CHAPTER Data and Statistics CONTENTS Scales of Measurement STATISTICS IN PRACTICE: (Quaiative and Quntiative Date BUSINESSWEEK ro Sectional and Tine 1.1 _ APPLICATIONS IN BUSINESS [AND ECONOMICS 13 DATASOURCE ‘Accounting Existing Sures Finance Siatisial Stdies Marksting Data Acglstion ors Bruen 1a pescrupnive stanistics 42 DATA 1.5 STATISTICAL INFERENCE Elements, Variables, and 16 COMPUTERS AND Observations STATISTICAL ANALYSIS2 CChoater 1 Date ond Stasis BUSINESSWEEK* [NEW YORK. NEW YORK With a global circulation of more than 1 million, Busi: nessWeek isthe most widely read business magazine in the world, More than 200 dedicated reporters and editors in 26 bureaus worldwide deliver a variety of articles of fntoresto the business and economic community. Along with feature articles on current topics, the magazine contains regular sections on International Business, Eeo- nomic Analysis, Information Processing, and Science & Technology. Information in the feature articles and the regular sections helps readers stay abreast of current de- velopments and assess the impact of those developments ‘on business and economic conditions Most issues of BusinessWeek provide an in-depth report on atopic of current interest Often, the in-depth reports contain statistical facts and surnmares that help the reader understand the business and economic infor mation, For example, the December 6, 2004, issue in- cluded a special report on the pricing of goods made in Cina; the January 3, 2005, issue provided information about where to invest in 2005; and the April 4, 2005, issue provided an overview ofthe BusinessWeek 50, a diverse group of top performing companies. In addition, the weekly BusinessWeek Investor provides statistics about the state of the economy, including production Indexes, stock prices, mutual funds, and interest aes. BusinessWeek also uses statistics and statistical in formation in managing its own business. For example, sin annual survey of subscribers helps the company learn about subscriber demographics, reading habits, likely purchases, lifestyles, and soon. BusinessWeek managers tse statistical summaries from the survey to provide The auton or indbied Chee Tu, Rserh Manag of uns Wan forpovding ha ssn Pras, BusinessWeek uses statistical facts and summaries {in many of its articles. © Tersi Mller/E-Visual Communications, Ine. better services to subseribers and advertisers. On recent [North American subscriber survey indicated that 90% of BusinessWeek subseribers use & personal computer at home and that 64% of BusinessWeek subscribers are involved with computer purchases at work. Such satis- ties alert BusinessWeek managers to subscriber interest in articles about new developments in computers. The resulls ofthe survey at aso made available wo potential advertisers, The high percentage of subscribers using personal computers at home and the high percentage of. subseribers involved with computer purchases at work ‘would be an incentive for a computer manufscturer to consider advertising in BusinessWeek Inthis chapter, we discus the types of data available {for statistical analysis and describe how the data are ob- {ained, We intoduee descriptive statistics and statistical inference as ways of converting data into meaningful and easly interpreted statistical information, Frequently, we see the following types of statements in newspapers and magazines: + The National Association of Realtors reported that median selling price for a house in the United States was $215,000 (The Wall Street Journal, January 16, 2006), + The average cost of a 30-second television commercial during the 2006 Super Bowl game was $2.5 million (USA Today, January 27, 2006).@ 1.1 Applications in Busines andl Economies 3 + Alupiter Media survey found 31% of adult males watch television 10 or more hours sawock, For adult women it was 26% (The Wall Street Joumal, January 26, 2004). + General Motors, a leader in automotive cash rebates, provided an average cash incentive of $4300 per vehicle (USA Today, January 27, 2006). © More than 40% of Marriott International managers work their way up through the ranks (Fortune, Fanuaty 20, 2003). + The New York Yankees have the highest payroll in major league bassball. In 2005, the team payroll was $208,306,817, with a median of $5,833,334 per player (USA Today Salary Database, February 2006), + The Dow Jones Industrial Average closed at 11,577 (Barron's; May 6, 2006) ‘The numerical facts inthe preceding statements ($215,000; $2.5 million; 31%; 26%; {$4300; 40%; $5,833,334; and 11,577) are called statistics. Tn this usage, the term statistics refers to numerical fats such as averages, medians, percents, and index numbers that help us understand a variety of business and economic conditions. However, as you will see, the field, oF subject, of statistics involves much more than numerical facts. In a broader sense, statistics is defined as the art and science of collecting, analyzing, presenting, and inter preting data, Particularly in business and economics, the information provided by collect- ing, analyzing, presenting, and interpreting data gives managers and decision makers & better understanding of the business and economic environment and thus enables them to ‘make more informed and better decisions, In this ext, we emphasize the use of slatisties Tor business and economie decision making. Chapter 1 begins with some illustrations of the applications of statistics in business and ‘economies, In Seetion 1.2 we define the term data and introduce the concept of a dataset. ‘This section also introduces key terms such 28 variables and observations, discusses the difference between quantitative and qualitative data, and illustrates the uses of cross- sectional and time series data, Scetion 1.3 discusses how data can be obtained from exist {ng sources or through survey and experimental studies designed to obtain new data. The ‘important role thatthe Intemet now plays in obtaining data is also highlighted, The uses of dala in developing descriptive staisics and in making statistical inferences are described in Sections Land 1. Applications in Business and Economics In today’s global business and economic environment, anyone can aecess vast amounts of statistical information. The most successful managers and decision makers understand the information and know how to use it effectively. In this section, we provide examples that illustrate some of the uses of statistics in business and economies. Accounting Public accounting firms use statistical sampling procedures when conducting audits for their clients. For instance, suppose an accounting firm wants to determine whether the amount of accounts receivable shown on a client's balance shest fairly represents the 8c- tual amount of accounts receivable. Usually the large number of individual accounts re- ceivable makes reviewing and validating every account too time-consuming and expensive. [As common practice in such situations, the audit staff selects a subset of the accounts called a sample. After reviewing the accuracy of the sampled aecounts, the auditors draw a conclusion as to whether the aecounts receivable amount shown on the elient’s balance sheet is acceptable,CChooter 1 Date end Statisis Financial analysts use a variety of statistical information o guide their investment recom- ‘mendations. Inthe ase of stocks, the analysts review a variety of Financial data including price/earnings ratios and dividend yields. By comparing the information for an individual stock with information about the stock market averages, a inancial analyst can begin to draw a conclusion as to whether an individual stock is over- or underpriced. For example, Barron's (September 12,2005) reported thatthe average prce/eatnings ratio forthe 30 stocks in the Dow ones Industrial Average was 16.5, JPMorgan showed a prce/easnings ratio of 11.8. Inthis case, the statistical information on price/esrnings ratios indicated a lower price {in comparison to earnings for JPMorgan than the average forthe Dow Jones stocks. There- fore, 2 financial analyst might conclude that JPMorgan was underpriced. This and other information about JPMorgan would help the analyst make a buy, sll, or hold recommen- dation forthe stock Marketing Electronic scanners st retail checkout counters collect data for a varity of marketing re- search applications, For example, data suppliers such as ACNielsen and Information Re- sources Inc. purchase point-of-sale scanner data from grocery stores, process the data, and ‘then sell statistical summaries of the data to manufacturers. Manufacturers spend hundreds of thousands of dollars per product category to obtain this type of scanner data. Manufic- turers also purchase data and statistical summaries on promotional activities such as spe- cial pricing and the