 1 – 8/21 = 0.6190

13. C

Solution:

Tossing a coin repeatedly is a series of independent events, i.e., the probability of landing a head is always 1/2 in each
time.
14. A

Solution:

P( A  B)  P( A)  P( B)  P( A  B)  P( A)  P( B) , i.e. (a) is incorrect and (c) is correct.

P( A  B)  P( A)  P( B) when A and B are independent, i.e. (b) is correct.

P( A  B)  P( A)  P( B | A)

Therefore, P( A  B)  P( A)  P( B)  P( B | A)  P( B)

For the following case,

A A’ Marginal

B 0.20 0.30 0.5

B’ 0.15 0.35 0.5

Marginal 0.35 0.65 1

0.2 4
P( B | A)    0.5  P( B) , therefore it is possible that P( B | A)  P( B) .
0.35 7
15. C

Solution:
The saved amount of customers is summarized as follows:

Purchased Amount

$100 $150

10% off $10 $15

Coupon

30% off $30 $45

50% off $50 $75
And the corresponding probabilities:

Purchased Amount

$100 $150 Marginal Probability

10% off 28/64 14/64 28/32

Coupon 30% off 3/64 3/64 3/32

50% off 1/64 1/64 1/32

Marginal Probability 50% 50% 100%

The required probability = 3/64 + 1/64 + 1/64 = 5/64

16. D

Solution:
W is the most one whose data is dispersed to both two sides. Therefore, it has the largest SD.

17. C

Solution:

1 9
( x)  (1)  0 , therefore x = 9.
10 10

18. C

Solution:
(0)p(0) + (25)p(1) + (50)p(2) + (75)p(3) + 100p(4)
= (0)(0.05) + (25)(0.25) + (50)(0.5) + (75)(0.15) + (100)(0.05) = 47.5

19. C

Solution:
mean = (1+2+3+4+5+6)/6 = 3.5
The law of large numbers say that the average point will close to the mean when the number of trials becomes very large.

20. A

Solution:

E( X  Y )  E( X )  E(Y )  1.5  2.2  3.7

Cov( X , Y )  SD( X )SD(Y )   (0.4)(0.5)(0.95)  0.19

Var ( X  Y )  Var ( X )  Var (Y )  2Cov( X , Y )  0.16  0.25  2(0.19)  0.79

SD( X  Y )  0.8888
21. D
Solution:

E (70 X  80Y )  1.5  70  2.2  80  281

Var (70 X  80Y )  4900Var ( X )  6400Var (Y )  (2)(70)(80)Cov( X , Y )

 4900(0.16)  6400(0.25)  (2)(70)(80)(0.19)  4512  SD(70 X  80Y )  67

If   0.5 , Cov( X , Y )  (0.4)(0.5)(0.5)  0.1 , the variance will be smaller than before, and so is the standard
deviation.
22. B
Solution:

1 1
Expected value = 10000  (  1.1   0.92)  10100
2 2

23. D
24. C
Solution:

P( Junk | Filtered )

P( Junk , Filtered ) P( Junk , Filtered ) (0.3)(0.9)

    0.7941
P( Filtered ) P( Junk , Filtered )  P(not Junk , Filtered ) (0.3)(0.9)  (0.7)(0.1)

[Q25-Q26] An appliance manufacturer maintains a repair center for its customers. Based on past experience, 30% of
all appliances sent in for repair have a mechanical problem (M), and 70% have an electrical problem (E). If the problem
is mechanical, 90% of the appliances can be repaired and returned to the customer (RR); in the remaining 10% of the
cases the appliance must be replaced (REP) with a new unit. If the problem is electrical, 60% can be repaired and
returned to the customer, with the remaining 40% being replaced with a new unit.

