End-Term Assignment

In partial fulfilment of Course:

Quantitative Management - I

Submitted by:

Surya Kant Prasad

Roll No:

P19093

Date of Submission:

September 23, 2019

Surya Kant Prasad P19093 Sec-B

QUESTION - A

1. Study the Lungcap data set and answer the following questions.

i) Construct a two-way table for gender and smoking habit.

ii) Given that one randomly selected person is a smoker, what is the probability that the
person is a female?
iii) Are gender and smoking habit independent?

2. Suppose it is given that 20% of the male smokers and 15% of the female smokers were born
caesarean. With the help of the data, verify the above statements. Give enough reasons for your
answers.
3. Plot the histogram of the distribution of Lungcap amongst smokers.
4. Plot the histogram of the distribution of Height amongst smokers.
5. Are height and Lungcap independent?
6. Are the variation of Lungcap of male smokers and female smokers equal?
7. Are the average of Lungcap of smokers and non-smokers equal?
8. Plot the histogram of the age amongst smokers.
9. What percentage of people below 16 years smoke?
10. What percentage of people above 17 years smoke?
11. Test if smoking habit and age are dependent.
12. Test if smoking habit and Lungcap are dependent.
13. Fit a suitable distribution to height and also to Lungcap. Test the goodness of fit.

QUESTION – B

Study the car data set and answer the following questions.

1. Find the average and variance of price and mileage separately. Comment on the results. How will
you interpret the result statistically?
2. Test if the mean mileage of different car manufacturers within some price range are equal.
Clearly specify all the assumptions and the null and alternative hypotheses.
3. Find a 90% confidence price range for the Chevrolet cars.
4. Find a 90% confidence for variance of prices for Pontiac cars.
5. Calculate the correlation coefficient between mileage and Liter for each company.
6. Comment on the results.
7. Suppose a car has a Liter of 3.8. How sure will you be that its mileage is more than 20,000?
8. Is there any correlation between prices and mileage?

QUESTION – C

1. Let 𝑌̅ be the mean of a random sample of size 𝑛1 from 𝑁(𝜇, 𝜎 2 = 10). Find 𝑛1 such that the
probability of the random interval (𝑌̅ − 1/2 , 𝑌̅ + 1/2 ) includes 𝜇 is approximately 0.954.
2. Let 𝑍̅ be the mean of a random sample of size 𝑛2 from 𝑁(𝜇, 𝜎 2 = 9). Find 𝑛2 such that the
probability of the random interval (𝑍̅ − 1 , 𝑍̅ + 1) includes 𝜇 is approximately 0.90.

3. Draw 200 random samples each of size 𝑛1 (found above) from a normal distribution with mean 5
and variance 3.

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Surya Kant Prasad P19093 Sec-B

4. Write down the distribution of the sample mean. Test using the data obtained in Q3 above, if the
sample means follow that distribution.

5. Draw 200 random samples each of size 25 from a normal distribution with mean 7 and variance
3.
6. Compute 95% confidence interval for the difference of means from each of the 200 samples.
Draw a graph to show all 200 confidence intervals and comment.

QUESTION – D

1. Collect stock prices for 5 companies from 1st Jan 2016 to 30th June 2016.
2. Plot the histogram of the returns for each company. Describe the histograms.
3. Test whether the average returns for 5 companies are equal. State clearly the assumptions
required, null and alternative hypotheses.
4. Test whether the average returns for each pair of companies are equal.
5. Comment on the results.

QUESTION – E

1. The income distribution of a very large population is exponential with average income ₹ 40, 000
per annum. Draw 500 samples (from the income distribution) of size 100 each. Sketch the
distribution of sample average income. Comment.
2. The age distribution of a very large population is given below:

Age Group 15-18 18-21 21-23 23-25 25-27 27-29 29-31 31-33 33-35
(years)
Proportion 0.1 0.1 0.1 0.1 0.2 0.1 0.1 0.1 0.1

Draw 100 samples (from the age distribution) of size 50 each. Sketch the distribution of sample
average age. Comment.

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Surya Kant Prasad P19093 Sec-B

Section-A
Q.1.i.

