Resit Exam 2019

IB9BA0 Quantitative Methods for Business

Exam Question 1

If test results are normally distributed with mean 150 and standard deviation 30,
what is the probability that a student receives a test result between 120 and 165?
Round your answer to two decimal places. Use at least 4 decimals in all your
computations.

Answer: 0.53

The z score for 120 is: (120-150)/30 = -1. Now, Pr(z < -1) = Pr(z > 1) =0.1587
using the table.
The z score for 165 is: (165-150)/30 = 0.5. Pr(z > 0.5) = 0.3085 using the table.

The probability we seek is Pr(-1 < z < 0.5) = 1 - Pr(z < -1) - Pr(z > 0.5) = 1-
0.1587-0.3085 = 0.5328

Exam Question 2
If the probability that a student answers a question correctly is 0.7 (independently),
what is the probability that the student answers 3 or less questions correctly in an
exam with eight questions? Round your answer to two decimal places. Use at least 4
decimals in all your computations.

Answer: 0.06.

To answer this using the table, we focus on the number of incorrect answers: 3
or less correct implies 5 or more incorrect answers. The probability of an
incorrect answer is 0.3. We can then find the relevant probability using the table
of the binomial distribution. The probability is 0.0580.

Alternatively, one can use the formula for the binomial distribution and calculate
Pr(k = 0)+ Pr(k = 1)+ Pr(k = 2)+ Pr(k = 3).
Exam Question 3:

What is the probability that the sum of two dices will be more than 10? Round your
answer to two decimal places. Use at least 4 decimals in all your computations.

Answer: 0.08

One possibility is that the total equals 12. This only occurs if both equal 6, which
occurs with probability 1/36. Another possibility is that the total equals 11. This
can occur in two ways:

a) the first dice = 5 and the second = 6. Occurs with probability 1/36.
b) the second dice = 5 and the first = 6. Occurs with probability 1/36.

Overall, the probability is 3/36 = 1/12 = 0.0833333

Exam Question 4

To check the weight of a new product a sample of 64 products was taken and
weighed. The mean weight was 35 and the standard deviation was 8. Create an
approximate 95% confidence interval around the sample mean. What is the upper
limit of the confidence interval? Round your answer to one decimal place. Use at
least 4 decimals in all your computations.

Answer: 37.0

The upper limit of the confidence interval is mean + 2*STEM, where STEM =
StandardDeviation/sqrt(n).

We get: 35+2*(8/sqrt(64)) = 35+2*(8/8) = 35+2 = 37.

If an exact critical value of 1.96 is used, we get 35+1.96*1 = 36.96.

Exam Question 5

A University administrator wants to survey students about their evaluation of a new

program. The administrator believes that evaluations have a standard deviation of
1.2. How many students do they need to sample to ensure that the margin of error
(ME) of an exact 99% confidence interval (critical value 2.58) is at most 0.2? Your
answer should be an integer. Use at least 4 decimals in all your computations.

Answer: 240

Desired margin of error = 3.5 – 3.3 = 0.2

Margin of error = 2.58*STEM = 2.58*(stdev / sqrt(n) ) = 2.58*(1.2 / sqrt(n)).

So, we know that 0.2 = ME = 2.58*(1.2 / sqrt(n)). Solving for sqrt(n) we get

sqrt(n) = (2.58*1.2/0.2) -> n = = (2.58*1.2/0.2)^2 = (15.48)^2 = 239.63

So, a sample size of 240 is needed.

Exam Question 6

In a survey of 180 consumers, 30% said they prefer product design A. Create an
approximate 95% confidence interval for the proportion of consumers who prefer
design A. What is the lower limit of the confidence interval? Round your answer to
two decimal places. Use at least 5 decimals in all your computations.
Answer: 0.23

Proportion = p = 0.30. Confidence level = 95%.

Critical value z = 2 (approximate)
STEP = sqrt(p*(1-p)/n) = 0.03416 (replacing population proportion p with sample
proportion q).
Confidence interval lower limit = p - z*STEP =0.3-2* 0.03416= 0.2317

Exam Question 7

A study of a new blood pressure medicine, with 81 patients, found that the average
reduction in blood pressure was 10 with a standard deviation of 30. Test the null
hypothesis that the medicine did not reduce blood pressure using a significance level
of 5%. What is the value of the test statistic (the “t-value”)? Round your answer to
one decimal place. Use at least 4 decimals in all your computations.

