Basic Concepts of Statistics

BASIC CONCEPTS OF STATISTICS
by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
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My words.....
My purpose here is to give a few questions on

fundamentals of statistics. I welcome your suggestions. I
also request you to help me in spreading social
entrepreneurship across the globe – for which I need
support of you people – not of any VIP. With your help, I
can spread the ideas – for which we stand....
What were the root words of
statistics ?
Latin = status
Germany = statistik
Italian = statista
french = statistique
Who carried out first cencus of
the world ?
Pharaoh (over 1000 years before Christ)
What are the subjects where
statistics has application ?
Every subject including the following :

business management
economics
commerce
industry etc.
What are 2 major sources of data?
1. primary data : collected for the first time

during the research
2. secondary data : which are already available
published data – they were collected for some
other purpose, but they can be used for the
present research
From where can we get secondary
data ?
1. industry report
2. previous researches
3. published data
4 annual reports
5. statistical department
6. directories / reports / data bases
From where can we get primary
data ?
1. interview
2. survey
3. schedule / questionnaire
4. observation
5. experimentation
What do we do after collection of
data ?
Scrutinise = remove data which are defective

then we arrange them
we try to tabulate them
for this we have to fix classification of data
then we we can prepare graphs / tables / charts
from data and then we can analyse data
Why do we classify data ?
After classification, data can easily be

analysed. We can easily interpret data
How can we classify data ?
1. chronologically (data wise / year wise)

2. geographically (north v/s south zone)
3. qualitative ( order = like first, second, third)
4. quantitative data analysis (use of tools for
quantitative analysis)
Name a few international bodies
that publish data (which we can
use as secondary source of data)?
IBRD, IMF, ADB, ILO, UNO, WTO, WHO

etc.
What is the difference between
primary and secondary data ?
Primary data is first hand original in nature whereas secondary
data is in the form of compilation of existing data or already
published data.
The collection of primary data involves huge resources in
terms of money and time, finance and energy whereas
secondary data is relatively less costly.
Primary data is usually collected by keeping in mind the
purpose for which it is collected so its suitability will be more in
comparison to secondary data
What is difference between census
and sample survey ?
Under the census or complete enumeration method, data are

collected for each and every unit of the population or universe
which is a complete set of items which are of interest in any
particular situation
in sample, we pick up only a few items and from them we
collect data. So reliability is less comparatively
What are the steps in presentation
of data ?
Classification of data (put data in classes)
Tabulation of data (prepare table from
data)
Frequency distribution of data (identify
frequencies)
Diagrammatic presentations of data
(prepare diagrams)
Graphic representation of data (prepare
graphs).
What do you understand from
tabulation ?
Tabulation is a systematic and logical

arrangement of data in columns and rows
in accordance with some salient features
and characteristics.
What are the parts of a table ?
Table Number
Title of the Table
Sub-title or Head Note
Captions and stub
Body
Footnotes
Source Note
What is class limit ?
The end numbers or the highest and

lowest values that can be included in a
class interval are known as the class limits
of that class. For example, in above table
40-50 and 80-100 are the lower and upper
class limits.
What is class interval ?
It is the difference between the upper limit

and lower limit of the same class. The
lower limit of a class is usually represented
by symbol I1 and upper limit by I2.
What is Class frequency ?
The number of observations included in a

particulars class is known as the frequency
of that class.
It refers to that classification where both
the class limits are included in the class
itself while determining the class
intervals.
What are the 3 methods of data
presentation ?
1. textual presentation = present data in the

form of text – write reports etc.
2. graphical presentation = prepare graphs, pie
chart, bar chart, histo gram etc.
3. tabular presentation : prepare tables of data
for better analysis
POPULATION ??
All the elements of set, which are of the

interest of researcher
Statistical inference
The process of using data obtained from a

sample to make estimate or test hypothesis
about the characteristics of the population
Qualitative data ?
Data that are labels or names used to identify

categores of items
Quantitative data ?
The data that indicate how much and how

many ?
Frequency distribution ??
A tabular summary of data showing number

and frequency of each of nonoverlapping
classes
What is median ?
Measure of central location, when data are

arranged in ascending order
What is mode ?
Value with greatest frequency
What is percentile ?
When some % of value are above some

specified value, it is called that percentile
th nd
50 percentile = median = 2 quartile
Quartile ?
25% data sets

we have 3 quartile
st
1 quartile = 25%
nd
2 quartile = 50%
3rd quartile = 75%
Range ?
Measure of variability
largest - smallest value
Interquartile range
(3rd quartile - 1st quartile)
Variance ?
Squared deviations of data from mean
Standard deviation
Positive square root of variance
Coefficient of variance ?
Standard deviation / mean * 100
Z score
(Xi – mean) / standard deviation

it is a standardised value = showing difference
from mean
+ & - 1 standard deviation =68.27%
+ & - 2 standard deviation = 95.45%
+ & - 3 standard deviation = 99.73%
Empirical rule ?
In a bell shaped distribution (normal

distribution), we have data in 1 or 2 or 3
standard deviation to mean in some % of total
data
Outlier ?
Unusually small or unusually large data
Box plot
Graphical presentation of data
Covariance ?
Linear relation between two data sets

positive or negative
Correlation coefficient ?
Shows correlation between two variables

from -1 to + 1
Weighted mean ?
Data * weight give us weighted mean
Grouped data
Data grouped as class interval as summarised

by frequency distribution
individual values are not available
Probability
Likelihood that an event will occur
Experiment
A process that generates a well defined

outcome
Sample space
Set of all experimental outcomes
Sample point
Any experimental outcome
Tree diagram
A graphical representation helpful in

identifying the sample points of an experiment
involving multiple steps
What is permutation &
combination?
Permutation = it denotes order / Sequence but

combination = it only denotes that some
objects are together
example : ABC can have only one combination
taking all of them together. But permutations
are many : - ABC,ACB,BCA,BAC,CBA,CAB
What is relative frequency method
?
Method of assigning probability on the basis of

histrorical data
Subjective method of probability
Method of assigning probability on the basis of

judgement
Event
A collection of sample points
Venn diagram
Graphical representation showing sample space

and operations involving events
sample space = rectangle
event = circle within sample space
What is formula of permutation ?
Npr = n! / (n-r)!
p=permutation
n= total number of objects
r=how many objects you are taking at a time
! = multiply with reducing numbers till it reaches 1
example : 5p5 = 5! / (5-5)!
5!=5*4*3*2*1
0! = 1
thus answer = 120 answer
How many different 4 digit letters
can you make out of A,B,C,D,E?
N = 5 (A,B,C,D,E)
R=4
formula = Npr = n! / (n-r)!
=5!/(5-4)!
= 120 answer
How many different 4 digit numbers can you
make out of 1,2,3,4,0?
N = 5 (1,2,3,4,0)
R=4
but 0 cannot come in the first digit
for first digit we have 4 options (1,2,3,4), for next digits,
we can use 0. thus we have 4*4*3*2*1 = 96 options OR
=5!/(5-4)! but this contains all those numbers which start
with 0. so let us keep 0 as fixed for 1st digit and solve it.
Now we have to pick up 3 digit out of 4
contd.
contd.....
If it is not 0, permutation will be :
=5!/(5-4)!
= 120
Zero fixed for 1st potion, we have these options :
Npr = n! / (n-r)!
n=4,r=3
4!/(4-3)! = 24
deduct this 24 from 120
120 -24 = 96 answer
you can use any formula (out of these 2), you get the same answer
How many different 4 digit numbers can you
make out of 1,2,3,4,0 which are divisible by 2?
Start with 96 of the last question

now pick up all those which are ending with 1 :
3*3*2*1 = 18
similarly those which are ending with 3
3*3*2*1 = 18
thus 96 – (18+18) = 60 seems to be the answer
In how many ways can Raj invite
any 3 of his 7 friends?
This is a question of combination. Here order
(sequence) is not important, his friends can come in
any order. Thus this is a case of combination.
Formula : N! / ((n-r)!*r!)
you can calculate combination by dividing
permutation by r!
=7! / ((7-3)!*3!)
=(7*6*5)/(3*2*1) = 35 answer
How many different words can
you frame from FUTURE ?
Here we have two U
total we have 6 digits.
Formula : N ! / L!
N= total number of digits
L = those digits which are repeated.
Answer = 6! / 2!
= 360 answer
How many different words can
you frame from DALDA ?
Here we have two D & A
total we have 5 digits.
Formula : N ! / L!
N= total number of digits
L = those digits which are repeated.
Answer = 5! / (2!*2!)
= 30 answer
In how many ways can 8 person
sit around a round table ?
For questions relating to round table , we have