GENDER SMOKING
SMOKES NEVER SMOKED TOTAL
MALE 33 334 367
FEMALE 44 314 358
TOTAL 77 648 725

Q.1.ii Given that one randomly selected person is a smoker, probability that the person is female:
P (Female|Smoker) = No. of female smokers
Total No. of smokers
= 44/77

= 0.571

Q.1.iii. Let
H0: Null Hypothesis that Gender and Smoking Habit are independent.
HA: Alternate Hypothesis that Gender and Smoking Habit are dependent.
Reject Ho if C is less than 5% p-value.
Observed Frequencies Expected Frequencies Difference Sq. Diff./Exp. Freq
F Value Given E Value Expected (Fij - Eij) (Fij - Eij)^2/Eij
F11 33 E11 38.98 -5.98 0.917
F12 334 E12 328.02 5.98 0.109
F21 44 E21 38.02 5.98 0.940
F22 314 E22 319.98 -5.98 0.112
Degrees of freedom= 1 C

2.077
 1,0.05

3.841

Since c < 1, 0.05, the p-value for c (>10%) is more than 5%. Hence it is not sufficient to reject
HO and we can say that gender and smoking habits are independent.

Q.2 Given 20% (=m) of male smokers and 15 %( =f) of female smokers were born caesarean.
a) As per the sample,
No. of male smokers = 33 , No. of male smoker born caesarean =10
Proportion of male smoker born caesarean, Pm =10/33 =30.3%
Sample size, Nm=33
Since sample size > 30, as per CLT, Pm ~ N(Pm,Sm)
Standard deviation, Sm= (Pmx(1-Pm)/ Nm)^0.5= 0.08

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Surya Kant Prasad P19093 Sec-B

Zc=Pmm)/S = (30.30%-20%)/0.08 = 1.29

Z+cr= Z0.975= 1.96; Z-cr=Z0.025= -1.96
Hypothesis Statement:
HO: Proportion of male smoker, m = 20%
HA: Proportion of male smoker, m ≠ 20%
Rejection Rule
Reject HO if Zc > Zcr or Zc < Zcr
Since Z-cr > Zc (=1.29) < Zcri , there is not enough evidence to reject HO.
Hence we accept the hypothesis that 10% of the male smokers were born caesarean.

b) As per the sample

No. of female smokers = 44 , No. of male smoker who are caesarean =11
Percentage of male smoker born caesarean, Pf =11/44=25%
Sample size, Nf=44
Since sample size > 30, as per Central Limit Theorem, Pf ~ N(Pf,SDf)
Standard deviation, SDf= sqrt(Pfx(1-Pf)/ Nf)= 0.065
Zcal=Pff)/SD = (25% - 15%)/0.065 = 1.53
Z+cri=Z0.975=1.96; Z-cri=Z0.025=-1.96
Hypothesis Statement:
HO: Percentage of female smoker, f = 15%
HA: Percentage of female smoker, f ≠ 20%
Rejection Rule
Reject HO if Zc > Z+cr or Zc < Zcr
Since Z-c > Zc (=1.53) < Zcr , there is not enough evidence to reject HO.
Hence we accept the hypothesis that 15% of the female smokers were born caesarean.

Q3/4.

Q5. Hypothesis Statement: Lungcap Height Total

H0: Height and lungcap are independent <63 >63
for the following ranges <7 229 34 263
HA: Height and lungcap are dependent >7 54 408 462
Rejection Rule: Total 283 442 725

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Surya Kant Prasad P19093 Sec-B

Reject Ho if cal is less than 5% p-value.

Observed Frequencies Expected Frequencies Difference Sq. Diff./Exp. Freq
F Value Given E Value Expected (Fij - Eij) (Fij - Eij)^2/Eij
F11 229 E11 102.66 126.34 155.479
F12 34 E12 160.34 -126.34 99.549
F21 54 E21 180.34 -126.34 88.509
F22 408 E22 281.66 126.34 56.670
Degrees of freedom= (2-1)(2-1)=1  cal

400.207
 1,0.05

3.841
Since cal > 1,0.05 , the p-value for cal (~0%) is less than 5%. Hence reject HO and state that
Height and lungcap are dependent.

