Statistics for Business
Homework Assignment 2
Question 1.
A survey of 545 college students asked: What is your favorite winter sport? And,
what type of college do you attend? The results are summarized below.
Favorite Winter Sport
College Type Total
Snowboarding Skiing Ice Skating
Junior college 68 41 46 155
Four-year college 84 56 70 210
Graduate School 59 74 47 180
Total 211 171 163 545
Using these 545 students as the sample, a student from this study is randomly
selected.
a. What is the probability of selecting a student whose favorite sport is skiing?
b. What is the probability of selecting a junior-college student?
c. If the student selected is a four-year-college student, what is the probability that
the student prefers ice skating?
d. If the student selected prefers snowboarding, what is the probability that the
student is in junior college?
e. If a graduate student is selected, what is the probability that the student prefers
skiing or ice skating?
Question 2.
The National Center for Health Statistics, housed within the U.S. Centers for
Disease Control and Prevention (CDC), tracks the number of adults in the United States
who have health insurance. According to this agency, the uninsured rates for Americans in
2018 are as follows: 5.1% of those under the age of 18, 12.4% of those ages 18–64, and
1.1% of those 65 and older do not have health insurance (CDC website). Approximately
22.8% of Americans are under age 18, and 61.4% of Americans are ages 18–64.
a. What is the probability that a randomly selected person in the United States is 65
or older?
b. Given that the person is an uninsured American, what is the probability that the
person is 65 or older?
Question 3.
A person is interested in constructing a portfolio.Two stocks are being considered.
Let x = percent return for an investment in stock 1, and y = percent return for an investment
in stock 2. The expected return and variance for stock 1 are E(x) = 8.45% and Var(x) = 25.
The expected return and variance for stock 2 are E(y) = 3.20% and Var(y) = 1. The
covariance between the returns is 𝜎!" = −3
a. What is the standard deviation for an investment in stock 1 and for an invest- ment
in stock 2? Using the standard deviation as a measure of risk, which of these stocks is the
riskier investment?
b. What is the expected return and standard deviation, in dollars, for a person who
invests $500 in stock 1?
c. What is the expected percent return and standard deviation for a person who
constructs a portfolio by investing 50% in each stock?
d. What is the expected percent return and standard deviation for a person who
constructs a portfolio by investing 70% in stock 1 and 30% in stock 2?
e. Compute the correlation coefficient for x and y and comment on the relationship
between the returns for the two stocks.
Question 4.
The NCAA estimates that the yearly value of a full athletic scholarship at in-state
public universities is $19,000. Assume the scholarship value is normally distributed with a
standard deviation of $2100.
a. For the 10% of athletic scholarships of least value, how much are they worth?
b. What percentage of athletic scholarships are valued at $22,000 or more?
c. For the 3% of athletic scholarships that are most valuable, how much are they
worth?