to use the following formula :
(n-1)!
So here answer = (8-1)! = 7! =5040 answer
How many 4 digit numbers can be
formed out of 1,2,3,5,7,8,9 if no
digit is repeated.
Total number ofdigits = 7

formula = Npr
n =7 r 4
7p4 = 7! / 3!
=7*6*5*4 = 840
How many numbers greater than
2000 can be formed from
1,2,3,4,5. No repeatition is
allowed.
5 digit numbers = 5! = 120
4 digit numbers,: we cant take 1 in the
beginning. We have 4 options for 1st digit 4 for
nd rd
2 digit 3 for 3 digit ...
4*4*3*2*1 = 96
total = 216 answer
There are 6 books on english, 3 on maths, 2 on
GK. In how many ways can they be placed in
shelf, if books of 1 subject are together?
We have 3 subjects so 3!
books of same subjects can be interchanged.
So answer : 3!*6!*3!*2!
=6*720*6*2 = 51840 answer
How many words can we make
out of DRAUGHT, the vowels are
never separated?
Number of vowels = 2
other digits = 5
we will treat vowels as 1 word
so we have 6!. Vowels can be interchanged so
2!
so answer = 6!*2! = 1440 answer
In how many ways can 8 pearls be
used to form a necklace ?
In questions of necklace, we use the following

formula : ½ (N-1)!
Here we can take reverse order of left to right
or right to left, so divide by ½
=1/2 (8-1)!
=2520
In how many number of ways can
7 boys form a ring ?
(7-1) !
= 6! = 720 answer
50 different jewels can be set to
form necklace in how many
ways ?
½ ( n -1) !
= ½ (50 -1)!
=1/2 (49)!
How many number of different
digits can be formed from
0,2,3,4,8,9 between 10 to 1000?
Let us assume that repeatition is not allowed
Let us make 2 digit numbers :
for first digit we have 5 option, for 2nd digit also we have 5 options
(including 0) = 25
for 3 digit numbers : 5*5*4 = 100
total 125
if repeatition is allowed :
for 2 digit : 5 * 6 = 30 for 3 digit : 5*6*6 = 180
total = 210 answer
What is the number of permutations of 10 different
things taking 4 at a time in which one thing never
comes ?
=9p4
= (9*8*7*6)
=3024
There are 5 speakers (A,B,C,D,E) , in how
many ways can we arrange their speach that A
always speaks before B
For A and then B without gap : Let us take A and B as

one.
4! = 24
for A and then B let us keep B at 3rd place and A at 1st

place =3!
there are total 6 such possibilities so we have 6*6 = 36
total possibilities = 60 answer
5 persons are sitting in a round table in such a
way that the tallest person always sits next to
the smallest person?
Keep tallest and smallest person as 1.

we have (4-1)! = 6
the tallest and the smallest person can be
interchanged = 2
=12
How many words can be formed
from MOBILE so that consonent
always occupies odd place ?
There are 3 odd and 3 even places.

We have 3! *3!
=36 answer
In how many ways can we
arrange 6 + and 4 – signs so that
no two – signs are together?
++++++
there are 5 places between 2 +. one on extreme
left and one on extreme right.
We have 7 positions for – sign
7c4
we have 6 places for 6 + sign, so we have 6c6
total = 35 answer
There are 10 buses between Bikaner and Jaipur. In
how many ways can Gajendra go to Jaipur and come
back without using the same bus in return journey?
There are 10 options while going

there are 9 options while returning (one bus
used earlier will not be used)
10*9 = 90 answer
In how many ways can yamini distribute 8
sweets to 8 persons provided the largest sweet
is served to Jigyasha?
1 sweet is fixed
so we have 7!
= 5040 answer
Yamini & Jigyasha go to a train and they find
6 vacant seats. In how many ways can they sit?
Yamini has 6 options but Jigyasha has only 5

options left
= 6*5 = 30 answer
How many words can you make
from DOGMATIC?
8!
40320 answer
Gajendra has 12 friends out of whom 8 are
relatives. In how many ways can he invite 7
in such a way that 5 are relatives?
8c5 * 4c2
=56*6
=336 answer
There are 8 points on a plane. No 3 points
are on a straight line. How many
traiangles can be made out of these ?
8c3
= 56 answer
In how many ways can you form a
committee of 3 persons out of 12
persons ?
12c3
=220 answer
How many different factors are
possible from 75600 ?
The factors are : 2^4* 3^3*5^2 *7

formula = (number of factors +1) (number of
factors +1) .... - 1
(4+1)(3+1)(2+1)(1+1) -1 =119 answer
A box contains 7 red 5 white and 4 blue balls.
How many selections can be made that we pick
up 3 balls and all are red?
It is a question of combination.
Total possibilities = 7c3
7c3 = 7*6*5 / 3*2*1 = 35 thus there are 35

chances of getting
A box contains 7 red 5 white and 4 blue balls.
What is the probability that in our selections
we pick up 3 balls and all are red?
Total possibilities for red = 7c3

7c3 = 7*6*5 / 3*2*1 = 35
total possibility of 3 balls : 16c3
=(16*15*14/3*2*1) =560
probability -
thus there are 35/560 chances of getting
red in all the three selections
What is the probability of getting
3 heads when I toss a coin 5
times?
This is a case of binomial probability (where
there are only 2 outcomes possible, we can use
this theory)
Here we can use this formula :
Ncr (p)^r * (q)^(n-r)
=n =5, p = ½ q = (1-p) = ½ , r = 3
5c3 (1/2)^3*(1/2)^2
=5/48 answer
In how many ways can Gajendra invite some
or all of his 5 friends in party hosted by him?
(at least 1)
Frmula of combination of 1 to all

= 2^n – 1
= 2^5 - 1
= 32-1
=31 answer
How many words can be formed by using all the
letters of the word DRAUGHT so that a. vowels
always come together & b. vowels are never together?
A There are 2 vowels. We treat them as 1.

solution : 6!*2! = 1440 answer
b. total possibilities = 7! = 5040
number of cases when vowels are not together
= 5040-1440 = 3600 answer
In how many ways can a cricket
eleven be chosen out of a batch
of 15 players.
15c11
=15! / ((15-11)!*11!)
=15!/(4!*11!)
=(15*14*13*12)/(4*3*2*1)
1365 answer
In how many a committee of 5 members can be
selected from 6 men 5 ladies consisting of 3 men and
2 ladies
6c3 *5c2
=[(6*5*4)/(3*2*1)] [(5*4)/(2*1)]
=20*10
=200 answer
How many 4-letter word with or without
meaning can be formed out of the letters of the
word 'LOGARITHMS' if repetition of letters is
not allowed
10p4
=(10*9*8*7)
=5040 answer
how many ways can the letter of
word 'LEADER' be arranged
We have two e, so divide 6p6 by 2

6!/2!
=720 / 2
=360 answer
How many arrangements can be made out of the
letters of the word 'MATHEMATICS' be arranged
so that the vowels always come
together
Let us treat all 4 vowels as 1

total digits are 11
we we take 11 – 4+1 = 8 digits
vowels can be arranged among themselves =
4!/2!
=8!/ (2!*2!) * 4!/2! = 120960 answer
In how many different ways can the letter of
the word 'DETAIL' be
arranged in such a way that the vowels occupy
only the odd positions
We have 3 odd and 3 even positions

=3! *3!
=36 answer
How many 3 digit numbers can be formed from the
digits 2,3,5,6,7 and 9 which are divisible by 5 and
none of the digits is repeated?
Last digit must be 5

now we have 5 options for 1st and 4 options for
nd
2 digit
=5*4 = 20 answer
In how many ways can 21 books on English and 19
books on Hindi be placed in a row on a self so that
two books on Hindi may not
be together?
We have 22 places for Hindi books.