use of in-store displays. Brand managers can review the scanner statistics and the promotional activity statistics to gain a better understanding of the rela- tionship between promotional activities and sales. Such analyses often prove helpful in establishing future marketing strategies for the various products Production ‘Today's emphasis on quality makes quality control an important application of statisties in production. A variety of statistical quality control charts are used to monitor the out- put ofa production process. In particular, an 2-har chart can be used to monitor the average ‘output. Suppose, for example, that e machine fills containers with 12 ounces ofa soft drink. Periodically, a production worker selects a sample of containers and computes the average ‘nursber of ounces inthe sample. Tis average, or x-bar value, i plotted on an x-bar chart plotted value above tke charts upper coatrol limit indicates overfilling, and a plotted value ‘below the charts lower conteol limit indicates underflling, The process is termed “in con- {rol” and allowed to continue as long asthe plotted x-bar values fall between the chat's ‘upper and lower control limits. Properly interpreted, an s-bar chart ean help determine when adjusiments are necessary to correcta production process, Economics Economists frequently provide forecasts about the Future ofthe economy or some aspect of it, They use a varity of statistical information in making such forcessts, For instance, in forecasting inflation rates, economists use statistical information on such indicators as the Producer Price Index, the unemployment rate, and manufacturing capacity utilization. (Often these statistical indicators are entered into computerized forecasting madels that predict inflation rates@ 12 Data 5 Applications of statistics such as those described in this section are an integral past of {his text, Such examples provide an averview of the breadth of statistical applications. To supplement these examples, practitioners in the fields of business and economics provided chapter-opening Statistics in Practice articles that introduce the material covered in each chapter. The Statistics in Practice applications show the importance of statistics in a wide vvarety of business und economic situations, Data Data are the facts and figures collected, analyzed, and summarized for presentation and in- {erpretation, All the data collected in a particular study ae referred to as the data set forthe study. Table 1.1 shows a data set containing information for 25 companies that are part of the S&P 500, The S&P 500 is made up of 500 companies selected by Standard & Poor's "These companies account for 76% of the market capitalization ofall U.S. stocks, S&P 500 stocks are closely followed by investors and Wall Street analysts. TABLE 1.1 DATA SET FOR 25 S&P 500 COMPANIES. Farnings Share” per BusinessWeek Price Share ‘Company Exchange Ticker Rank o ) Abbott Laboratories N Aur 90 46 202 Altria Group N Mo 188 66 497 Apollo Group xo | aror i % 0.90 [Bank of New York N BK 05 30 18s Bristol-Myers Squibb N BMY 346 26 121 Gincinnai Financia] xo | ane Io 45 27 Comcast xo | cwcsa 296 2 043 Deere N DE 36 n S71 bay xo | EBay 19 48 os Federated Dept. Stores N D 353 36 3.86 Hasbro N Has an 21 0.96, IBM N 1M 216 3 498 Invernationsl Paper N P 310 3 098 Knight Ridder N KRI 31 66 43 Manor Care N HER 2s u 190 Medtronic N MDT 3 32 179 National Semiconductor | N NSM. Iss, 20 1.03 Novellus Systems xq. | xvis 386 30 1.06 Pitney Bowes| N PBI 339 46 205 Pulte Homes| N DEM 2 8 169) ‘SBC Communications N BC an a 132 ‘St Paul Travelers N STA 264 38 133 Teradyne N TER 412 15 08a UnitedHealth Group N UNH 5 3 394 ‘Wells Farto N wre 159 38 409 Source: BusinessWeek (Apei 4, 2005)CChooter 1 Date end Statisis Elements, Variables, and Observations Elements are the entities on which data are collected, For the dataset in Table 1.1, each in dividual company's stock isan element; the element names appear the first column. With 25 stocks, the data set contains 25 elements ‘A variable is a characteristic of interest forthe elements, The data set in Table 1.1 includes the following five variables: + Exchange: Where the stock is traded —N (New York Stock Exchange) and NQ (Nasdaq National Market) + Ticker Symbol: The abbreviation used to identify the stock on the exchange listing © usinessWeek Rank: A number from | to 500 thats a measure of company