Q6. Hypothesis Statement:

HO: Variance of male smokers and female smokers are equal or /22 =1 (Null Hypothesis)
HA: Variance of male smokers and female smokers are not equal or /22≠1 (Alternate
Hypothesis)
Rejection Rule:
Reject HO if Fcal(=s12/s22) >Fcrit,df for significance level 0.05.
We conducted F-value test for =0.05/2=0.025(for two tail test) got the following results:

Since Fcal (=1.19)< Fcrit(1.96), there is not enough reasons to reject HO. Hence we accept the
hypothesis and state that the variances of male smokers and female smokers are equal.

Q7. Let 1 and 2 be the average of lungcap of smokers and non-smokers. Whereas 12 and 22 are
the sample variance of the respective population.
x1= Random Variable of average of lungcap of sample smokers ~ N(1,12/n1)
x2= Random Variable of average of lungcap of sample non-smokers~ N(2,22/n2)
As per data,
No. of smokers, n1=77 No. of non-smokers, n2= 648
Average of lungcap of smokers x1=8.645 Average of lungcap of non-smokers x2= 7.77
Sample lungcap variance of smoker, s= 3.545

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Surya Kant Prasad P19093 Sec-B

 Sample lungcap variance of non-smoker, s=

7.432

Since population lungcap variances of smokers (12)and non-smokers is unknown22) , we
assume 12=22=sp2.
Where sp2= [(n1 – 1)s12 + (n2 – 1)s22 ]/(n1+n2 – 2) = 7.023
Now, (x1-x2)/(sp x sqrt(1/n1+1/n2)) ~ tn1+n2-2
tcal = (x1-x2)/(sp x sqrt(1/n1+1/n2)) = 2.74
t+cri,0.025 =1.96
t-cri,0.975 = -1.96
Hypothesis Statement
HO: 1=2 or 1-2=0
HA:1≠2 or 1-2≠0
Rejection Rule
Reject HO if tcal > t+cri or tcal < t-cri
Since in our case tcal (=2.74) > t+cri (=1.96), we reject HO.
Hence the average lungcap of smokers and non-smokers are not equal(1≠2).
Q.8.

Q.9. No. of people below 16 years = 548

No. of people below 16 years who smoke= 42
Percentage of people below 16 who smoke = 42/548 = 7.66%
Q.10. No. of people above 17 years = 80
No. of people above 17 years who smoke= 15
Percentage of people below 16 who smoke = 15/80 = 18.75%

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Surya Kant Prasad P19093 Sec-B

Q.11. H0: Age and smoking habit are independent for Age
Smoking
the above age ranges Habit <15 >15 Total
HA: Age and smoking habit are dependent for Yes 42 35 77
the above age ranges No 506 142 648
Reject Ho if cal is less than 5% p-value. Total 548 177 725

Observed Frequencies Expected Frequencies Difference Sq. Diff./Exp. Freq

F Value Given E Value Expected (Fij - Eij) (Fij - Eij)^2/Eij
F11 42 E11 58.20 -16.20 4.510
F12 35 E12 18.80 16.20 13.963
F21 506 E21 489.80 16.20 0.536
F22 142 E22 158.20 -16.20 1.659
Degrees of freedom= (2-1)(2-1)=1  cal

20.668
 1,0.05

3.841
Since  cal >  1,0.05 , the p-value for  cal (~0%) is less than 5%. Hence reject HO and state that age
  

and smoking habit are dependent.

Q.12. Hypothesis Statement:
H0: Lungcap and smoking habit are Smoking Lungcap
independent for the above lungcap ranges Habit <9 >9 Total
HA: Lungcap and smoking habit are Yes 43 34 77
dependent for the above lungcap ranges No 432 216 648
Reject Ho if cal is less than 5% p-value. Total 475 250 725
Observed Frequencies Expected Frequencies Difference Sq. Diff./Exp. Freq
F Value Given E Value Expected (Fij - Eij) (Fij - Eij)^2/Eij
F11 43 E11 50.45 -7.45 1.100
F12 34 E12 26.55 7.45 2.089
F21 432 E21 424.55 7.45 0.131
F22 216 E22 223.45 -7.45 0.248
Degrees of freedom= (2-1)(2-1)=1 cal 3.568
 1,0.05

3.841
Since cal < 1,0.05 , the p-value for cal (>=5%) is more than 5%. Hence there is not enough
reasons to reject HO and state that lungcap and smoking habit are independent.