22p19 *21!
Out of 7 constants and 4 vowels
how many words of 3 consonants
and 2 vowels can be formed?
Selection of 5 digits
=7c3 *4c2
=35*6 = 210
5 digits can be arranged in 5! ways
=120
total options : 210*120 = 25200 answer
What is effective rate of interest ?
In the case of compound interest questions, the

effective rate is generally higher than the rate.
For example: if rate is 20% compounded
quarterly, (4 times in a year) it will be equal to
: (1+20/400)^4
=1.2155
so effectiveinterest here is 21.55% answer
What is present value ?
When you are trying to find the present worth of some

money which is due after some time, it is called present
value. Due to factors like inflation, risk, uncertainity,
present value is always less. Suppose you have to get
1100 after 1 year, at a discount rate of 10% its present
value is 1000. (you can see here that there is a discount of
100)
Money due – discount for time factor = present value

What is future value ?
Future value takes up interest and therefore it is

more than the sum invested.
If I invest 1000 today, with an interest rate of
10%, it will become 1100 after 1 year.

Formula for present value ?
Amount / (1+rate) ^ number of years

suppose 1221 is due after 3 years and rate of
interest is 10%, present value is :
1221 / (1+10/100)^3
=917.35 answer

What is the formula for future
value ?
Amount *(1+rate) ^ number of years

suppose 1000 is invested for 3 years and rate
of interest is 10% annually compounding,
future value is :
1000 * (1+10/100)^3
=1331 answer
How to calculate EMI?
You may use the formula for present value of

annuity. Here you need a factor
formula = ((1+rate)^n -1) / (rate(1+rate)^n)
here n= number of instalments
rate = rate % / number of instalments in a
year*100
EMI = amout to pay / factor of
annuity(calculated from above formula)
What will be EMI for Rs. 5 lakh
rate of interest = 10%, payable in
20 annual instalments
= ((1+rate)^n -1) / (rate(1+rate)^n)

((1+10/100)^20 - 1)/(10/100 (1+10/100)^20)
=5.73/.67 =8.55
EMI=500000/8.55 =58479 ANSWER

What will be EMI for Rs. 5 lakh
rate of interest = 10%, payable in
Monthly instalments in 20 years.
= ((1+rate)^n -1) / (rate(1+rate)^n)

((1+10/1200)^240 - 1)/(10/1200*
(1+10/1200)^240)
6.328 / .061 =103.624
EMI = 500000 / 103.624 =4825 ANSWER

What is sinking fund ?
If you deposit a sum of money every year and

you are able to have a lot of money after some
time this is sinking fund
you create sinking fund to purchase a new
machinary / building etc
it is just reverse of the EMI (where you were
looking at present value of annuities), because
here you are taking future value of annuities.
How to calculate sinking fund
contribution?
For calculation of sinking fund contribution,

we have to use the following formula :
= ((1+rate)^n -1 )/(rate)
here n = number of instalment
rate = rate / number of instalments in a
year*100.
Jigyasa has to collect 1 ml. After 5 years to start a new
factory. How should she save every month? Rate = 12%
= ((1+rate)^n -1 )/(rate)
=((1+12/1200)^60 -1) / (12/1200)
=.8167 / .01
dividing factor =81.669
monthly savings = 1000000/81.669
=12244.44 per month answer
What is a sample ?
Instead of contacting every person, we may

contact only a few persons, this is called
sample.
Suppose we go to check the quality of wheat to
purchase. Instead of checking all the bags, we
pick up one bag randomly and pick out a few
grains, this is also a sample.
What are the methods of sampling
?
1. random sampling = purely by chance – just like a lottery
2. judgement sampling – here we are using some basis for
judgement – the basis of judgement is related to our purpose of
research. 3. quota sampling – taking some number of persons
from each group
4. cluster sampling – here we divide populationin clusters
(based on their geography / demography / location / etc.) and
then pick up a few clusters (groups) of people and study them
all

contd...
Stratified ramdom sampling : here we divide

population in different stratas (strata =
population divided on some logical criteria)
then we randomly take a few % of persons
from each strata.
Convenience sampling = taking sample on the
basis of your convenience
What is confidence level ?
It is the confidence created / associated with an

interval estimate If we are using a confidence
level of 95%, it means that there are 95%
chances that our estimate will be close to
population parameter (mean).

population parameters and sample
statistics ?
Population = actual population – but it is not
possible to collect all the information about
population due to our own resource constraints
we dont have time or resources to collect data
about population. Therefore we go for sample.
When we use sample, we are using sample
statistics. We try to estimate population
parameters from sample statistics.
What is population parameter?
If you go for census study (you contact each

element in the population and take their data),
you can calculate population parameter. There
are different parameters which are of use like :
mean, mode, median, standard deviation, etc.
But we actually take sample so we estimate
population parameters from sample statistics.
What is sample statistics?
Sample characteristics like mean, mode,

median, standard deviation etc. Which are used
to estimate population parameter

What is sampling error?
The difference in the value identified by

sample and the population parameter is called
sampling error.
For example, population mean is 20 but sample
mean is 18, so sampling error = 2

What is quantitative data and
qualitative data ?
quantitative data = data which tell about what

and how much
qualitative data=data which only contain
nominal scale – just name / labels etc.

What are the various types of
scales of data ?
1 nominal scale = only names are there – like ram, shyam

2. ordinal scale - they give order or ranks
3.interval scale: they have identifiable gaps, but they dont
have zero
4. ratio scale – they can be used to calculate ratio – they
have a zero and ratio can also be calculated, they are the
best in numerical analysis

What are the various methods to
present data ?
Scatter chart / diagrams
bar chart
Histogram
Ogive
Dot plot
etc.

What is statistical inference ?
When we try to estimate or test hypothesis

using sample data, it is called statistical
inference (here we use sample data, not the
population parameters).

What is a variable ?
It is a characteristic of some interest relating to

some element. It can take different values.
Variables are denoted by X,Y,Z etc.
Examples of variables are :
for people = their education,
for car=their car, fuel efficiency etc.
What is cross sectional data ?
Data collected at the same point of time from

different segments

What is cross tabulation?
There are two variables, their data are

presented in one table – one variable as X axis
and other variable as Y axis
for example : Age and Height
or Marks and Attendance

Can we take up same element
again in sampling ?
Yes, it is possible (by chance)

there are two types of sampling :
1. sampling with replacement
2. sampling without replacement
in sampling with replacement, it is possible
that by chance we may pick up same element
again (we should avoid).
What is normal distribution ?
There are many types of probabilty

distributions, normal distribution is used most
widely. It assumes that the data are bell shaped
and mean=mode=median. Normal distribution
assumes that most of the data are near mean
and extreme data are very few.

How do you calculate mode ?
Mode is that element, which has highest frequency

if there is continuous data,you may use the following
formula :
Mode = L1 + (D1 / (D1+D2) * class interval)
L1 = lower limit of the modal class
D1=higest frequency – frequency in preceding class
D2=higest frequency – frequency in succeeding class

Example of mode :
2,3,5,6,7,8,9,11,13,13,14,14,14,15,17,21,22,34,
43
out of these mode is 14 (because its frequency
is 3)

Example of mode ?
Class frequency
10 to 20 4
20 to 30 8
30 to 40 12
40 to 50 4
apply the formula : modal class = 30 to 40
= 30 + ((12-8) / ((12-8)+(12-4)) * class interval
= 30 + 4/12 * 10 = 30+3.3 = 33.3 answer

What is median ?
Median = exact mid point in the data

formula = n/2 or (n+1) / 2
example : 1,3,5,7,9
thre are 5 values, so n = 5
(5+1)/2 = 3
so 3rd value is median. Median = 5 answer
Formula for median ?
L1 + ((M-C) / F)* class interval

L1 = lower limit
F = frequency
M=median = n/2
C = cumulative frequency of the previous class

Example of median ?
Class frequency C.F
10 to 20 4 4
20 to 30 8 12
30 to 40 12 24
40 to 50 4 28
L1 + ((M-C) / F)* class interval
M=28/2 = 14, so median class is 30 to 40
30 + (( 14-12)/12) * 10
=30+1.6 = 31.6 answer
What is cumulative frequency ?
When you add up frequencies, it is called

cumulative frequencies
in the previous example , 10to 20 is 4, but 20
to 30 is shown as 16 (4 of 10 to 20 is added in
it) cumulative frequency