strength © Share Price (SJ: The losing price (February 28, 2005) + Earnings per Share ($): The earnings per share for the most recent 12 months “Measurements collected on each variable for every element in a study provide the data ‘The set of measurements obtained for a particular element is ealled an observation, Refer: ‘ng to Table 1.1, we see that the set of measurements for the fist observation (Abbott Lab- oratories) is N, ABT, 90, 46, and 2.02. The set of measurements forthe second observation (Alia Group) is N, MO, 148, 66, and 4.57, and so on. A dataset with 25 elements contains 25 observations. Scales of Measurement Data collection requires one of the following scales of measurement: nominal, ordinal, interval, or ratio, The scale of measurement determines the amount of information con” lined in Use data and indicates the most appropriate data summarization and statistical analyses. ‘When the data fora variable consist of Iabels or names used to identify an atibute of| the element, the scale of measurement is considered a nominal scale, For example, rfer- ‘ing tothe data in Table 1.1, we see that the scale of measurement forthe exchange variable {snominal because N and NQ are labels used to identify where the company's stocks waded. In cases where the scale of messurement is nominal, a numeric code as well s nonnumeric labels may be used. For example, o facilitate data collection and to prepare the data for entry into a computer database, we might use « numeric code by letting 1 denote the New ‘York Stock Exchange and 2 denote the Nasdag National Market, Ia this case the numeric values! and? provide the labels used o identify where the stocks traded. The scale of mea- surement is nominal even though the data appear as numeric values, ‘The scale of measurement for a variable is called an ordinal scale if the data ex- hibit the properties of nominal data and the order or rank of the data is meaningful. For ‘example, Eastside Automotive sends customers # questionnaire designed to obiain datz fon the quality of its automotive repair service. Each customer provides a repuir service rating of excellent, good, or poor. Because the data obtained are the labels—excellest, ‘good, or poor—the data have the properties of nominal data. In addition, the data can be ranked, of ordered, with respect to the service quality. Data recorded as excellent cate the best service, followed by good and then poor. Thus, the scale of measurement is ordinal, Note that the ordinal data can also be recorded using a numeric code. For ‘example, the BusinessWeek rank for the data in Table 1.1 is ordinal data. It provides a rank from 1 10 $00 based on BusinessWeek's assessment ofthe company's strength ‘The scale of measurement for a variable becomes an interval scale ithe data show the properties of ordinal data and the interval betwen values is expressed in terms of a fixed‘Quatre daa ore ten fered as tego data ‘he sail method appropiate for earn data depends tien whether the data are ‘uaa or quota, 12 Data 7 unit of measure. Interval data are always numeric. Scholastic Aptitude Test (SAT) seores are an example of interval-scaled dats. For example, tree students with SAT math scores 0620, '550, and 470.can be ranked or ordered in terms of best performance to poorest performance. Inaddition, the differences berween the scores are meaningful, For instance, student 1 scored 620 ~ $50 = 70 points more than student 2, while student 2 scored 550 ~ 470 = 80 points more than student 3 ‘The scale of measurement for a variable isa ratio scale if the data have all the prop- crties of interval data and the ratio of two values is meaningful. Variables such as dis- tance, height, weight, and time use the rato scale of measurement. This scale requires that 4 ze10 value be included to indicate that nothing exists forthe variable at the zero point For example, conser the cost of an automobile. A zero value forthe cost would indicate ‘hat the automobile has no cost and is fre. In addition, if we compate the cost of $30,000 for one automobile to the cost of $15,000 for a second automobile, the ratio property shows that the first automobile is $30,000/S15,000 ~ 2 times, or twice, the cost of the second automobile. Qualitative and Quantitative Data Data can also be clasified as either qualitative or quantitative, Qualitative data include labels or names used wo identify an attribute ofeach