Q13. As per the data, we have the following descriptive statistics for lungcap and height:
LungCap Height
Mean 7.863148 Mean 64.83628
Standard Standard
Deviation 2.662008 Deviation 7.202144
Count 725 Count 725

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Surya Kant Prasad P19093 Sec-B

Distribution for Lungcap

HO : We assume the lungcap distribution of the population to follow Normal Distribution
~ N(7.863,2.66)
HA: The lungcap distribution doesn’t follow ~ N(7.863,2.66)
We construct the following frequency distribution with taking bin size such that the frequency
percentage is 10%.
Percentage Z-value Bin Frequency (fi) Expected fi-ei (fi-ei)2 (fi-ei)2/ei
Frequency
(ei)
10% -1.28 4.456 83 72.5 10.5 110.250 1.521
20% -0.84 5.627 62 72.5 -10.5 110.250 1.521
30% -0.52 6.479 67 72.5 -5.5 30.250 0.417
40% -0.25 7.198 61 72.5 -11.5 132.250 1.824
50% 0 7.863 72 72.5 -0.5 0.250 0.003
60% 0.25 8.529 74 72.5 1.5 2.250 0.031
70% 0.52 9.247 79 72.5 6.5 42.250 0.583
80% 0.84 10.099 71 72.5 -1.5 2.250 0.031
90% 1.28 11.271 88 72.5 15.5 240.250 3.314
More 68 72.5 -4.5 20.250 0.279
 cal

9.524
We get cal = 9.52
For significance level 5% and degrees of freedom 7 (=10-2-1), we have 7,0.05=14.064.
Since cal < 7,0.05 , p-value will be more than 5% . Hence we accept HO and lungcap distribution
follow ~ N(7.863,2.66).

Distribution for Height

HO : We assume the height distribution of the population to follow Normal Distribution
~ N(64.836,7.202)
HA: The height distribution doesn’t follow ~ N(64.836,7.202)
We construct the following frequency distribution with taking bin size such that the frequency
percentage is 10%.
Percentage Z-value Bin Frequency (fi) Expected fi-ei (fi-ei)2 (fi-ei)2/ei
Frequency
(ei)
10% -1.28 55.618 86 72.5 13.5 182.250 2.514
20% -0.84 58.786 64 72.5 -8.5 72.250 0.997
30% -0.52 61.091 64 72.5 -8.5 72.250 0.997
40% -0.25 63.036 69 72.5 -3.5 12.250 0.169
50% 0 64.836 61 72.5 -11.5 132.250 1.824
60% 0.25 66.637 79 72.5 6.5 42.250 0.583
70% 0.52 68.581 63 72.5 -9.5 90.250 1.245

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Surya Kant Prasad P19093 Sec-B

80% 0.84 70.886 70 72.5 -2.5 6.250 0.086

90% 1.28 74.055 98 72.5 25.5 650.250 8.969
More 71 72.5 -1.5 2.250 0.031
cal 17.414
We get cal = 17.414
For significance level 5% and degrees of freedom 7 (=10-2-1), we have 7,0.05=14.064.
Since cal > 7,0.05 , p-value will be less than 5% . Hence we reject HO and height distribution
doesn’t follow ~ (64.836,7.202).

Section-B

Q1.

Price

Mean 21343.14
Standard Error 348.6119
Median 18025
Mode 10921.95
Standard Deviation 9884.853
Sample Variance 97710315
Kurtosis 3.291149
Skewness 1.575795
Range 62116.54
Minimum 8638.931
Maximum 70755.47
Sum 17159888
Count 804

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Surya Kant Prasad P19093 Sec-B

Mileage

Mean 19831.93
Standard Error 289.0619
Median 20913.5
Mode 18910
Deviation 8196.32
Sample Variance 67179657
Kurtosis 0.183909
Skewness -0.13125
Range 50121
Minimum 266
Maximum 50387
Sum 15944875
Count 804

We observe that the sample variance of price is more than mileage. That means the spread of
price around average is more than that of mileage. So we can say that wide range of priced cars
have mileage closer to 19831.93.