What is relative frequency ?
Formula
= frequency of a class / number of items

Find mean, mode and median on
following data ?
Class freq. C.F x*f

10 to 20 5 5 75
20 to 30 12 17 300
30 to 40 12 29 420
40 to 50 5 34 225
total 34 1020
mean = 1020/34 =30,
solution...
Median = 20+(17-5)/12 * 10 = 30
mode cannot be calculated because there are
two equal modal values, so we use the
following formula
Mode = 3median – 2 mean
mode = 30 answer k
Calculate rank correlation
using the following data ?
X Y
2 11
4 8
6 3
8 1

Solution
Calculate their ranks
X Y Rx Ry D^2
2 11 4 1 9
4 8 3 2 1
6 3 2 3 1
8 1 1 4 9
d=rx-ry so D^2 = (Rx-ry)^2
D^2 = 20
What is formula of quartile
deviation ?
(q3 – q1)/ 2

What is formula of coefficient of
quartile deviation ?
(q3-q1) / (q3+q1)

What is formula of coefficient of
mean deviation ?
Mean deviation / Median

or
mean deviation / mean

calculate combined standard deviation.
Means A=8 B = 3, std. Deviation A = 2 B
=1
n1 of a = 20 n2 =30
Formula = sqrt ((n1s1 +n2s2 +n1d1+n2d2)/(n1+n2))
d1 = mean of a – combined mean
d2 = mean of b -combined mean
combined mean = (160+90)/50 = 5
d1=3 d2 =-2
sqrt ((20*2 +30*1 +20*3+30*(-2))/(20+30))
=1.18 answer

FORMULA OF RANK
CORRELATION
= 1- (6∑D^2) / (N^3 -N)

= 1 – (6*20)/(64 -4)
=1 - 120/60
=1-2 =-1
Thus two series have perfectly negative
correlation
What is sample space?
A set of all experimental outcomes is called

sample space

What is experiment ?
In research, we manipulate some data, we

change some variables that is called
experiment,

What is experimental group?
There are generally two types of groups – one
on which you undertake experiment
(experimental group) and one on which you
dont do any experiment, just do observation.
(control group)
Example – if you have two plants, on one plant
you pour fertilisers and on the other you dont
put any fertilizer, then the former is
experimental group and 2nd is control group.
What is standard deviation?
Deviation = difference
here we find the difference of each value with
mean and this will create standard deviation.
Formula = square root of (sum of squares of
difference of each element from mean)

Example : of standard deviation..
X dx^2
2 4
3 1
5 1
6 4
average = 16/4 = 4, dx = x-average = 2-4 = -2
average of dx^2 = variance = 10 / 4 = 2.5
standard deviation = square root of variance
= sqrt(2.5) =1.58 answer
Steps in calculation of standard
deviation ?
1. calculate average. For this total all the values of X and
then divide it by n (in our example, we have divided 16/4,
where 16 is total of all values and 4 is number of
elements.
2. find dx (difference of x from mean)
3. square the dx to get dx^2
4 . find average of dx^2 this is called variance.
5. find square root of variance. This is called standard
deviation.
What is covariance ?
If there are two data series – let us say X andY,

then we can find their relation, we need
covariance.
Co = together Variance = difference
formula of covariance
= total of dx*dy /number of elements
Example of covariance :
X Y dx dy dx*dy
2 6 -2 2 -4
3 5 -1 1 -1
5 3 1 -1 -1
6 2 2 -2 -4
average of X=16/4 =4 , average of Y = 16/4=4
dx = difference of each element from X
dy = difference of each element from Y
total of dxdy=-10
covariance = -10/4 = -2.5 answer
What is correlation and regression
Correlation just tells you that there is a relation

between two variable. It doesnt tell you which is the
dependent and which is independent variable. If you
want to predict / forecast, you have to use regression.
In regression, we have two variables – one dependent
and one independent. Regression tells you about
relation of these two variables. Based on regression,
you can predict / forecast.

How to calculate correlation?
There are many methods to calculate correlation, but the
carl pearson's method is the most popular method.
Formula of correlation = covariance / (product of standard
deviation of X * standard deviation of Y)
suppose covariance of X and Y is -4 and standard
deviation of X is 2 and standard deviation of Y is also 2,
then correlation
= -4 / (2*2) = -1

What is the maximum and
minimum value in correlation ?
Maximum correlation = 1 (perfectly positive

relation)
minimum correlation = -1(perfectly negative
relation – one falls other declines)
no relation = 0

Example of correlation?
X Y dx dy dx*dy
2 6 -2 2 -4
3 5 -1 1 -1
5 3 1 -1 -1
6 2 2 -2 -4
total of dxdy=-10 total of dx^2 = 10, standard deviation of x =
sqrt(2.5) and standard deviation of Y = sqrt(2.5)
covariance = -10/4 = -2.5
correlation = -2.5 / (sqrt (2.5) * sqrt (2.5)) = -1 answer
What is regression ?
The basic model of linear regression (one dependent and

one independent variable) is as under :
y = a+ bx+e
a = intercept
b=slope
e=error
since error is random and moves in either direction, so we
generally write as y=a+bx

What is regression?
It is a simple tool to predict data. Regression

assumes that there are at least two data sets,
one is dependent on another. Example :
if you say that demand is based on price, then
we can have regression between price and
demand. Price will be independent variable
(called X), and demand will be dependent
variable (called Y)
What is slope and intercept ?
Simplest form of regression is linear regression (a
straight line between dependent and independent
variable).
Here we need two things : slope and intercept.
Slope is denoted by B and intercept is denoted by A.
Formula of regression is : Y = A +BX
1. A is the point (value) of Y when X = 0
2. B denotes the rate of change in Y in response to
change in X.
How to calculate slope?
In the formula of y=a+bx, we use b to denote slope. It
denotes change in y with reference to change in x. Slope
can be calculated with the following formula =
= covariance / (variance of x)
once we calculate b, we can easily calculate a by putting
in the formula y=a+bx
thus we can get both a and b, then we can calculate yhat or
Ỷ = a+bx (because a and b are known and with the help of
x we can predict y)

Example of regression
X Y dx dy dx*dy
2 6 -2 2 -4
3 5 -1 1 -1
5 3 1 -1 -1
6 2 2 -2 -4
variance of x = 2.5 covariance = -10/4 = -2.5
b=covariance/variance of x, and covariance =-2.5, variance of x=2.5
b= -2.5 / 2.5 = -1 now put it in formula to get a y=a+bx
take y=4, x=4, b=-1 so 4 = a+(-1) 4 = or a = 8
thus a = 8, b = -1 so we can now predict y
What is coefficient of
determination ?
the percent of the variation that can be
explained by the regression equation.
the explained variation divided by the total
variation
the square of r (r denotes correlation)
it is also called r squared
we calculate it by taking difference of
estimated y and average of y
Example of coefficient of
determination
Suppose estimated Y = 4
actual Y = 3
average of Y = 7
now total variation is 3-7 = -4
explained variation (determination) = 4-7 = -3
unexplained variation (error) = 3 -4 =- 1
here coefficient = -3/-4*100 =75%
What is coefficient of variation ?
= Standard deviation / mean * 100

suppose standard deviation = 2
suppose mean = 4
=2/4 *100 = 50%
coefficient of variation = 50%

What is skewness ?
When the data are not normallydistributed,

they are skewed. They are either towards left
or towards right side.
If the data are not skewed, it looks like a bell
shaped data. But if it is skewed, it looks like a
slope or like a see – saa.
Formula = (mean – mode ) / standard deviation
What is bar chart ?
It is a chart which represents thick lines (bars)

to denote frequencies of X variables (on X
axis)
length of the bar should be equal to frequency
it is similar to histogram (but there we use
connected rectangles

What is ogive ?
It is a chart. It indicates data on cumulative

basis. Here you first calculate cumulative
frequency and then find its %. Data may be
expressed using a single line. You can display
the total at any given time. The relative slopes
from point to point will indicate greater or
lesser increases. Ogive can be from left to right
or from right to left
Example of ogive
(here data are absolute in
cumulative frequency – not in %)

What is class interval ?
It denotes the width of class

for example : 10 to 20
here class interval is 20-10 =10
class interval is calculated by following
formula : (highest – least)/ number of classes
desired
continuous and discrete data?
Continuous data can take any value like

10.00073 it is writtes like : 10 to 20 (so here
any value between 10 to 20 can come)
but discrete data can take only certain
numerical values like 3,4,5,6 etc.