element. Qualitative data use either the ‘nominal or ordinal scale of measurement and may be nonnumerie or numeric, Quantita- ‘tive data require numeric values that indicate how much or how many. Quantitative dats are obtained using cither the interval or rato scale of measurement, ‘A qualitative variable sa variable with qualitative data, and a quantitative variable is ‘variable with quantitative data, The statistical analysis epproprate fora particular variable depends upon whether the variable is qualitative or quantitative. Irthe variable is qualitative, the statistical analysis is rather limited. We can summarize qualitative data by counting the number of observations in each qualitative category or by computing the proportion of the ‘observations in each qualitative category. However, even when the qualitative data use @ numeric code, arithmetic operations such as addition, subtraction, multiplication, and éivi- sion do not provide meaningful results, Section 2.1 discusses ways for summarizing quali- tative data, (On the other hand, arithmetic operations often provide meaningful results for aquanti- tative variable, For example, fora quantitative variable, the data may be added and then di- vided by the numberof observations to compute the average value. This average is usually ‘meaningful and easily interpreted. In general, moze alternatives for statistical analysis aze possible when the data are quantitative, Section 2.2 and Chapter 3 provide ways of sum- ‘marizing quantitative data, Cross-Sectional and Time Series Data For purposes of statistical analysis, distinguishing between cross-sectional data and time series data is important, Cross-sectional data are data collected al the same or approxi- ‘mately the same point in time. The data in Table 1.1 are cross-sectional because they de- scribe the five variables for the 25 S&P S00 companies atthe same point in time. Thme series data are data collected over several time periods. For example, Figure I.1 provides agraph ofthe USS. city average price per gallon fr unleaded regular gasoline. The graph shows gasoline price in fairly stable band between $1.80 and $2,00 from May 2004 through February 2005. After that gasoline price became more volatile. It rose significantly, culmi- nating witha sharp spike in September 2005, ‘Graphs of time series data are frequently found in business and economic publications ‘Such graphs help analysts understand what happened in the past, idently any trends overCChooter 1 Date end Statisis FIGURE 1.1. U.S, CITY AVERAGE PRICE PER GALLON FOR CONVENTIONAL REGULAR GASOLINE ‘Monthly Average $3.00) $260] 2.40] 3220] Average Price pe Gallon $2.00] sito] siso| [pj PAu ep ON Jon FD Ma Aon Au ep ON ‘Month Soure: U.S. Eacey Information Administration, January 2006. ‘ime, and project future levels for the time series, The graphs of time series dats ean take fon a variety of forms, as shown in Figure 1.2, With a litle study, these graphs are usually ‘easy to understand and interpret. For example, Panel (A) in Figure 1.2 is @ graph showing the interest rate for student Stafford Loans between 2000 and 2006. Aer 2000, the interest rate declined and reached its lowest level of 32% in 2004. However, after 2004, the interest rate for student Ioans showed a steep increase, reaching 6.8% in 2006. With the U.S. Department of Education estimating that more than 50% of undergraduate students graduate with debt, this inereas- ing interest rate places a greater financial burden on many new college graduates ‘The graph in Panel (B) shows arather disturbing increase in the average credit eard debt ‘per houschold over the 10-year period from 1995 to 2005, Notice how the time series shows Aan almost steady annual ineease in the average eredit card debt per household from $4500 {in 1995 to $9500 in 2005. In 2005, an average credit card debt per household of $10,000 appeared not far off. Most creditcard companies offer relatively low introductory interest rates. After tis inital period, however, annual interest rates of 18%, 20%, or more are com- ‘moa, These rates make the creditcard debt difficult for households to handle Panel (C) shows a graph of te time series for the oceupaney rate of hotels in South Florida . Are you currently @ member of a national mail-order book lub? (Yes or No) . Whatis your age? Including yourself, how many people (adults and children) are in your household? © What kind of