Quiz1 Solution 2021

Question-Wise Details
Section 1 20 2m
Section #1 question(s) Time taken
Q.
Question 1 Time taken: 13s
1
In a group of 30 individuals, what is the probability that all of them have different birthdays? [Assume a year has 365 days.]
EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 (365 P 30)/ (365^30) = 0.2937
Response:
OPTIONS RESPONSE ANSWER
0.71
0.29
0.5
0.15
Q.
2
Which of the following is true for the Bayes’ Theorem?
EASY PGP-I-IPS EF Quiz-01 on 28-July-2021
Response:
It’s a statement regarding the joint probability. Not correct -- it is a statement for conditional prob
Not correct - it is relevant for dependent events

It’s useful only if two events are independent
It’s applicable only if the outcomes of the experiment are equally likely Not correct - it hold for all sorts of prob (not for equally likely only)
It’s useful when the events occur in a sequence
PGP Office Indore | Pritam Ranjan Page 5 / 15

Q.
3
If A and B are events such that P(A)=0.25, P(B)=0.325 and P(B|A)=0.4, then what is the value of P(B|A’)? [Notation: A’ is A complement.]

P(B/A') = P(B and A') / P(A') = [ P(B) - P(B and A) ] / [1-P(A)]
= (0.325 - 0.4*0.5) / (1-0.25) = 0.3
Response:
0.6
0.3
0.4
None of the above
Q.
4
Suppose a marketing sales person from American Express is randomly approaching customers standing at the checkout counter of Big Bazaar in Indore. Let X be
the total number of customers he approached until 10 people signed up for the credit card. What is the distribution of X?
The correct name of the distribution of X is "negative binomial"

Since "n" is not fixed, it cannot be binomial
Response:
Poisson
Binomial
Bernoulli
None of the above

Q.
5
When you roll a pair of fair dice, what is the probability of getting an odd sum?
P(Odd sum) = P((O,E) or (E,O)) = 1/4 + 1/4 = 0.5
Response:
0.5
0.25
Q.
6
If A and B are independent events such that P(A)=0.25 and P(B|A)=0.4, then what is the value of P(B|A’)? [Notation: A’ is A complement.]
If A and B are independent, then

EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 P(B/A') = P(B) = P(B/A) = 0.4
Response:
0.6
0.3
0.4
None of the above

Q.
7
When you roll a pair of fair dice, what is the probability of getting an odd product?
EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 Odd product can be achieved

if both faces are odd out of all four options:(O,E), (O,O), (E,O), (E,E)
So, the prob is 1/4
Response:
0.5
0.25
Q.
8
In 2007, Starbucks inaugurated its Chai-Latte. If 10% of all customers who walk in and order the new drink, what is the probability that out of 10 people, at least 1 will
order a Chai-Latte?
EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 P(at least one will oder Chai-latte)
= 1 - P(no one will oder Chai-latte)
= 1 - (0.9)^(10)=0.65123
Response:
0.1
0.5
0.65
0.75

Q.
9
If X follows Bin(15, 0.5), then P(X<=5) is __________ P(X>=10).
If X~bin(15, 0.5), then P(X=0) = P(X=15), P(X=1) = P(X=14),

EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 and so on...
Therefore, P(X<=5) = P(X>=10)
Response:
equal to
less than
greater than
None of the above
Q.
10
If P(A)=0.3, P(B|A)=0.3 and P(B’|A’) = 0.7, then what is the value of P(B|A’)? [Notation: A’ is A complement.]
EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 P(B/A') = 1 - P(B'/A') = 1-0.7 = 0.3
Response:
0.6
0.3
0.4
None of the above

Q.
11
A discrete positive random variable with range 0 to ∞ may have symmetric probability distribution
The key to the question is range being zero to infinity.

Do you think that we can have a distribution with actual range

Response: zero to infinity and still be symmetric? The answer does not
depend on discrete or continuous
true
false
May be
None of the above
Q.
12
A public interest group was planning to make a court challenge to auto insurance rates in one of the three cities: Atlanta, Baltimore and Cleveland. The probability
that it would choose Atlanta was 0.40; Baltimore, 0.35; and Cleveland, 0.25. The group also knew that it had a 60 percent chance of a favorable ruling if it choose
Baltimore, 45 percent if it choose Atlanta, and 35 percent if it choose Cleveland. If the group did receive favorable ruling, what is the probability that Baltimore was
chosen? P(Atlanta) = 0.4 P(favourable|Atlan) = 0.45
P(Baltimore) = 0.35 P(favourable|Balt) = 0.6
P(Cleveland) = 0.25 P(favourable|Cleve) = 0.35
P(Baltimore | favourable) = P(fav|Balt)*P(Balt) / P(fav)
= 0.6*0.35 / (0.45*0.4 + 0.6*0.35 + 0.35*0.25)
Response: = 0.4398
0.2398
0.3398
0.4398
0.5398

Q.
13
When flipping a fair coin, what is the probability of requiring at least 4 flips to get a head?
EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 X = number of flips required to get a head

P(X>= 4) = 1- [P(X=1)+P(X=2)+P(X=3)]
= 1 - (1/2 + 1/4 + 1/8) = 0.125
Response:
0.5
0.25
0.125
0.0625
Q.
14
The average annual return on Stock A is 8.3% with the variance of 2.3. Whereas, Stock B has an average return of 8.4% with a variance of 6.4. Which of the
following is NOT correct?
S(A) = (8.3 - mu)/sqrt(2.3)
S(B) = (8.4 - mu)/sqrt(6.4)
S(A) = S(B) => mu = (8.3*sqrt(6.4) - 8.4*sqrt(2.3))/(sqrt(6.4)-sqrt(2.3)) = 8.1503