Answer: 3.0

Here STEM equals 30/sqrt(81) = 30/9 = 3.333.

The test statistic then becomes: 10/3.3333 = 3.

Exam Question 8

Robin suspects that a coin is biased. She throws it 25 times and gets head 15 times.
Using this data, test the null hypothesis that the coin is unbiased, i.e., test the null
hypothesis that the probability of getting of head is 0.5, using a significance level of
5%. What is the value of the test statistic (the “t-value” or “t-statistic”)? Round your
answer to one decimal place. Use at least 4 decimals in all your computations.

Answer: 1.0

Here STEP = sqrt(0.5*0.5 / 25) = sqrt ( 0.25 / 25) = 0.1.

The absolute value of test statistic then becomes: (0.6-0.5)/ 0.1 = 1.
Data for exam questions 9 and 10

The following data shows the yearly growth rate for three firms. Based on this
data, test the null hypothesis that the average growth rate is equal for all firms,
using an Anova and a significance level of 0.05.

Firm 1 Firm 2 Firm 3

2 6 4
7 6 4
3 4 3

Exam Question 9
What is the critical value that the F-ratio should be compared with (round to 2
decimal places)?

Answer: 5.14

Exam Question 10
What is the F-ratio (use at least 4 decimals in each calculation and round the
answer to 1 decimal places)?

Answer: 0.8

Answer: Computations can be done as follows n= 9

Group 1 Group 2 Group 3
obs obsˆ2 obs obsˆ2 obs obsˆ2
2 4 6 36 4 16
7 49 6 36 4 16
3 9 4 16 3 9
Sums 12 62 16 88 11 41

Sum of squares (Sˆ2) = 191 Total (T)= 39 No. Groups (k) = 3

Based on the table we have:

SS_Between = 4.6667, SS_Tot = 22, SS-Within = 17.3333

MS_Between = 4.6667/(3-1) = 2.3333

MS_Within = 17.3333/(9-3) = 2.8889

F = 2.333/ 2.889= 0.808

Critical value (F value for signif. 0.05, df_between = 2, df_within = 6) is 5.14.
Because F <Critical Value, the null hypothesis is Not rejected.
Exam question 11

The following data shows the yearly markets shares for four firms. Based on this data,
test the null hypothesis that the average market share is equal for all firms, using an
Anova and a significance level of 0.05. What is the F-ratio? Use at least 4 decimals in
each calculation and round the answer to 1 decimal place.

Firm 1 Firm 2 Firm 3 Firm 4

4 3 8 11
7 4 9 4

Answer: 1.3

Answer: Computations can be done as follows n= 8

Group 1 Group 2 Group 3 Group 4
obs obsˆ2 obs obsˆ2 obs obsˆ2 obs obsˆ2
4 16 3 9 8 64 11 121
7 49 4 16 9 81 4 16
Sums 11 65 7 25 17 145 15 137

Sum of squares (Sˆ2) = 372 Total (T)= 50 No. Groups (k) = 4

Based on the table we have:

SS_Between = 29.5, SS_Tot = 59.5, SS-Within = 30

MS_Between = 29.5/(4-1) = 9.8333

MS_Within = 30/(8-4) = 7.5

F = 9.8333/ 7.5 = 1.3111

Critical value (F value for signif. 0.05, df_between = 3, df_within = 4) is 6.59.
Because F <Critical Value, the null hypothesis is Not rejected.
Exam Questions 12-14

The following data shows the growth rates for firms from two countries (France
and UK) and two different sizes (small and large).

Country

France UK
Small 8 3
Size 7 6
5 1
Large 8 3
10 7
11 4

Exam Question 12
Using a two factor Anova, what is the F-ratio for the main effect of the Country? Use
at least 4 decimals in all computations. Round your answer to 1 decimal place.

Answer: 13.6

Exam Question 13
Using a two factor Anova, what is the F-ratio for the main effect of Size? Use at least
4 decimals in all computations. Round your answer to 1 decimal place.

Answer: 3.7

Exam Question 14
Using a two factor Anova, what is the F-ratio for the interaction effect? Use at least 4
decimals in all computations. Round your answer to 1 decimal place.