25. B
Solution:
P( REP ) = P( M and REP) + P( E and REP ) = 0.3 x 0.1 + 0.7 x 0.4 = 0.03 + 0.28 = 0.31

26. E
Solution:
P ( E | REP ) = P( E and REP )/ P( REP ) = 0.7 x 0.4 /0.31 = 0.28/0.31 = 90.32%

27. E
28. D
Solution:

Corr( X ,0.001Y )
Cov( X ,0.001Y )

SD( X ) SD(0.001Y )
Cov( X ,0.001Y )

0.001SD( X ) SD(Y )
 0.001Cov( X , Y ) Cov( X , Y )
   Corr ( X , Y )
0.001SD( X ) SD(Y ) SD( X ) SD(Y )
29. B
30. D
31. C
32. E
33. B
34. B
Solution:

1 1
Expected value = 10000  (  1.1   0.92)  10100
2 2
35. D
Solution:
Suppose that factory A produced n cars, then factory B produced 2n cars.
Overall defective rate = [1.2% (n) + 2.4% (2n)] /(n+2n) = 6%(n)/3n = 2%.
36. A

Solution:
If the mean and SD of variable X are x and s respectively, then the mean and SD of variable a+bX are
a  bx and | b | s respectively, where a and b are constants.

Let X be the variable of the number of right questions.

Then 25  X is the variable of the number of wrong questions.

Therefore, we have mean = 25 – 20.2 = 4.8 and SD = | 1 | 2.8  2.8 .

37. B
Solution:
P( RR ) = P( M and RR ) + P( E and RR ) = 0.7 x 0.9 + 0.3 x 0.6 = 0.63 + 0.18 = 0.81

38. E
Solution:
P ( M | RR ) = P( M and RR )/ P( RR ) = 0.7 x 0.9 /0.81 = 0.63/0.81 = 77.78%
39. E
40. E
41. D
42. C

Solution:
Probability that 24 or fewer germinate =1 − 𝑃(25 𝑔𝑒𝑟𝑚𝑖𝑛𝑎𝑡𝑒)= 1 − 0.925 = 0.9282

43. D

Solution:

mean of 𝑋= 𝐸(𝑋) = 0 ∗ 0.4 + 1 + 0.3 + 2 ∗ 0.2 + 3 ∗ 0.1 = 1

variance of 𝑋 = 𝑉𝑎𝑟(𝑋) = (0 − 1)2 ∗ 0.4 + (1 − 1)2 ∗ 0.3 + (2 − 1)2 ∗ 0.2 + (3 − 1)2 ∗ 0.1 = 1

mean of 𝑌 = 𝐸(2𝑋 + 1) = 2𝐸(𝑋) + 1 = 2 ∗ 1 + 1 = 3

variance of 𝑌 = 𝑉𝑎𝑟(2𝑋 + 1) = 22 ∗ 𝑉𝑎𝑟(𝑋) = 4 ∗ 1 = 4

44.C
45.B
Solution:

Possible result:

1ST Head Tail

nd
2

Head HH HT

Tail TH TT

Given that there is at least 1 Tails, the sample space becomes {HT, TH, TT}. The probability of getting 1 heads in this
sample space is 2/3.

46. B
47. B
Solution:

Let n be the number of children who have raised $25 or more. Then 320 − 25n > 0, n < 12.8. So, the largest possible
number of children who could have raised $25 or more is 12.

48. C

Solution:

Let A = {Golden State Warriors wins the champion}, B = {Golden State Warriors wins the first three games}
P(B|A)P(A) 𝑃(𝐵|𝐴)𝑃(𝐴) (0.3)(0.6)
P(A|B) = = 𝑐 )𝑃(𝐴𝑐 ) = (0.3)(0.6) = 0.9783
P(B) 𝑃(𝐵|𝐴)𝑃(𝐴) + 𝑃(𝐵|𝐴 + (0.01)(0.4)
49. A
Solution:

HIV No HIV Total

Detected(Positive) 0.005 * 0.92 = 0.0046 0.995 * 0.027 = 0.026865 0.031465

Undetected(Negative) 0.005 * 0.08 = 0.0004 0.995 * 0.973 = 0.968135 0.968535

Total 0.005 0.995 1

P ( HIV | positive ) = P ( HIV and positive )/ P( HIV ) = 0.0046 / 0.031465 = 0.1462

50. D

51. C

Solution:

Let X be the number of voters who are Independents.