Which of the following are linear
equations?
a) y = 4x − 5 b) 2x − 3y + 8 = 0 c)
y = x² − 2x + 1
d) 3x + 1 = 0 e) y = 6x + x^3
f) y = 2
answer : out of these all those equation which result in
straight line make a linear equation. C and E dont make
any straight line. Rest all are linear equations.

Which of these ordered pairs
solves the equation y = 5x − 6 ?
A (1, −2) b (1, −1) c (2, 3) d (2, 4)

answer :
b&d

There are two lines : 2x+3y+5=0
and 4x-5y+2 = 0, find the point of
their intersection?
You may multiply the first equation by 2 and

then subtract the second equation, you wil get :
11Y=-8 or Y = -8/11
putting this value, we get X = 1/11

Are these points are collinear ?
A = 2,3
B = 4,1
C= -2,7
the points are collinear, if they are on one line.
They are on one line if they satisfy the
following formula :
Xa(Yb-Yc) +Xb(Yc-Ya)+Xc(Ya-Yb) =0
=2(1-7)+4(7-3)-2(3-1) = -12+16-4 =0
5 DECEMBER 09
so these points are
www.afterschool.tk
collinear 173
Find the equation of the line
which is parallel to 4x+7y+5=0,
and passes through 5, -4.
In case of parallel lines, the slope remains
same thus only constant changes. Here
constant is 5.
4(5)+7(-4)+k=0
k=8
4x+7y+8=0 answer
Are these points colinear? Make
an equation from them?
(3,1), (5,-5),(-1,13)
3(-5-13) +5(13-1)+-1(1--5)
=-54+60-6
=0
these points are colinear
Y-Y1/Y2-Y1 =X-X1/X2-X1
Y-1/-6 = X-3/2
2Y-2=-6x+18
Y+3X=10 answer

Find the equation of the line parallel to
the line joining (7,5) and (2,9) and
passing through (3,4) ?
Y-Y1/Y2-Y1 =X-X1/X2-X1
Y-5/9-5 = X-7/2-7
-5Y+25=4X-28
=4X+5Y -53 =0
for parallel, constant = k
4(3) +5(4)+k=0
k = -32
so equation = 4x+5y-32=0 answer
What is a variable ?
It can take different values.

Generally variable is denoted by X,Y,Z, and
constant is denoted by a,b,c
variable can be of two types :
1. discrete – it takes only integer values
example: number of houses
2.continuous – it can take any values example :
height of a person
What is a function?
It shows relation between two variable – one is
dependent and one independent
dependent variable is dependent on independent
variable
example : price = f(demand)
here we want to show that price is dependent on
demand, so price is a function of demand.
Dependent variable = price, independent variable =
demand
functions ?
1. linear function
example : Y = A +bx
here there is a straight line on a graph paper – and there is a
direct linear relation between the two variables
2. polynomial function : there are multiple independent
variables
Y = a+bx1+cx2 ....
3. absolute value function - no impact of negative values

What are the measures of central
tendency ?
Mean = arithematic average (sum / number)
Mode = the Variable which has highest
frequency
Median = the exact mid point of data.
For example :
2,3,8,11,11
here Median = 8, mean = 7, Mode = 11
Formula of mean ?
Add all the values and divide by number

in the previous example : add all the values of
2,3,8,11,11
= 35
there are 5 values so divide 35 by 5 = 7
mean is denoted by Xbar
What is relation between mean,
mode and median?
mode=3median-2 mean
in our example it should be :
= 3*8 – 2 * 7
=10.
but we have found 11.actually you will see,
that the mode here should be 10 – as we
discuss in later exercises

st
Calculate 1 quartile from the
following data ?
X Freq. C.F
10 TO 20 4 4
20 TO 30 6 10
30 TO 40 8 18
40 TO 50 7 25
50 TO 60 5 30
SOLUTION
FORMULA = L 1 (q1 – c) / f * (class interval)

Q1 = n/4 =first quartile= 30/4 = 7.5
7.5 falls in 20 to 30
= 20 + (7.5 – 4) / 6 * (10)
=20 + ((3.5/6) *10)
=20 + 5.8
= 25.8 ANSWER
st
Calculate 31 percentile from the
following data ?
X Freq. C.F
10 TO 20 4 4
20 TO 30 6 10
30 TO 40 8 18
40 TO 50 7 25
50 TO 60 5 30
Solution
FORMULA = L 1 (31p – c) / f * (class
interval)
31p= n/100 *31 = 30/100 *31 =9. 3
9.3 falls in 20 to 30
= 20 + (9.3 – 4) / 6 * (10)
=20 + ((5.3/6) *10)
=20 + 8.8
= 28.8 ANSWER
Can mean, mode and median be
equal?
Yes - in normal distribution, mean, mode and median
are all equal.
In normal distribution, we have 3 characteristics :
1. data are symmetrical
2. data are more in central values and less as we move
apart
3. mean=mode=median
most of statistical formula require normal distribution.
How to calculate median in bigger
data :
Formula :( N+1 )/ 2
n=number of data
for example : 1,2,3,4,5,6,6,7
here we have 8 values , so (8+1)/2 = 4.5
so we should take mid value between 4 and 5,
which is 4.5 answer
What types of data series are there
?
There are many types of data series :
individual data
discrete series
continuous series
in continuous data series, there is no value
which is not possible.
(for example : 0 to 10, 10 to 20, 20 to 30) ....
What are the measures of
dispersion?
Dispersion = how the data is looking in
comparison to mean.
If data is wide apart from mean, there is high
dispersion.
If the data is just close to mean, there is very
less dispersion.
If data has more dispersion, there is less
uniformity in the data. We have many tools to
measure dispersion like range, variance etc.
Example of high and less
dispersion of data :
Low dispersion : 6,6,7,7,7,7,8,8,9,
high dispersion : 1,4, 8, 19,20,50,60,80,100
you can see, the first data set has far more consistency
and dispersion is less.
Tools to measure dispersion are : range, standard
deviation, variance, mean deviation etc.
Range = highest – least value.
In the first case range = 9-6 = 3, in 2nd case range =
100-1 = 99
What is standard deviation?
Here we find the difference between each

value and mean. Then we square the difference
and find the average. This is called variance.
Square root of variance is called standard
deviation. This gives us an estimate of
dispersion of data.

Example of standard deviation?
X has 5 values : 1,2,3,4,5
its total is 10. average = 15/5 = 3
now we take difference of each value :
(1-3) = -2, (2-3)=-1, (3-3) = 0...
so we get : -2,-1,0,1,2,
now square them = 4,1,0,1,4 total =10
now find the mean=10/5 = 2 (this is variance)
square root of 2 = 1.4 is the standard deviation.
Example of intercept and slope ?
If X change by 10% but Y changes by 20%, so

slope = 20/10 = 2
if it is written that X,Y points are : (0,2), (2,4),
(4,6),(6,8) ... here you can see that there is a
linear relation between X and Y. (first digit is
X and second digit is Y).
Intercept is 2, because when X is 0, Y is 2.
Find slope in the following
example?
X Y
2 11
4 8
6 3
8 1

Solution
Slope (b ) = covariance / variance of X

so first we shall calculate covariance

Solution
X Y dx dy dxdy dx^2
2 11 3 -5.25 -15.75 9
4 8 1 -2.25 - 2.25 1
6 3 -1 2.75 -2.25 1
8 1 -3 4.75 -14.25 9
covariance = (-34.5 / 4) = 8.62
variance of x = 20 / 4 = 5
slope (b) = 8.62/5 = 1.72 answer

What are the types of data ?
1. primary (which you collect yourself)

2. secondary (which is already collected for
some other purpose, but you can also use it).