Response: That is,
for mu > 8.1503, sa < sb
for mu < 8.1503, sa > sb
One should compare Sharpe ratio of the two stocks

Correct
Stock B is riskier than Stock A Correct
Sharpe ratio of Stock B is greater than Sharpe ratio of Stock A Not always
We cannot compute Sharpe ratio without the risk-free rate Correct

Q.
15
The probability that event A will occur is 0.90 and the probability that event B will occur is 0.10. The two events are known to be mutually exclusive. The probability
that both A and B will occur simultaneously is:
EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 Since A and B are mutually exclusive, P(A and B) = 0
Response:
0.1
0.9
0.5
Q.
16
Probability is a _______ function.
Response:
decreasing
convex
set
one-to-one

Q.
17
Which of the following is NOT true for a discrete random variable?
Response:
The probability mass function (pmf) must add upto 1.
The support (set of all possible value) is either a finite set or a countably infinite set.
The cumulative distribution function (cdf) is a continuous function. Correct option -- CDF of a discrete random
variable is a step function
The random variable is a function from sample space to the Real line.
Q.
18
A sample of 3 balls are drawn from a box containing 7 red and 12 blue balls. Expected number of red balls in the sample is
EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 3* 7/ (7+12) = 1.105263
Response:
0.91
1.1
2.5
None of these

Q.
19
A closet contains 7 pairs of shoes. If 6 shoes are chosen at random, what is the probability of finding no complete pair in your sample?
EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 (7 choose 6) * 2^6 / (14 choose 6) = 0.149
Response:
0.71
0.29
0.5
0.15
Q.
20
Suppose every student answers these MCQs randomly. Let X be the number of students who gets an A in this exam. [Assume N=83] Which of the following is NOT
correct?
Response:
P(X>83)=0 CORRECT: X takes values in {0,1,2....,83}
P(X=23.5)=0 CORRECT: X takes values in {0,1,2,...,83} with non-zero prob
P(X<85)=1 CORRECT: P(X<=83) = 1, so P(X < a) = 1 for any a>83
P(X>0)=1 Incorrect: P(X=0) + P(X>0)= 1

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Question-Wise Details

EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 (365 P 30)/ (365^30) = 0.2937

OPTIONS RESPONSE ANSWER

Which of the following is true for the Bayes’ Theorem?

EASY PGP-I-IPS EF Quiz-01 on 28-July-2021

OPTIONS RESPONSE ANSWER

Not correct - it is relevant for dependent events

It’s useful when the events occur in a sequence

PGP Office Indore | Pritam Ranjan Page 5 / 15

EASY PGP-I-IPS EF Quiz-01 on 28-July-2021

OPTIONS RESPONSE ANSWER

None of the above

The correct name of the distribution of X is "negative binomial"

OPTIONS RESPONSE ANSWER

None of the above

PGP Office Indore | Pritam Ranjan Page 6 / 15

OPTIONS RESPONSE ANSWER

If A and B are independent, then

OPTIONS RESPONSE ANSWER

None of the above

PGP Office Indore | Pritam Ranjan Page 7 / 15

EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 Odd product can be achieved

OPTIONS RESPONSE ANSWER

OPTIONS RESPONSE ANSWER

PGP Office Indore | Pritam Ranjan Page 8 / 15

If X follows Bin(15, 0.5), then P(X<=5) is __________ P(X>=10).

If X~bin(15, 0.5), then P(X=0) = P(X=15), P(X=1) = P(X=14),

OPTIONS RESPONSE ANSWER

None of the above

EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 P(B/A') = 1 - P(B'/A') = 1-0.7 = 0.3

OPTIONS RESPONSE ANSWER

None of the above

PGP Office Indore | Pritam Ranjan Page 9 / 15

The key to the question is range being zero to infinity.

Do you think that we can have a distribution with actual range

OPTIONS RESPONSE ANSWER

None of the above

OPTIONS RESPONSE ANSWER

PGP Office Indore | Pritam Ranjan Page 10 / 15

EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 X = number of flips required to get a head

OPTIONS RESPONSE ANSWER

S(A) = S(B) => mu = (8.3*sqrt(6.4) - 8.4*sqrt(2.3))/(sqrt(6.4)-sqrt(2.3)) = 8.1503

One should compare Sharpe ratio of the two stocks

Stock B is riskier than Stock A Correct

We cannot compute Sharpe ratio without the risk-free rate Correct

PGP Office Indore | Pritam Ranjan Page 11 / 15

OPTIONS RESPONSE ANSWER

Probability is a _______ function.

EASY PGP-I-IPS EF Quiz-01 on 28-July-2021

OPTIONS RESPONSE ANSWER

PGP Office Indore | Pritam Ranjan Page 12 / 15

Which of the following is NOT true for a discrete random variable?

EASY PGP-I-IPS EF Quiz-01 on 28-July-2021

OPTIONS RESPONSE ANSWER

The probability mass function (pmf) must add upto 1.

EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 3* 7/ (7+12) = 1.105263

OPTIONS RESPONSE ANSWER

PGP Office Indore | Pritam Ranjan Page 13 / 15

EASY PGP-I-IPS EF Quiz-01 on 28-July-2021 (7 choose 6) * 2^6 / (14 choose 6) = 0.149

OPTIONS RESPONSE ANSWER

EASY PGP-I-IPS EF Quiz-01 on 28-July-2021

OPTIONS RESPONSE ANSWER

S(A) = S(B) => mu = (8.3sqrt(6.4) - 8.4sqrt(2.3))/(sqrt(6.4)-sqrt(2.3)) = 8.1503