music are you interested in buying? Fifteen categories were listed, including hardrock, soft rock, adult contemporary, heavy meal, rap, and county ‘Comment on whether each question provides qualitative or quantitative data “The Ritz-Carlton Hotel used a customer opinion questionnaire to obtain performance data about its dining and enterainment services (Tae Ritz-Carlton Hotel, Naples, Florida, February 2006), Customers were asked to rate six factors: Weleome, Service, Food, Mens Appeal, Atmosphere, and Overall Experience. Data were recorded foreach factor with L for Fair, for Average, 3 for Good, and 4 fr Excellent. The customer responses provided data for six variables, Are the variables qualitative or quantitative? >. What measurement scale is used? “The Gallup organization conducted telephone survey witha randomly selected national sample of 1005 adults, 18 years and older. Th survey asked the respondents, “How would ‘you describe your own physical health at this time?” (www gallup.com, February 7, 2002) Response categories were Excellent, Good, Only Pair, Poor, and No Opinion. a, What was the sample size for this survey? . Are the data qualitative or quantitative? © Would itmake more sense o use averages or percentages asa summary ofthe data for this question? 4. OF the respondents, 29% sad their personal health was excellent How many individ uals provide this response? “The Commerce Department reported receiving the following applications forthe Maleoln Baldrige National Quality Award: 23 ftom large manufacturing firms, 18 from large se ice firms, and 30 from sina busineses, 2 Istype of business a qualitative or quantitative variable? 'b. What percentage of the applications came from smal businesses? The WallStreet Journal subscriber survey (October 13, 2003) asked 46 questions about subseribee characteristics and interests, State whether each of te following questions‘Supplamanlory Exercises 2 4, 12, provided qualitative or quanitative data and indiate the measurement scale appropriate for each a. What s your age? Are you male or female? «When did you first start reaing the WS? High school, college, early career, mnid- carer, at career, or retirement? 44. How long have you been in your present job or postion? ‘What ypeot vhicleare you considering for your nex purchase ?Nine response caegories include sedan, spon car, SUV, minivan, and so on ‘State whether each ofthe following variables is qualitative or quantitative and indicate its Annual sales Soft drink size (small, medium, large) Employee classification (GSI through GS18) Earnings per share Method of paymeat (cash, check, ereit card) “The Hawaii Visitors Bureau collects data on visitors to Hawali, The following questions were among 16 asked in a questionnsire handed out lo passengers during incoming ssine Fights in June 2008, © This trp to Hawaii is my Is, 2nd, 34, A, oe + The primary reason for this trip is: (10 categories including varation, convention, honeymoon) ‘Where plan to stay: (1 categories including hotel, apartment, elatves, camping) Total days in Hawaii 4. Whatis the population being studied? 'b. Is the use of e questionnaire a good way so reach the population of passengers on Incoming sittne Mights? © Comment on each ofthe four questions in terms of whether it wil provide qualitative or quantitative data Figure 1.8 provides a bar graph summarizing the earnings for Volkswagen for the years 1997 to 2005 (BusinessWeek, December 26, 2005). FIGURE 1.8 EARNINGS FOR VOLKSWAGEN -arnings $ bilions) 5 40 rr} 1997, 19981999 2000 2001 2002 2003 2008 2005 Year2 CChooter 1 Date end Statisis 14 15. 16. 1, ‘Are the data qualitative or quantitative? Are the dat time series or cross-sectional? ‘What isthe variable of intrest? Comment on the trend in Volkswagen's earnings overtime The BusinessWeek article (December 26, 2005) estimated earnings for 2006 at $600 million or $6 bilion. Does Figure .8 indicate whether this estimate appears tobe reasonable? © A-similar article tha appeared in BusinessWeek on uly 23, 2001, only had the data fom 1997 to 2000 along with higher earnings projected for 2001. What was the out- Took for Volks wagen’s earings in July 20017 Did gn investment in VoTkswagen look promising in 2001 Explain What waring does this graph suggest about projecting data such as Volkswagen's camings into the Future? (CSM Worldwide forecasts global production forall automobile manufacturers. The