statistical analysis?
1. descriptive statistics : here you collect data
and present it (for example data on market
share)
2. inductive statistics : here you undertake
statistical inferences and estimate for future
3. statistical decision theory : here you have to
take decision about a situation based on
statistics
What are the basic tools for
statistical analysis ?
1. be clear about problem

2. formulate hypothesis
3. set significance level (how much accuracy
do you want)
4. set sampling frame, research design &
collect data
5. analyse data and draw inferences
What is hypothesis ?
What do you want to test. We frame 2
hypothesis at least. One of them is null
hypothesis and one is alternate thesis. Based on
literature review & our own experiences, we
frame some understanding on the subject. We
have to frame null hypothesis which is
opposite of this idea. Then we have to frame
alternate hypothesis. We test out null
hypothesis.
What is type I and type II error ?
If we reject a null hypothesis, which is actually

true, we are having type I error
if we accept a null hypothesis which is actually
false – we are having type II error.
We have to set standards for both these errors.
If you become liberal for type I error, then type
II error will increase and vice versa.
What is alpha ά ?
Type I error is called alpha

How do we test alpha ?
We calculate P value.
If P value is less than alpha, we reject null
hypothesis
if P value is more than alpha then we cant
reject null hypothesis

What is p value ?
It is actual calculation about what is the

possibilitity of error. It is calculated to be
compared with alpha. Alpha is determined in
advance, but P value is actual observation.

How does statistics &
econometrics help you in business
decisions?
You can test your decisions using data.
You can also build models.
There are various types of model :
1. physical, 2. geographic 3. schematic 4.
analog 5. mathematical / statistical /
econometrics based
statistics and econometrics can help you in
building the last types of models (5th type)
What types of statistical analysis
are possible ?
1. univariate (there is a single set of data)

2. bivariate (there are two sets of data) 3.
multivariate (there are many sets of data)

What are univariate tools?
Mean, mode, median, time series analysis,

moving average analysis etc.

What are bivariate tools ?
Correlation, regression, etc.

What are multivariate tools ?
There are many like : conjoint analysis,

multivariate regression etc.
Here we have many variables :
example : demand is dependent on

An biased die is tossed.Find the
probability of getting a
multiple of 3?
The possible options are : 1 to 6.
there are only 2 multiples of 3 : 3,6
so probability is (number of favourable
outcomes ) / (total number of possibilities)
= 2/6 = 1/3 answer

In a simultaneous throw of a pair
of dice,find the
probability of getting a total more
than 7?
We can have 36 possibilities (6*6) however, we need only
those cases where the total is 8 or more. These are : (6,2),(6,3),
(6,4),(6,5),(6,6),(5,3),(5,4),(5,5),(5,6),(4,4),(4,5),(4,6),(3,5),
(3,6),(2,6) =15
answer = 15/36 = 5/12 answer

A bag contains 6 white and 4
black balls .Two balls are
drawn at random .Find the
probability that they are of the
same colour?
Both are white : 6/10*5/9
both are black = 4/10*3/9
add them : =42/90 or 7/15
or : 6c2/10C2*1/2 + 4c2/10c2
=21/45 = 7/15 answer

Two dice are thrown
together.What is the probability
that the sum of the number on
the two faces is divisible by 4 or
6?
The possibilities are : (1,3)(1,5) (2,2) (2,4),(2,6),(3,1),(3,3),
(3,5),(4,2),(4,4),(5,1),(5,3),(6,2),(6,6)
thus we are able to get 14 out of 36. so answer = 7/18 answer

Two cards are drawn at random
from a pack of 52 cards What
is the probability that either both
are black or both are
queens?
Both are black = 26/52 * 25/51=25/102
both are queens : 4/52 * 3/51=3/663
both are black queens : 2/52*1/51 = 1/1326
now add them : (25/102 + 3/663 – 1/1326)
=(325+6-1)/1326
=330/1326 or .25 answer

Two dices are tossed the
probability that the total score
is a prime number?
Prime numbers are : 1,2,3,5,7,11

totals are : (1,2),(1,1),(1,4),(1,6),(2,1),(2,3),
(2,5),(3,2),(3,4),(4,1),(4,3),(5,2),(5,6),6,1),(6,5)
=15/36 answer

Two dice are thrown simultaneously .what is
the probability
of getting two numbers whose product is even?
If any one of the two numbers is an even number, the

product will be even number. Thus we should pick up all
those cases when both the numbers are odd numbers :
(1,1),(1,3),(1,5),(3,1),(3,3),(3,5),(5,1),(5,3) (5,5)
thus there are only 9 such cases. Remove them from 36,
we get : 27 cases
answer : 27/36 answer

In a lottery ,there are 10 prizes and 25 blanks.A
lottery is
drawn at random. what is the probability of
getting a prize ?
10/(10+25)
=10/35 or 2/7 answer

In a class ,30 % of the students offered English,20 %
offered Hindi and 10 %offered Both.If a student is
offered at random, what is the probability that he has
offered English or Hindi?
30+20-10 = 40% or .4 answer

Two cards are drawn from a pack of 52 cards .What is
the probability that either both are Red or both are
Kings?
Both are red ½ * 25/51

both are king = 4/52 + 3/51
now add both these answers =55/221

one card is drawn at random from a pack of 52 cards.What
is the probability that the card drawn is a face card?
Face cards are : Jack, queen, king

total = 12
12/52 answer

A man and his wife appear in an interview for two
vacancies in the same post.The probability of husband's
selection is 1/7 and the probabililty of wife's selection is
1/5.What is the probabililty that only one of them is
selected?
Husband + not wife

=1/7 * 4/5 = 4/35
wife + not husband
=1/5 * 6/7 = 6/35
add = 10/35 answer

From a pack of 52 cards,one card is drawn at
random.What is the probability that the card is
a 10 or a spade?
4/52 + 13/52 – 1/52

=16/52 answer

A bag contains 4 white balls ,5 red and 6 blue balls .Three
balls are drawn at random from the bag.What is the
probability that all of them are red ?
5/15*4/14*3/13
or 5c2/15c2 =
=2/91

A box contains 10 block and 10 white balls.What is
the probability of drawing two balls of the same
colour?
Both are black :

10/20 * 9/19 =9/38
+both are white :
10/20 * 9/19 =9/38
or
black : 10c2 / 20c2
+white : 10c2 / 20c 2
=90/190
A box contains 20 electricbulbs ,out of which 4 are
defective, two bulbs are chosen at random from this
box.What is the probability that at least one of these is
defective ?
In such questions (at least one type), it is better

to reverse the question, solve it and deduct the
answer from 1. So here we shall first calculate
the probability of getting no defective bulb.
Let us assume that no bulb is defective :
16/20 * 15/19 = 12/19
at least one is defective = 1 -12/19
= 7/19 answer
Two cards are drawn together
from apack of 52 cards.What is
the probability that
one is a spade and one is a heart ?
nd
First is spade and 2 heart :
13/52 * 13/51 = 13/204
nd
First is heart and 2 spade :
13/52 * 13/51 = 13/204
add them : 13/102 answer

The probability that a card drawn
from a pack of 52 cards will be a
diamond or a king?
13/52 + 4/52 – 1/52

=16/52

What is hypothesis ?
What you think or what you want to check out or what

you want to study is called hypothesis.
We prepare two types of hypothesis :
1 null hypothesis (just opposite of what we think or what
we are testing out)
2. alternate hypothesis (what we want to check out).
We study and check null hypothesis only.