P(X > 1) = 1 − P(X ≤ 1) = 1 − P(X = 0) − P(X = 1) = 1 − 0.925 − 25 ∗ 0.1 ∗ 0.924 = 0.7288

52. C
Solution:

P( X  2)  P( X  2)  P( X  3)  0.4  0.2  0.6

53. C
Solution:

We rearrange the data in ascending order:

2  a, 5  a, 6  a, 8  a, 9  a, 10  a, 11  a, 14  a, 18  a, 21  a , then Q1 = 6-a and Q3 = 14- a.
Therefore, IQR = (14-a) – (6-a) = 8
54. B

Solution:

The following is the summary of the sum of two dices:

Die 2

1 2 3 4 5 6

1 2 3 4 5 6 7

2 3 4 5 6 7 8

Die 1 3 4 5 6 7 8 9

4 5 6 7 8 9 10

5 6 7 8 9 10 11

6 7 8 9 10 11 12

Therefore, the required probability = 21/36

55. B
Solution:

Sharpe ratio of IBM = (0.10 – 0.015)/1.41 = 0.06028

Sharpe ratio of Apple = (0.20 – 0.015)/1.5 = 0.12333

56. C
57. A
58. A
59. D

Solution:
Rearrange the data in ascending order:
6 12 13 15 17 21 22 23 31
Mean = ( 12 + 6 + 22 + 31 + 23 + 13 + 15 + 17 + 21 )/9 = 160/9 = 17.78
Median = 17

6 2  12 2  132  15 2  17 2  212  22 2  232  312

Variance =  17.78 2 = 48.09
9
SD = 6.94
60. B
Solution:

Since x  13.5 , s  2 , 11.5 and 15.5 are actually x  s and x  s respectively.

According to the Empirical Rule, the interval ( x  s , x  s ) contains 68% of the ratios.

61. D

Solution:

Mean
Total Sales (X) 20 40 60 50 50 55 60 70 50.625
Selling
14 16 18 17 18 18 18 20
Expenses(Y) 17.375
xi  x -30.625 -10.625 9.375 -0.625 -0.625 4.375 9.375 19.375
yi  y -3.375 -1.375 0.625 -0.375 0.625 0.625 0.625 2.625
103.359 14.6093 5.85937 0.23437 0.3906 2.73437 5.85937 50.8593
( xi  x )( yi  y ) 4 8 5 5 3 5 5 8

Cov (X,Y)
= (103.3594 + 14.60938 + 5.859375 + 0.234375 + 0.39063 + 2.734375 + 5.859375 + 50.85938)/(8-1)
= 26.1607

62. D
63. B
64. C
Solution:
Percentage = 30 / (30 + 70) = 30%
65. A
Solution:
Percentage = 20 / 200 = 10%
66. B
67.A
68. A
69. D
70. D
71. A
72. D
73. B
74. C

Solution:
Let P(C) be the probability that residents own 2 cars, P(I) be the probability that annual household income is
over $25,000,
P(C∩I)
P(C) = 0.7, P(I) = 0.6 , = 0.8, P(C ∩ I) = 0.8*0.6 = 0.48, P(C ∩ I′) = 0.7 − 0.48 = 0.22
P(I)

75. C

Solution:
P(C ∪ I) = 0.7 + 0.6 − 0.48 = 0.82
P(C′ ∩ I′) = 1 − 0.82 = 0.18
P(C′ ∩ I′) 0.18
= = 0.45
P(I′) 0.4

76. D
77. B

Solution:
The probability = 0.75*0.08 + 0.25*0.23 = 0.1175

78. A

Solution:
The probability = 1 – 0.54 = 0.9375

79. A

Solution:
Mean = (-2)*0.59 + 5*0.15 + 7*0.25 + 8*0.01 = 1.4
Variance = (-2 – 1.4)2*0.59 + (5 – 1.4)2*0.15 + (7 – 1.4)2*0.25 + (8 – 1.4)2*0.01 = 17.04
80. C