Answer: 0.5

In what follows, “a” means “country” and “b” means “size”

 Answer: computations can be done like this:
No obs (n)= 12
Levels of factor a (Ka) = 2 Levels of factor b (Kb) = 2
Factor a
a1 a2
obs obsˆ2 obs obsˆ2
8 64 3 9
b1 7 49 6 36
5 25 1 1

Factor b Sums 20 138 10 46 Sum row = 30

obs obsˆ2 obs obsˆ2

8 64 3 9
b2 10 100 7 49
11 121 4 16

Sums 29 285 14 74 Sum row = 43

Sum Column 49 Sum Column 24

Based on the above sum, we can compute the F ratios as follows:

Total (T) = 73
Sum squared (Sˆ2) = 543
SS_a = 400.17 + 96.00 - 444.08 = 52.08
SS_b = 150.00 + 308.17 - 444.08 = 14.08

SS_a*b = 133.33 + 33.33 + 280.33 + 65.33 - 444.08 - 52.08 - 14.08 = 2.08

SS_Tot = 543.00 - 444.08 = 98.92

SS_With = 30.67

MS_a = 52.08 / 1 = 52.08

MS_b = 14.08 / 1 = 14.08
Ms_a*b = 2.08 / 1 = 2.08
Ms_With = 30.67 / 8 = 3.83

F_a = 52.08 / 3.83 = 13.59 Crit. Val is F for 1 and 8 = 5.32

F_b = 14.08 / 3.83 = 3.67 Crit. Val is F for 1 and 8 = 5.32
F_a*b = 2.08 / 3.83 = 0.54 Crit. Val is F for 1 and 8 = 5.32
Exam Questions 15-18

The following table shows exam result (y) and study time (x) for four students.

Student x y
1 2 5
2 6 8
3 4 3
4 8 8

Exam Question 15
What is the correlation coefficient (r) based on this data? Round your answer to 1
decimal place. Use at least 4 decimals in all your computations.

Answer: 0.7

Exam Question 16
Assuming the regression line is Y = a + bX, what is the value of b? Round your answer
to 1 decimal place. Use at least 4 decimals in all your computations.

Answer: 0.7

Exam Question 17
Assuming the regression line is Y = a + bX, what is the value of ‘a’? Round your
answer to 1 decimal place. Use at least 4 decimals in all your computations.

Answer: 2.5

Exam Question 18
Test the null hypothesis that the slope in the regression line is equal to zero, using a
significance level of 0.05 (two-tailed test). What is the value of the test-statistic (the
‘w-value’ or sometimes called ‘t-statistic’)? Round your answer to one decimal place.
Use at least 5 decimals in all your computations.

Answer: 1.5
The regression line can be computed as follows
Number of obs. is 4 Signif level: 0.05

obs X X*X Y X*Y Y*Y

1 2 4 5 10 25
2 6 36 8 48 64
3 4 16 3 12 9
4 8 64 8 64 64

Sum 20.00 120.00 24.00 134.00 162.00

Mean 5.00 6.00

SS_xy equals 134.00 - 120 = 14

SS_x equals 120.00 - 100 = 20
SS_y equals 162.00 - 144 = 18.00
Thus, the correlation coefficient is = 0.74

Thus, b = SS_xy / SS_x = 0.7

and a = yhat - b*xhat = 6.00 - 0.7 * 5.00 = 2.5
(yhat is the mean of y and xhat is the mean of x)

Thus the regression line is Ŷ = 2.5 + 0.7 * X

To compute the test statistic we compute the predicted Y (Ŷ):

Y X Ŷ = a + b * X e = Y-Ŷ (Y-Ŷ)*(Y-Ŷ)
5 2 3.9 = 2.5 + 0.7 * 2 1.100 1.210
8 6 6.7 = 2.5 + 0.7 * 6 1.300 1.690
3 4 5.3 = 2.5 + 0.7 * 4 -2.300 5.290
8 8 8.1 = 2.5 + 0.7 * 8 -0.100 0.010

Σ (Y-Ŷ)2 8.2
Thus, Rsq = 1 - ( Σ (Y-Ŷ)2)/SS_y ) = 1 - 8.2 / 18.00 = 0.544444

To test the null-hypothesis of a slope equal to zero we compute the test statistic: w = (b-0)/s_b
where s_b*s_b = (Σ (Y-Ŷ)2 / (N-2)) / SS_x

Σ (Y-Ŷ)2 / (N-2) = 8.2 / 2 = 4.1

and SS_x (computed above) is: 20

Thus, s_b*s_b = 4.1 / 20 = 0.205

and s_b is the squareroot of 0.205 which is 0.4528

Thus, the test statistic w equals 0.7 / 0.4528 = 1.546

Critical values are 4.30 and -4.30
Thus, the null hypothesis is: not rejected
Exam Question 19

The following table shows sales (y) and marketing costs (x) for five products.