What is systematic sampling ?
If you pick up first unit by random sampling
thereafter you pick up each value
systematically it is called systematic sampling.
Suppose you pick up first unit randomly, this is
12, no you take up every 4th element, it is
systematic sampling, you take up 12, 16, 20,
24, 28 ... so on thus this type of sampling saves
time and creates the virtues of random
sampling also.
What are continuous and discrete
distributions ?
Continuous distributions are :
1. normal
2. exponential
Discrete distributions are :
1. pascal
2.poisson
3. binomial
What is theoretical distribution ?
If you pick up a sample it will not give you

exactly the same value as population. If you
pick up a large number of samples out of
population, and plot the values of these
samples, you will get what we call as
theoretical distribution. If the sample size is
large, the theoretical distribution will
approximate the real population.
What is normal distribution ?
It is also called the Gaussian distribution. It is defined by

two parameters mean ("average" m) and standard
deviation (σ). A theoretical frequency distribution for a set
of variable data, usually represented by a bell-shaped
curve symmetrical about the mean.
MEAN=MEDIAN=MODE
& data symmetrical bell shaped

What is Z, if mean=100 and standard
deviation (σ) 6 find P(X<106)
Step 1: For a given value X=106

formula of Z = value – mean / standard deviation
Z = (106-100)/6 = 1
Step 2: Find the value of 1 in Z table
Z = 1 = 0.3413
Step 3: Here the X value is greater than mean (bell shaped curve is
half = .5 in both side equally, .3413 is in right side of this curve, but
left side is also included, so .5 of left side)
P(X) = 0.5 + 0.3413 = 0.8413

What is probability density
function?
PDF of a continuous random variable is a
function which can be integrated to obtain the
probability that the random variable takes a
value in a given interval. PDF is used to find
the point of Normal Distribution curve.
Continuous Probability Density Function of the
Normal Distribution is called the Gaussian
Function.

Formula of PDF ?
((1/(σsqrt(2π)))*e^(x-m)^2 / (2σ^2)

What is type I error ?
When you reject null hypothesis when it is

actually correct, it is called type I error
it is also called alpha

What is type II error ?
When you accept null hypothesis when it is

actually incorrect, it is called type II error

What is type III error ?
Rejecting a null hypothesis for wrong reason is

called type III error
it is rarely used.

What is binomial distribution ?
The Binomial Distribution is one of the
discrete probability distribution. It is used
when there are exactly two mutually exclusive
outcomes of a trial. These outcomes are
appropriately labeled Success and Failure. The
Binomial Distribution is used to obtain the
probability of observing r successes in n trials,
with the probability of success on a single trial
denoted by p.
Example of binomial distribution
Take up the case of coins. What is the

probability of getting 3 heads on 4 trials
(coin has only two outcomes = head, tail)
(what is probability of observing 3 successes
in 4 trials, with the probability of success on a
single trial denoted by p = .5)
formula : P(X = r) = nCr p^r (1-p)^(n-r).
C = combination
Solution ....
N = 4, r = 3 p = .5
formula of combination = N! / ((N-r)! * r!)
C = 4! / ((4-3)! * 3!) =24 / (1*6) = 4
4! = 4*3*2*1 = 24
Ncr = 4,
p^r = (.5)^3 = .125
(1-p)^(n-r). = (1-.5)^(4-3) = .5
solution = 4*.125*.5 =.25 answer

What is poisson distribution?
It is one of the discrete probability

distribution. This distribution is used for
calculating the possibilities for an event with
the given average rate of value(λ). A poisson
random variable(x) refers to the number of
success in a poisson experiment.

Formula of poisson distribution
f(x) = ((e^-λ)(λ^x)) / x!
where,
λ is an average rate of value.
x is a poisson random variable.
e is the base of logarithm(e=2.718)

in an office 2 customers arrived today (take it as average).
Calculate the possibilities for exactly 3 customers to be
arrived on tomorrow.
Here λ (lembda) (mean arrival) = 2, & x (value to calculate) = 3
Step1: Find e^-λ.
where, λ=2 and e=2.71828
e-λ = (2.718)^-2 = 0.135.
Step2: Find λ^x.
where, λ=2 and x=3.
λx = 2^3 = 8.
Step3: Find f(x).
f(x) = e-λλx / x!
f(3) = (0.135)(8) / 3! = 0.18.
How to carry out hypothesis
testing ?
First of all fix level of significance and alpha.
If you keep alpha of 5% it means that you will consider
level of significance of 95%. That means that there would
be 5% chance of error (which you are willing to tolerate).
When we calculate Z (in normal distribution), we try to
see whether it will fall in our level of significance or not
and what is the p value. If p value is less than our
acceptable error, we reject the null hypothesis.

What is alpha in statistics ?
It is the error that you are willing to tolerate.

Alpha is also denoted by type I error

What is the variance of binomial
distribution ?
N*p*q
n = number of units
p = probability
q = (1-p)

Calculate coefficient of
concurrent deviation ? (a type of
correlation)
X Y
4 8
5 4
6 2
8 1

Solution
Formula = + / - sqrt ( + / - ((2c – m) / m) )

c = number of positive signs as concurrent
deviations
m = totle number of pairs

Solution
X Y dx dy dxdy
4 8
5 4 + - -
6 2 + - -
8 1 + - -
here m = 3, c = 0 (C is number of + signs in dxdy)
= -sqrt (-(0-3) / 3) =- 1 so there is correlation of -1.
answer
What is finite population
multiplier ?
When we are taking samples from finite
population without replacement, then the
properties of normal distribution get distorted,
because the probability of 2nd item depends on
st
1 item and so on. Therefore we have to use
finite population multiplier with all our
formula : sqrt( (N-n) / N-1))
N=population size; n=size of sample
What is standard error mean ?
Error = fluctuations
standard deviation of mean is also called
standard error of mean
its formula = standard deviation / sqrt(n)
n = number of items in sample

Formula for standard error mean ?
Standard deviation of mean / (sqrt n)

n = size of sample
if population is finite, use finite population

multiplier

Why do we do sampling ?
When we are collecting any data – there are two
options – 1. contact each unit and collect data from
this – called census
2. pick up only a few and on the basis of their
response try to infer the response of the entire
population – called sampling
sampling saves time, resources, but there is little bit
possibility of error – which can be minimised by
systematic research process.
What are the main types of
sampling ?
Probability or non probability sampling
probability sampling = where each element has equal
probability of selection
non-probability sampling = where due to some or other
reason, there is inqual probability of selectio of item
example : in a fair contest, every one has equal chance /
lottery – these are examples of probability sampling
non-probability sampling - reservation / selection of your
own friends / nepotism

What are probability sampling
methods ?
1. simple random sampling (just like lottery)
2. systematic sampling (select first item randomly thereafter
pick up each item on fixed gap)
3. stratified sampling (divide population in different strata /
group / classification and then pick up randomly some
persons from each strata)
4. cluster sampling (here pick up one or a few cluster out of
a large number of clusters)

When should we use which types
of sampling ?
It depends on our purpose, population, type of

universe and the situation.
Suppose, you are able to get clusters, which
have elements representing the entire
population, you may go for cluster sampling.
If you want to really use a good method, have
random sampling in that method.
What are the methods of
nonprobability sampling ?
Here we undertake sampling on the basis of
some criteria / convenience :
1. convenience sampling (example : you pick
up people from your friends / relations )
2. quota sampling (example our reservation
system)
3. judgemental sampling (example : select
sample on some criteria)
What is multi-stage sampling ?
When we undertake sampling in different

stages, it is called multistage sampling.
Example : suppose you want to study rural
development in the world - First you pick up
nation to study, then you pick up state, then
you pick up district, then you pick up village
and finally the sample
What is cluster sampling ?
Suppose that population is so divided that there

are many clusters and each cluster is a mini
representation of the entire population, then we
can go for cluster sampling.

What is sampling distribution ?
Sampling distribution is the distribution of all the means
of the various samples that are possible from a population.
Example : suppose our population is 1,2,3,4,5,6 and we
are picking up samples of 3 units out of this. Population
mean = 3.5
sample means could be : (1,2,3) = 2, (2,3,4) = 3, (3,4,5) =
4 and so on. So we can have sample means like 2,3,4,5,
etc. If we plot these sample means, it will give us
distribution which is similar to the population itself.
Larger the sample, more accurate will be the estimation.
What is sampling distribution of
mean?
The distribution (on graph paper) of the sample

means is called sampling distribution of mean

What is central limit theory and
Z?
Normal distribution is when we have

mean=median=mode and all these are in the
centre of data (data is bell shaped)
Z = (sample mean - population mean ) /
(standard deviation * sqrt(n))
based on Z we can calculate probability of a
value taking some value on the graph.
Example of central limit theory
Population mean = 100
variance = 36
sample size = 25
what is the Z that sample has mean of 90 ?
(90 – 100) / (6 * (5) )
= 10 / 30 = - .33
thus Z = - .33 from this we can make inference
here we should use t distribution instead of z
What is the difference between Z
and T ?
Z denotes the limits as per normal distribution

t is also for Z. But when the sample size is less
than 30, we have to use t instead of z
as the sample size increases, t approaches z if
the sample size is more than 30, we have to use
z instead of t

What is the z for proportion ?
When we are taking population data in % or in

proportion, we use the followng formula :
= (sqrt ((p * q ) / n )))
p = possibility / probability / porportion which
is desired
q = 1-p
n = sample size
What is one tailed or two tailed
test ?
When we are comparing both the sides

(increase or decrease) it is two tailed test
when we are comparing only one side, it is one
tailed test.

