Technical University of Munich MA9712 Statistics for Business Administration

Chair of Mathematical Finance Summer Semester 2018

PD Dr. Aleksey Min, Dr. Carlos Amendola, Miriam Jaser Solution Sheet 2: Homework Exercises

20 April 2018

Solution to the Homework Exercises

Exercise H.3

The following diagram shows a bar plot of the absolute frequencies of a sample of size n = 51,
which contains the age of surveyed persons.
14
11
8
6
4
2
0

18 19 20 21 22 23 26 32

a) Determine the relative frequencies of the different values of the variable age and use them to
draw the empirical distribution function.

b) Determine the proportion of persons who are i) younger than 19; ii) older than 22; iii) older
than 21 and not older than 26.

c) Calculate the mode, the empirical mean, the median, as well as the lower and upper quartiles.

d) Calculate the range and the interquartile range.

Solution:

a) For the variable age, the following values were observed in the sample

u1 = 18, u2 = 19, u3 = 20, u4 = 21, u5 = 22, u6 = 23, u7 = 26, u8 = 32 .

From the figure, we get the corresponding absolute frequencies

n1 = 5, n2 = 15, n3 = 11, n4 = 7, n5 = 6, n6 = 4, n7 = 2, n8 = 1 .

Hence, we can determine the relative frequencies

n1 5 15 11 7 6 4 2 1
f1 = = , f2 = , f3 = , f4 = , f5 = , f6 = , f7 = , f8 = .
n 51 51 51 51 51 51 51 51
The empirical distribution function is a step function with jumps at the observed values ui ,
i =1, . . . , 8. With the help of the formula for the empirical distribution function

1 n 1 8
Fn ( x ) = ∑
n i =1
1(−∞,x] ( xi ) =
51 ∑ n j 1(−∞,x] (u j ) ,
j =1

1 (please look for the next page)

 we calculate the cumulative relative frequencies
5 20 31 38 44 48
F51 (18) = , F51 (19) = , F51 (20) = , F51 (21) = , F51 (22) = , F51 (23) = ,
51 51 51 51 51 51
50
F51 (26) = , F51 (32) = 1.
51
ecdf(x)

1.0
0.8
0.6
Fn(x)

0.4
0.2
0.0

20 25 30

b) i) The proportion of persons who are younger than 19 is given by

5
F51 (19) − f 2 = F51 (18) =
.
51
ii) The proportion of persons who are older than 22 is given by
44 7
1 − F51 (22) = 1 −
= .
51 51
iii) The proportion of persons who are older than 21 and not older than 26 is given by
50 38 12
F51 (26) − F51 (21) = − = .
51 51 51

c) The mode xmod is the most frequently occuring value in the sample and thus it is 19.
The empirical mean is given by
1 51 1 8
1 1050
51 i∑ ∑ n j · u j = 51 (90 + 285 + 220 + 147 + 132 + 92 + 52 + 32) =
x51 = xi = ≈ 20.59 .
=1
51 j =1
51
Since the number of observations is odd, the median is given by
x̃0.5 = x( 51+1 ) = x(26) = 20 .
2

The lower and upper quartiles correspond to the 0.25 and 0.75 quantiles, respectively. Since
51 · 0.25 = 12.75 and 51 · 0.75 = 38.25, the lower and upper quartiles are given by
x̃0.25 = x(13) = 19 and x̃0.75 = x(39) = 22 .

d) The range is defined as the difference between the maximum and the minimum and hence it
is given by
Sp = 32 − 18 = 14 .
The interquartile range is the difference between the upper and the lower quartile. Thus, with
the help of Part c), we get
IQR = x̃0.75 − x̃0.25 = 22 − 19 = 3 .