Q2. Average
Price Range mileage (xi) Variance (i2) Sample Size(ni)
<190000 20241.52 64394503 467
19k-41k 19759.26 65564947 297
>41K 15589.65 95651556 40

Let 1,2 and 3 be the average of mileage of cars in the price range as given in the table. Whereas
12 ,22 and 32 are the variance of the respective car price range.
Hypothesis Statement
HO : 1= 2=3
HA : 1≠ 2≠3

We conducted Anova test. Since the p-Value is less than 0.05, we reject HO and state that the
average mileage of the cars in above price range are not equal.

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Q3.
Price-Chevrollet t-value Price
t+ 0.05,319 0.824822 16745.82
Mean 16427.6 t-0.95,319 -0.82482 16109.38
Standard Deviation 6901.439 CL= 636.4364
Sample Variance 47629867
Count 320
Confidence Level(90.0%) 636.4364 Or,else using t-distribution, s=6901.439/sqrt(320)
= 385.80

Q.4. 150
n

Sample Variance 16708238

171.507
149,0.1
CI Variance (90%) 14515607 (n-1)s2/149,0.1

Section-C:

Q1. Given 𝑌̅ ~ N(10), error = 0.5 for sample size n1.

Confidence Level =1- =0.954 or 
 Corresponding Z value for /2 =|Z0.023| =1.99
Now, from standard normal distribution |Z/2|=(𝑌̅- /(sqrt(n1)).
Or, error = |Z/2|x(sqrt(n1))
Or, 0.5=1.99xsqrt(10)/sqrt(n1)
Or, n1 = 1.992 x 10 / 0.52 = 158.4 ~ 159.
Q2. Given 𝑍̅~ N(9), error = 1
Confidence Level =1- =0.9 or 
 Corresponding Z value for /2 =|Z0.05| =1.65
Now, from standard normal distribution |Z/2|=( 𝑍̅- /(sqrt(n2)).
Or, error = |Z/2|x(sqrt(n2))
Or, 1=1.65 x sqrt(9)/sqrt(n2)
Or, n2 = 1.652 x 9 / 12 = 24.5 ~ 25.
Q.3. 200 Random no. with size 159 from N(5,3) generated.

Q.4. Since we have taken the sample from a normal distribution N(5,3) each of size 159 (>30), the
average of 200 sample will follow normal distribution with N(5,3/159) which can be verified in the
descriptive statistics of the sample and histogram below.
Sample Mean = 5
Sample variance = 0.020

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Frequency
40
35
30
25
20
15
10
5
0

Bin Frequency Bin Frequency

4.61242 1 5.109468 30
4.674551 4 5.171599 24
4.736682 8 5.23373 9
4.798813 8 5.295861 3
4.860944 16 5.357992 1
4.923075 23 5.420123 2
4.985206 33 More 1
5.047337 37
Q.5. 200 Random no. with size 25 from N(5,3) generated.

Frequency
45
40
35
30
25
20
15
10
5
0

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Bin Frequency Bin Frequency

3.355843 1 5.431835 40
3.615342 2 5.691334 17
3.874841 1 5.950834 14
4.13434 5 6.210333 11
4.393839 16 6.469832 2
4.653338 19 6.729331 1
4.912837 31 More 2
5.172336 38

Section D:
Q.1. I collected stock price of Tata motors, Maruti Suzuki, Mahindra & Mahindra, Hero, Ashok Leyland
from 01.01.2016 to 30.06.2016.

Q2. Histogram of stock returns

Q.3. HO: Average stock returns of the five companies taken are equal (R1 = R2 = R3 = R4 = R5)
HO: Atleast one of average stock return is not equal to other stock returns.
Reject HO if p value < 0.05

Since the p-Value is greater than 0.05, we accept the HO and state that the average return of the
said companies are equal.

Anova: Single Factor

SUMMARY
Groups Count Sum Average Variance
Column 1 123 -0.08929 -0.00073 0.000389
Column 2 123 -0.32103 -0.00261 0.000528
Column 3 123 -0.25588 -0.00208 0.000457
Column 4 123 0.067323 0.000547 0.000298
Column 5 123 0.167521 0.001362 0.000262

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ANOVA
Source of Variation SS df MS F P-value F crit
Between Groups 0.001397 4 0.000349 0.90372 0.461334 2.38654
Within Groups 0.235817 610 0.000387

Total 0.237214 614

Q4./5. Hypothesis Statement

HO: Average stock returns of each pair of companies are equal.
HA: Average stock returns of each pair of companies are not equal.
Rejection Rule:
tcal lies in rejection region or tcal>t+0.975,df or tcal<t- 0.025,df
Observation:
In all the cases t-0.025,df <tcal<t+0.975,df, i.e lies in acceptance region. Hence we don’t have sufficient
reasons to reject HO and state that for all the pair of companies averages of stock returns are
equal.