What is the procedure in
hypothesis testing ?
1. frame two hypothesis : null and alternate

2. fix level of significance
3. define critical region
4. compare actual values with desired values
5 conclude

Govt data say that 65% of Indian students rent
out their bikes. In a sample of 200 only 80
claimed to have rented out their bikes. Prepare
null hypothesis and test it.
Here we are compare data with 65%

so Ho (null hypothesis) = .65
H1 = < .65
testing = (.4 - .65) / sqrt(200)

What is chi square ?
Compare actual and expected values
x y
a 11 12 23
b 9 8 17
totl: 20 20 40
in order to calculate expected value we use folllowing
formula : (row total * column total) / grand total
=for first value of 11, we have :
(23*20 ) / 40 = 11.5

Table of expected values ....
x y
a 11.5 11.5 23
b 8.5 8.5 17
totl: 20 20 40

Calculate difference between
observed and expected values
1st = (11 -11.5) =- .5

2nd (12-11.5) = .5
rd
3 (9 – 8.5) = .5
th
4 (8-8.5) = -.5

Find square of the difference
1st = .25
2nd ..25
rd
3 .25
th
4 .25

Divide this value by expected
value
1st = .25 /11.5 =.02
2nd ..25 /11.5= .02
3rd .25/8.5=.029
4th .25 / 8.5 =.029
total these values = .1 this is chi=square value
at 5% significance level, the standard chi square value
is 3.84 which is more than our value, so we cant
reject null hypothesis and we conclude that both the
groups are similar.
Question : 600 rich and 400 poor students take
a test. Use chi square test to find whether their
marks are significantly different or not ?
H L
R 460 140 600
P 240 160 400
TOT. 700 300 1000

Start = frame hypothesis and
significance level
Null hypothesis = both groups are similar

alternate hypothesis = both groups are not
similar
significance level:-
ά=5% (there are 5% chances that an incorrect
hypothesis is rejected)
CHI SQUARE – STEP 1.
find expected values for each of
these values
The formula is
=: (row total * column total)/grand total
expected values are as under :
H L
R 420 180 600
P 280 120 400
TOT. 700 300 1000

Step 2 : find difference between
observed and expected values and
square them up.
Formul a = (o – e)^2
H L
R 1600 1600
P 1600 1600

Step 3 : divide (o-e)^2 by
expected values
Formula (o-e)^2 / expected value

H L
R 1600/420 1600/180
P 1600/280 1600/120

Step 4 : add them all : this is chi
square value
= 3.81 + 8.9 + 5.71 + 13.33

total = 31.75

Step 5 : compare this value with
standard value.
Standard value can be calculated by a formula or you can also
see chi-square table to find the standard value.
Table has two dimensions : one dimension shows degree of
freedom and one dimension denotes level of significance
degree of freedom = (row -1) (column -1)
=(2-1*(2-1) = 1
at 1 degree of freedom and ά=5% we find the chi square table
value is 3.84. so compare the value with 3.84

Step 6 : derive conclusion
If the calculated value of chi square is more
than the table value, then reject the null
hypothesis. If the calculated value of chi square
is less than the table value, then accept the null
hypothesis.
In this case, our calculated value of chi square
is 31.75, which is higher than table value of chi
square (3.84) so we can reject the null
hypothesis
Conclusion
We can conclude that null hypothesis is

rejected and there seems to be significant
difference between the two groups.

Graphical presentation
Acceptan Rejection zone

3.84
ce zone
31.
75

10% of the tools produced turn out to be
defective. What is the probability that out of 10
tools chosen randomly, exactly 2 are
defective ?
Here we can use binomial distribution or
poisson distribution to solve this problem.
Let us solve using binomial distribution :
formula : Ncr * p ^r * q^ (n-r)
n = 10, r = 2, p = 10% or .1
q = (1-p) = (1-.1) = .9
c = combination formula
Solution beginning
10c2 * (.1) ^2 * (.9)^ (10-2)

Step 1 – solve combination
Formula = N ! / ((N-r)! * r!)

10 c 2 = 10! / (10-2)! * 2!
10! = 10*9*8*7*6*5*4*3*2*1
2!=2*1
= (10 * 9) /(2*1)
=45
Step 2 : solve remaining portion
(.1) ^2 * (.9)^ (10-2)

=.01 * .43
=.0043

Step 3 : multiply both
45 * .0043
=.19
it means that there is 19% chance that exactly 2
tools are defective.

Solve this question using poisson
distribution ...
Formula : = (e^ -lemda * m ^ x) / x!

e =2.71828
m = probability = .1 or 10% or our sample =
10*.1 = 1
x = our question here X is 2 ( because we want
to know whether 2 are defective or not)
Step 1 apply formula : first part
e^ -lemda
= 2.71828 ^ (-1)
=.37

Step 2 : solve second part of
formula
m^x
= 1^2
=1

rd
Step 3 solve 3 part of formula
X! = 2! = 2

Step 4 : combine all these
calculations
(.37 * 1) / 2
=.19
here we can see that 19% probability is there
that there are 2 tools which are defective.
Answer

What is the probable error of
coefficient of correlation for r =.6
and N = 64 also set limits ?
PE = .6745 (1-r^2) / sqrt(n)

= .054
limits :
.6+.054 and .6-.054 answer

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Basic Concepts of Statistics

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BASIC CONCEPTS OF STATISTICS

My purpose here is to give a few questions on

Pharaoh (over 1000 years before Christ)

Every subject including the following :

1. primary data : collected for the first time

Scrutinise = remove data which are defective

After classification, data can easily be

1. chronologically (data wise / year wise)

IBRD, IMF, ADB, ILO, UNO, WTO, WHO

Under the census or complete enumeration method, data are

Tabulation is a systematic and logical

The end numbers or the highest and

It is the difference between the upper limit

The number of observations included in a

1. textual presentation = present data in the

All the elements of set, which are of the

The process of using data obtained from a

Data that are labels or names used to identify

The data that indicate how much and how

A tabular summary of data showing number

Measure of central location, when data are

Value with greatest frequency

When some % of value are above some

25% data sets

(3rd quartile - 1st quartile)

Squared deviations of data from mean

Positive square root of variance

Standard deviation / mean * 100

(Xi – mean) / standard deviation

In a bell shaped distribution (normal

Unusually small or unusually large data

Graphical presentation of data

Linear relation between two data sets

Shows correlation between two variables

Data * weight give us weighted mean

Data grouped as class interval as summarised

Likelihood that an event will occur

A process that generates a well defined

Set of all experimental outcomes

Any experimental outcome

A graphical representation helpful in

Permutation = it denotes order / Sequence but

Method of assigning probability on the basis of

Method of assigning probability on the basis of

A collection of sample points

Graphical representation showing sample space

Start with 96 of the last question

For questions relating to round table , we have

Total number ofdigits = 7

In questions of necklace, we use the following

For A and then B without gap : Let us take A and B as

for A and then B let us keep B at 3rd place and A at 1st

Keep tallest and smallest person as 1.

There are 3 odd and 3 even places.

There are 10 options while going

Yamini has 6 options but Jigyasha has only 5

The factors are : 2^4* 3^3*5^2 *7

7c3 = 7*6*5 / 3*2*1 = 35 thus there are 35

Total possibilities for red = 7c3

Frmula of combination of 1 to all

A There are 2 vowels. We treat them as 1.

We have two e, so divide 6p6 by 2

Let us treat all 4 vowels as 1

The factors are : 2^4* 3^35^2 7

7c3 = 765 / 321 = 35 thus there are 35