Product x y
1 5 6
2 3 4
3 6 3
4 4 5
5 8 9

Test the null hypothesis that the slope in the regression line is equal to zero using a
significance level of 0.05 (two-tailed test). What is the value of the test-statistic (the
‘w-value’ or sometimes called ‘t-statistic’)? Round your answer to one decimal place.
Use at least 5 decimals in all your computations.

Answer: 1.5

The regression line can be computed as follows

Number of obs. is 5 Signif level: 0.05

obs X X*X Y X*Y Y*Y

1 5 25 6 30 36
2 3 9 4 12 16
3 6 36 3 18 9
4 4 16 5 20 25
5 8 64 9 72 81
Sum 26.00 150.00 27.00 152.00 167.00
Mean 5.20 5.40

SS_xy equals 152.00 - 140.4 = 11.6

SS_x equals 150.00 - 135.2 = 14.8
SS_y equals 167.00 - 145.8 = 21.20
Thus, the correlation coefficient is = 0.65

Thus, b = SS_xy / SS_x = 0.7837838

and a = yhat - b*xhat = 5.40 - 0.7838 * 5.20 = 1.324324
(yhat is the mean of y and xhat is the mean of x)

Thus the regression line is Ŷ = 1.32432 + 0.784 * X

To compute the test statistic we compute the predicted Y (Ŷ):
Y X Ŷ = a + b * X e = Y-Ŷ (Y-Ŷ)*(Y-Ŷ)
6 5 5.243243 = 1.3243243 + 0.7838 * 5 0.757 0.573
4 3 3.675676 = 1.3243243 + 0.7838 * 3 0.324 0.105
3 6 6.027027 = 1.3243243 + 0.7838 * 6 -3.027 9.163
5 4 4.459459 = 1.3243243 + 0.7838 * 4 0.541 0.292
9 8 7.594595 = 1.3243243 + 0.7838 * 8 1.405 1.975
Σ (Y-Ŷ)2 12.10811
Thus, Rsq = 1 - ( Σ (Y-Ŷ)2)/SS_y ) = 1 - 12.108 / 21.20 = 0.428863

To test the null-hypothesis of zero slope, we compute the test statistic: w = (b-0)/s_b
where s_b*s_b = (Σ (Y-Ŷ)2 / (N-2)) / SS_x

Σ (Y-Ŷ)2 / (N-2) = 12.10811 / 3 = 4.036

and SS_x (computed above) is: 14.8

Thus, s_b*s_b = 4.036036 / 14.8 = 0.2727

and s_b is the squareroot of 0.273 which is 0.5222

Thus, the test statistic w equals 0.7837838 / 0.5222 = 1.501

Critical values are 3.18 and -3.18
Thus, the null hypothesis is: not rejected
Exam Question 20
The following data shows how the number of different type of students that have
received distinction or not.

Student

finance accounting marketing

Distinction? Yes 11 45 29
No 67 65 56

Test the null-hypothesis that there is no association between student type and
distinction using a Chi-square test. What is the test statistic (the chi-square sum, the
uncorrected one, not the Yates corrected chi-square)? Use at least 4 decimals in all
your computations. Round your answer to 1 decimal place.

Answer: 15.8

Computations can be done like this:

2) Totals: a1 a2 a3 3) Calculate E: a1 a2 a3
b1 11 45 29 85 b1 24.286 34.249 26.465
b2 67 65 56 188 b2 53.714 75.751 58.535
78 110 85 273

4a) O-E: a1 a2 a3 4b) (O-E)*(O-E)/E a1 a2 a3

b1 -13.286 10.751 2.535 b1 7.268 3.375 0.243
b2 13.286 -10.751 -2.535 b2 3.286 1.526 0.110

5) Sum of (O-E)*(O-E)/E = 15.807

No. Columns 3 No. Rows 2
Degree of Freedom = 2
6) Critical Value 5.99
7) Thus, null hypothesis of no association is rejected