fol- lowing CSM data show the forecast of global auto production for General Motos, For, DaimlerChrysler, and Toyota forthe years 2004 to 2007 (USA Today, December 21,2008), Data are in millions of vehicles. Manatactoree 200 2006 2007 General Motoes 90 89 88 Ford 1 78 79 DaimlerChrysler a a 46 Toyota 83 on 96 4 Constricta time series graph fr the years 2004 to 2007 showing the numberof vehi- cles manufactured by each automotive company. Show the time series forall four manufacturers oa the same graph b. General Mozors has been the undisputed production leader of automobiles since 1931 ‘What does the time series graph show about whois the world’s biggest car company? Discus. ‘© Construct « bar graph showing vehicles produced by automobile manufacturer using the 2007 data. Is this graph based on cross-sectional or time series data?” ‘The Food und Drug Administration (FDA) reported the number of new drugs approved over an cight-year period (The WallStreet Journal, January 12,2004), Figure 1.9 provides a bar raph sumamaizing the number of new drugs approved each yea 8. Are the data qualitative or quantitative? b. Are the data time series or cross-sectional? ‘© How many new drugs were approved in 2003? 4d, In what year were the fewest new drugs approved? How many? ‘© Comment on the trend in the number of new drugs approved by the FDA over the Lightyear period, ‘The marketing group tt your company developed « new dict soft drink that t claims wi ‘capture a larg share of the young sult market. 8, What data would you want to see before deciding o invest substantial Fands in into cing the new product into the marketplace? b. How would you expect the data mentioned in part (a) tobe obtained’? A manager of large corporation recommends a $10,000 ruse be given to keep a valued subordinate from moving to another company. What internal and extemal sources of data right be used to decide whether such a salary inetease is appeoprate?‘Supplamanlory Exercises 23 FIGURE 1.9 NUMBER OF NEW DRUGS APPROVED BY TIIE FOOD AND DRUG ADMINISTRATION © ass i i G a dis 0° 1996 1987 1998 19992000. 2001 2002. 2008 var 1A. Arey 090 bie veers found 1S hei ace td atv agent oma the evel anges USAToday, Nove 2,215) 1 ‘Develop dep static tal can be elton te prentageof al bess lense who we av apn to mak el megan Theme oped atte mow eqn vay Bsns tle male ve arange- ment by thing an olin vel ae If 44% of borne vee surveyed mae thangs ti a, how anya te 430 basins eee sc an ei Ae tedtaon how tae arangonets are made quia quate? 19. Bune Meo Non Aran sobre tly collet snp 286 - sens Fine pce ofthe ponents nce an ml ceo 78.00 er ror ab 0 apo hoving an Ameren Expr ce es. 2 at th poplin of eres nti? 1 Ivana! some quali or quanta vase? © TownentipatenAmerean Exo c qin or uate vara? 8. Denti dynos cone setonl rine es it Dei ny state introns Bins Hed mighmueo te aio save. 20. Asuvey af 131 vest manger in Baro Bi Money pl evel he wing Barron’, October 28, 2002): + 43% of managers classified themselves as bullish o very bullish onthe stockmarket + The average expocted return aver the next 12 months for equities was 11.2%. + 2196 selected health eare as the sector most likely to Tead the market in the next 12 moms, + When asked to estimate how long it would take for technology and telecom stocks to resume sustainable growth, the managers’ average response was 2.5 years. Cite two descriptive statistics. 'b. Make an inference about the population of all investment managers concerning the average return expected on equities over the next 12 months ¢ Make an inference about the length of time it wil take for technology and telecom ocks to resume sustainable grow,Chapter 1 Dato end Stasis 21, A.seven-year medical research study reported that women whose mothers took the drug DES during pregnancy were twice as likely to develop tissue abnormalities that might lead to cancer as were women whose mothers dil not take the drug. 4 This study involved the comparison of two populations. What were the populations? 1b. Do you suppose the data were obiained in «survey or am experiment? «For the population of women whose mothers took the drug DES during pregnancy, & ‘sample of 3980 women showed 63 developed tissue abnormalities that might lead to cancer. Provide a descriptive statistic tha could be used to estimate the aumber of ‘women out of 1000 i this population who have tissue abnormalities. 