Solution:
Sharpe Ratio of IBM = (0.10 – 0.015)/2.23 = 0.038
Sharpe Ratio of Microsoft = (0.12 – 0.015)/2.30 = 0.046

81. D

Solution:
The expected return of the portfolio = (0.10 + 0.12)/2 = 0.11
The variance of the portfolio = (0.52)(4.99) + (0.52)(5.27) + 2*0.5*0.5*0.5 = 2.805

The standard deviation of the portfolio = √2.805 = 1.67

82. A

Solution:
The area between 𝜇 − 𝜎 and 𝜇 + 𝜎 is approximately 68% (You may check it from the Standard Normal Table.) Thus, the
interval is [1180-80,1180+80] = [1100,1260].

83. B

84. A

Solution:
You may look at the stacked bar charts before and after. After the correction, two bars are more similar than before the
correction, so we conclude that the association is stronger before the correction.

85. D

86. D
87. C

Solution:
Let G be the random variable of weight in grams and O be the random variable of weight in ounces. i.e. G=0.035O. Then.
𝑆𝐷(𝐺) 0.035𝑆𝐷(𝑂)
E(G)=0.035E(O) and SD(G)=0.035SD(O). 𝐶𝑉 in grams = 𝐸(𝐺)
= 0.035𝐸(𝑂)
= 𝐶𝑉 in ounces.

88. A

89. C

Solution:
Let 𝐼 be the event that the sales increases and 𝐵 be the event that the cost within budget. Then, the required probability
is 𝑃(𝐼 𝑐 ∪ 𝐵𝑐 ) = 𝑃(𝐼 𝑐 ) + 𝑃(𝐵𝑐 ) − 𝑃(𝐼 𝑐 ∩ 𝐵𝑐 ) = 2 − 𝑃(𝐼) − 𝑃(𝐵) − (1 − 𝑃(𝐼))(1 − 𝑃(𝐵)) = 2 − 0.8 − 0.4 −
0.2(0.6) = 0.68

90. D

Solution:
The denominators are different for population and sample variance.

91. C
Solution:
𝐶𝑜𝑣(𝑋,𝑌)
Note that 𝜌 = , we also need to consider the standard deviation of X and Y, covariance is high does not mean
𝑆𝐷(𝑋)𝑆𝐷(𝑌)
that correlation is high.

92. D
Solution:
Let 𝑋 and 𝑌 be the random variable of spending on gas and quick meals respectively. We know that 600 = 𝑋 + 𝑌, so
that 𝐶𝑜𝑟𝑟(𝑋, 𝑌) = 𝐶𝑜𝑟𝑟(𝑋, 600 − 𝑋) = −𝐶𝑜𝑟𝑟(𝑋, 𝑋) = −1.

93. B

Solution:
Let 𝑆 be a random variable of the salary paid to employees. We have 𝑆~𝑁(800,5002 ). The year-end bonus random
variable is 𝑆𝑌𝐸 = 𝑆 + 1000, then 𝐸(𝑆𝑌𝐸 ) = 900 and 𝑆𝐷(𝑆𝑌𝐸 ) = 500.
94. E

the 2% percentile of a standard normal distribution is: -2.05

the 2% percentile for the return: 0.11-2.05*0.23 = -0.3615
The Value at Risk of the portfolio is: 100,000*0.3615=36150.

95. B
Solution:
Note that the firm loses once the loss is greater than $5M.

Let 𝐿 be a random variable of the loss. Then, 𝐿 = 0 with probability 1 if there is no storm and
𝐿~𝑁(6𝑀, (3𝑀)2 ) if there is storm. The probability required is 𝑃(𝐿 > 5𝑀) = 𝑃(𝐿 > 5𝑀|{storm})𝑃({storm}) =
5𝑀−6𝑀 1
𝑃 (𝑍 > )× 0.1 = 0.1 × 𝑃 (𝑍 > − ) ≈ 0.063.
3𝑀 3

96. A

97. C

98. C
Solution: Same as Q.9.