FACULTY OF COMMERCE

DEPARTMENT OF BANKING AND FINANCE

BBFH120 QUANTITATIVE ANALYSIS FOR BUSINESS

SEMESTER 2, 2022

ASSIGNMENT 1 [Total - 100 marks]

Instructions to Students
1. Show all necessary workings.
2. Solutions to this assignment should be uploaded onto MyVista in pdf.
3. Solutions can either be typed or handwritten. If handwritten, solutions should be scanned
as a single continuous document and converted to pdf.
4. Ensure that the correct assignment is uploaded.

Question One
A college canteen manager is studying the amount of money spent per day on food and drink
by students visiting the canteen. A random sample of 20 students who visited the canteen
yesterday revealed they spent the following amounts ($):
78 18 63 24 38 54 52 59 45 65
36 50 34 44 41 58 56 43 51 62

1.1 Suggest two reasons why the manager opted to use a sample of students instead of
surveying all students who visited the canteen on that particular day. [2]
1.2 Describe how a random sample of 20 students could be selected for this study. [3]
1.3 Calculate the following descriptive statistics:
a) mean [2]
b) standard deviation [3]
1.4 Using classes 10 up to 20, 20 up to 30, 30 up to 40, and so forth, organise the data into a
grouped frequency distribution. [5]
1.5 Construct a percent less than ogive, hence, determine the proportion of college students
who spent at most $60 per day at the canteen. [5]

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Question Two
2.1 A study by the Schools Psychological Services department in the Ministry of Primary and
Secondary Education reported that 7.5% of school going teenagers has a drug problem. A
boarding master at a certain school wished to investigate this statement. In his sample of 20
teenager students:
a) How many would you expect to have a drug problem? What is the standard deviation? [5]
b) What is the likelihood that none of the students sampled has a drug problem? [3]
2.2 A recent study of the hourly wages of brick layers in the construction industry showed
that the mean hourly salary was $20.00, with a standard deviation of $3.20. Assume the
distribution of hourly wages follows the normal probability distribution. If we select a brick
layer at random, what is the probability that his wage is:
a) less than $19.00 per hour? [3]
b) more than $22.00 per hour? [4]
c) between $22.00 and $24.00 per hour? [5]

Question Three
A college student would require 15 minutes to solve a certain puzzle. A researcher wishes to
verify this claim and proceeded to note the time (in minutes) spent by a random sample of 8
college students to solve the puzzle:
14, 7, 17, 20, 18, 15, 19, 28
3.1 Construct a 99% confidence interval for the average time taken by a college student to
solve the puzzle. Does the confidence interval suggest that the average time spent by a
college student to solve the puzzle is significantly different from 15 minutes? Justify your
answer. [10]
3.2 Using a 1% level of significance, determine the critical value and the value of the test
statistic, hence, test whether the average time spent by a college student to solve the puzzle is
significantly different from 15 minutes. [8]
3.3 What assumption is necessary to make the inference above? [2]

Question Four
A real estate manager wanted to build a model that would help to predict the sales price (in
thousands of dollars) of a house based on the size (hundreds of m 2) of the house. The
following data is for a random sample of 10 house sales made by the real estate agency in the
past.

Size (00m2) 23 11 20 17 15 21 24 13 19 25
Price 18 98.1 173. 136.5 14 165.9 193. 127.8 163. 172.5
($000) 0 1 1 5 5

4.1 Portray the data on a scatter diagram. What preliminary conclusions can be made
regarding the relationship between price and size of house? [5 marks]

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4.2 Find the estimated regression equation that can be used to predict price of house based on
size of house. [6]
4.3 Interpret the slope coefficient. [2]
4.4 Use the estimated model to predict the price of a house which is 1800m2 big. [3]
4.5 The data gave a correlation coefficient of r = 0.937858409. Calculate the coefficient of
determination and interpret its value. [4]
Question Five
5.1 The following table gives information on the Consumer Price Index (Base = February
2019) and the monthly salary of a Grade D1 employee in government service.
Period Consumer Price Index Monthly salary
February 100 ZWL3 000
2019
June 2020 1 445.21 ZWL12 000

a) What is the purchasing power of the ZWL dollar in June 2020, based on the period
February 2019? [3]
b) Determine the employee’s “real” monthly income for June 2020. Hence, comment on
the standard of living of the employee in June 2020 in comparison to the Period
February 2019. [5]
5.2 Below are the prices and quantities of a group of items purchased by a typical urban
family in August 2000 and August 2017.

August 2000 August 2017

Item Price Quantity Pric Quantity
($) e
Toothpaste 2.49 6 3.35 6
Shampoo 3.29 4 4.49 5
Cough drops 1.59 2 4.19 3
Toilet paper 1.79 3 2.49 4

Using August 2000 as the base and interpreting your result in each case, determine the:
a) Laspeyres Price index, [4]
b) Paasche Price index, and [4]
c) Fisher’s Ideal Price index. [4]

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