44. For the population of women whose mothers didnot tak the drug DES during preg nancy, what isthe estimate of the number of women out of 1000 who would be expected to have tissue abnormalities? 1&, Modical studies often use s relatively large sample (inthis ease, 3980), Why? 22, Inthe fall of 2003, Arold Schwarzenegger challenged Governor Gray Davis forthe gov- «ermorship of California, APoliey Institute of Califona survey of registered voters reported Amold Schwarzenegger inthe lead with an estimated 54% of the vote (Newsweek, Sep- tember 8, 2003). ‘4. What was the population for this survey? ». What was the sample for this survey? & Why was a sample used in this situation? Explain, 23, Nielsen Media Research conducts weekly surveys of television viewing throughout the ‘United States, publishing both rating and market share data. The Nielsen rating isthe pet- centage of households with televisions watching a program, while the Nielsen share is the percentage of households watching a program among those houscholds with televisions in use. For example, Nielsen Media Research results forthe 2003 Baseball World Series be- ‘ween te New York Yankees and the Florida Marlins showed arating of 12.8% anda share (of 22% (Associated Press, October 27, 2003). Thus, 12.8% of households with televisions ete watching the World Series and 22% of households with elevisions inuse were watch: ing te World Series. Based on the rating and share data for major television programs, Nielsen publishes @ weekly ranking of television programs as well a a weekly ranking of ‘the four major networks: ABC, CBS, NBC, and Fox. 44. Whats Niclsen Media Research attempting to measure? >. Whats the poplation? © Why would a sample be used in this situation? <4. What kinds of decisions of actions ae based onthe Nielsen rankings? 24. A-sample of midterm grades for five students showed the fllowing results: 72, 65,82, 90, 776, Which of the following satements are correct, and which should be challenged as being too generalized? “The average midterm grade forthe sample of five students is 77 midterm grade for all students who took the exam is 77. se of the average midterm grade for all students who ook the exam is 77 “More than half ofthe students who take this exam will score between 70 and 85. fe Iffive other students are ineluded in the sample their grades wil e between 6S and 90. 25, Table .8 shows a data set containing information for 25 of the shadow stocks tracked by the American Association of Individual Investors (a.com, February 2002), Shadow stocks are common stocks of smaller companies that are not closely followed by Wal ‘Street analysts. The dataset is also on the CD accompanying the txt in the ile named Shadow02, ‘4. How many variables ae in the date set? 'b. Which ofthe variables ae qualitative and which are quantitative?‘Supplamanlory Exercises 25 TABLE 1.8 DATA SET FOR 25 SHADOW STOCKS Gross Market Price). Profit Ticker Cap Earnings Margin Company Exchange Symbol ($millions) Ratio. (%) DeWolfe Companies AMEX | WL 364 84 367 North Coast Energy orc | NCEB 525 62 393 Hansen Natural Corp. orc | HANS au 46 ar ‘Marine, In nysz | HZ0 mis 72 238 Nanometies Incorporated | OTC | NANO 2286 380) 333 ‘TeamStff, Inc, orc | 1sTF 921 335 4 Environmental Tectonics | AMEX | ETC sit 358 359 ‘Measurement Special AMEX | Mss 101s. 268 316 SEMCO Energy ne. Nysz | SEN i938 187 236 ary City Corporation ore | rery 2 159 364 Emre, nc. orc | Ewpx 1365 189 595 ‘Tect/Ops Seveon, Ine. amex | TO 232 203 3577 ARCADIS NV orc | arcar | 1734 8B 96 Qino Xing Universal Tele. | oc | XING 683 zi 308 Energy West Incorporated | orc | EWST 21 97 163 ‘Barnwell Industries, oe. AMEX | BRN 23 1 Ba Inmodata Corpestion orc | Nop 661 110 296 Medical Action Industries | otc — | MDCL wr. 269 308 Irstrumentacism Comp ore | iwey | 2409 36 321 Petroleum Development | OTC | PETD 959) 6 194 Drexier Technology Comp. | OTC | DRXR 2336 456 536 Gerber Childrenswear nc. | NYSE | Gcw 1269 79 258 Gaiam, In. ore | GAIA 2955 682 607 Artesian Resources Corp, | OTC | ARTNA 8, 203 435, ‘York Water Company orc | YoRW 2 29 M2 ce. Forthe Exchange variable, show the frequency andthe percent frequency for AMEX, NYSE, end OTC. Construct bar graph similato Figure 1.5 fr the Exchange variable. 44. Show the requeney distribution for the Gross Profit Margin using the five interval 0-149, 15-299, 30-88.9, 45-59.9, and 60-74.9, Construct a histogram similar to Figure 16.