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Section E)

a)

Bin Frequency

3.2
3.4
2
0
Airel Compact
3.6 3 6
Frequency

3.8 3
4 1 4
4.2 2 2
4.4 2
0 Frequency
4.6 2
4
4.2

4.8
5
3.2
3.4
3.6
3.8

4.4
4.6

5.2
More

4.8 0
5 3
5.2 1 Bin
More 0

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H0: Ariel Compact data follows Normal Distribution.

H1: Ariel Compact data does not follow Normal Distribution.
α – Level = 5%.

From Goodness of fit test we find the below table:

Parameter Value
Mean 4.1125
Variance 0.341809
Standard Deviation 0.584645
Chi-Square statistic 43.23777
Degrees of Freedom 2
5% Chi-Square Critical Value 0.10258
KS – Statistic 0.14187
5% KS Critical Value 0.294

Since .102 > 5%, we cannot reject null at 5% significance level and hence we can assume Ariel Compact
“Image” values is following normal distribution.
b) H0 : µ1=µ2=µ3=µ4=µ5
H1: Any other alternatives
α – level = 0.05 , R=5
Source of Variation SS df MS F P-value F crit
Rows 6.8504 19 0.360547 1.887215 0.027545 1.725029
Columns 45.1604 4 11.2901 59.09582 1.4E-22 2.492049
Error 14.5196 76 0.191047
Total 66.5304 99

FINV(0.05,4,15)=2.674
F-critical> 2.674, Hence, we can reject null at 5% significance level.
c)
H0 : 𝜎12 = 𝜎22

H1: 𝜎12 ≠ 𝜎22

DR: Reject null if 𝑠12/𝑠22 > K or 𝑠12/𝑠22 < L

P(Reject null | H0 true) = 0.05

P(𝑠12/𝑠22 > K or 𝑠12/𝑠22 < L | H0 true) = 0.05

P(𝑠12/𝑠22 > K | H0 true) = 2.5%

P((𝑠12 * 𝜎12 /𝑠22 * 𝜎22 )> K*𝜎12/𝜎22 | H0 true) = 2.5%

When H0 true, 𝜎12= 𝜎22 .

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Surya Kant Prasad P19093 Sec-B

P(Fn1-1,n2-1 > K) = 2.5%

P(F19,19 > K) = 2.5%

K = 2.5264.

𝑠12/𝑠22 = 0.326737/0.251868 = 1.2975

𝐾 > 𝑠12/𝑠22 , cannot reject null at 5% significance level.

d)
Brand Average Image Score
AC 4.16
AS 4.185
SE 4.585
SB 4.115
R 2.635
Highest average image score is for brand SE. It has the “Best Image”.
e) SE is the best image brand.
N = 20, Sample Mean = 4.585, Sample Standard Deviation S = 0.3232
Confidence Interval = (Sample Mean - tα/2S/√𝑁 , Sample Mean + tα/2S/√𝑁)
(1-α)% = 95% => α% = 5% => α/2% = 2.5% , t0.025,14 = 2.093
Confidence Interval = (4.585 – 2.093*0.3232/√20, 4.585 + 2.093*0.3232/√20) = (4.4338,4.7362)
f) N=100, 𝜎=0.67
P(a < 𝜎2 < b) = 90% => P(1/b < 1/ 𝜎2 < 1/a) = 90%
P((N-1)S2/b < (N-1)S2/ 𝜎2 < (N-1)S2/a) = 90%
(N-1)S2/ 𝜎2 will follow χ2N−1 distribution, N = 100.
P((N-1)S2/b < χ299 < (N-1)S2/a) = 90%
Using excel we find that
P(χ299 < 77.04633) = 0.05 => (N-1)S2/b = 77.04633 => b = 0.8635
P(χ299 < 123.2252) = 0.95 => (N-1)S2/a = 123.2252 => a = 0.5399
Confidence interval = (a,b) = (0.5399,0.8635)

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