(ISOM2500)[2020](s)quiz~=ywa4v8_vov^_56228.pdf downloaded by yzhanglq from http://petergao.net/ustpastpaper/down.php?course=ISOM2500&id=16 at 2021-12-08 06:10:27. Academic use within HKUST only.

Quiz 1 (ISOM2500, L3) (19th March, 2020) (Total:205)

1. (20 points) There is a frequency table of sale of soft drink in HKUST:

Soft drink Frequency
Coco-Cola 5500

Pepsi 7000
Red Bull 2500
7-Up -
Total 16200
(a) (5) Specify the data type
(b) (5) Find the frequency of ‘7-Up’.
(c) (5) Find the relative frequency of the Red Bull.
(d) (5) For visualizing the above table, which chat should we use? Pie chart, or bar chart,
or histogram, or waffle plot? Why?

2. (40 points) This histogram shows the monthly salary of 2268 Hong Kong residents in
2016

(a) (5) Describe the shape of the histogram.

(b) (5) Rank the following values/statistics of this dataset in ascending order: mean,
median, $8705.
(c) (5) If the third quartile of the salary is $16,300, how many residents earn more than
that in this sample?
(d) (10) Is the data highly or moderately skewed? Why?
(e) (10) For this dataset, how do we detect the outliers? Explain in details.
(f) (5) If we remove the outliers, how do the mean and SD change?

3. (20 points) There are 16 numbers: 1, 3, 4, 7, 11, 12, 15, 17, 19, 19, 19, 20, 20, 21, 21, 31.
(a) (10) Find the mean, mode, median, interquartile range, range.
(b) (5) Without calculation, describe what happen to mean and SD if -10 is added?
(c) (5) Can we apply skewness measures for this dataset? why

P.1
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4. (10 points) Tom is doing ISOM 2500 homework consisting of three questions. The
probability of answering first, second and third questions correctly is 1/2, 1/3 and 1/4
respectively.
(a) (5) Find the probability of answering no questions correctly.
(b) (5) Find the probability of answering at least one question correctly.

5. (25 points) The number of iPhones sold daily (X) on a web store follows this distribution:
𝒙 1 2 3 4 5 6
𝑷(𝑿 = 𝒙) 0.1 0.1 0.2 0.25 0.3 0.05
(a) (5) Find the probability that the number of iPhone sold is larger than 2.
(b) (5) Find the mean of the number of sold.
(c) (5) Find the standard deviation of the number of sold.
(d) (10) If the profit for each iPhone is $550 and the daily maintenance of the web store
costs $150. What is the mean of net profit daily?
(e) (10) What is the standard deviation of the net profit from part d)?

6. (20 points) A box contains 11 balls numbered 3, 4, 4, 5, 7, 8, 8, 8, 8, 9 and 11 respectively.

(a) (5) Find the probability that the number is even if one ball is randomly selected.
(b) (5) Find the probability that the product is even if two balls are randomly selected
with replacement.
(c) (10) Given the sum of the two balls’ number is 8, find the probability that the product
is even if two balls are randomly selected with replacement (You put the first ball
back into the box before you select the second ball).

7. (30 points) A research has collected the height of men at age 18 in 1996. See the summary
statistics and graphs below:

(a) (10) If we are interested at the percentage of data that lie within a given interval,
which statistical theorem/rule should we apply? What is the assumption we need
in order to apply this theorem/rule?
(b) (10) Find the percentage of data lie between 163.08cm to 178.85cm.
(c) (10) How many men are taller than 173.59cm?

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(ISOM2500)[2020](s)quiz~=ywa4v8_vov^_56228.pdf downloaded by yzhanglq from http://petergao.net/ustpastpaper/down.php?course=ISOM2500&id=16 at 2021-12-08 06:10:27. Academic use within HKUST only.

8. (15 points)
(a) (5) Based on the formula of variance, explain why it is sensitive to the outliers.
(b) (5) Based on the formula of skewness, explain why it can measure the degree of
asymmetry of a distribution around its mean?
(c) (5) What is size effect of skewness and kurtosis? Explain why.

9. (25 points)
We will invest $1000 in a stock with annual gross return R which has the following
distribution
R 0.8 1.2
P(R) 0.4 0.6

(a) (5) If we invest $1000 in this stock for one year, what is the distribution of the value
of investment at the end of the first year?
(b) (10) If we invest $1000 in this stock for two years, what is the sharpe ratio (1/CV) of
your investment at the end of the second year.
(c) (10) If we invest $1000 in this stock for 20 years, calculate the average annual return
with approximation method.

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