Applied Business Statistics
Test Preparation
Course Introduction
Applied Business Statistics equips students with the foundational statistical concepts and analytical techniques essential for data-driven decision-making in business environments. The course covers topics such as descriptive statistics, probability distributions, hypothesis testing, regression analysis, and quality control methods. Through the use of software applications and real-world business data, students learn to collect, interpret, and present quantitative information effectively. Emphasis is placed on applying statistical tools to solve practical business problems in areas such as marketing, finance, operations, and management, fostering critical thinking and evidence-based reasoning skills.
Recommended Textbook
Business Statistics Communicating with Numbers 3rd Edition by Sanjiv Jaggia
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20 Chapters
2578 Verified Questions
2578 Flashcards
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Chapter 1: Statistics and Data
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102 Verified Questions
102 Flashcards
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Sample Questions
Q1) Philadelphia experienced a record amount of rainfall in August. During the last week of the month, the city received additional rain from a hurricane. Because global warming is thought to cause extreme weather patterns, one conclusion that could be drawn is that these patterns are evidence of global warming. What is wrong with this conclusion?
Answer: The existence or nonexistence of climate change cannot be based on one month's worth of data. We must instead look at long-term trends.
Q2) Unstructured data conforms to a predefined row-column format.
A)True
B)False
Answer: True
Q3) Which scales of data measurement are associated with quantitative data?
A) Interval and ratio
B) Ratio and nominal
C) Ordinal and interval
D) Nominal and ordinal
Answer: A
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Chapter 2: Tabular and Graphical Methods
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Sample Questions
Q1) When displaying quantitative data, what is an ogive used to plot?
A) Frequency or relative frequency of each class against the midpoint of the corresponding class
B) Cumulative frequency or cumulative relative frequency of each class against the upper limit of the corresponding class
C) Frequency or relative frequency of each class against the midpoint of the corresponding class and cumulative frequency or cumulative relative frequency of each class against the upper limit of the corresponding class
D) None of the above
Answer: B
Q2) For qualitative data, a frequency distribution groups data into ________ and records the number of ________.
Answer: categories; observations
Q3) A scatterplot depicts a positive ________ relationship, if as x increases, y tends to increase at an increasing rate.
Answer: curvilinear
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4
Chapter 3: Numerical Descriptive Measures
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Sample Questions
Q1) The covariance between the returns on two assets is negative. This occurs when
A) the variance of one asset has a negative linear relationship with the variance of the other asset
B) the standard deviation of one asset has a positive linear relationship with the standard deviation of the other asset
C) on average, the return on one asset is below its expected value and the return on the other asset is above its expected value
D) on average, the return on one asset is below its expected value and the return on the other asset is below its expected value
Answer: C
Q2) In a data set, an outlier is a large or small value regarded as an extreme value in the data set.
A)True
B)False
Answer: True
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Chapter 4: Introduction to Probability
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Sample Questions
Q1) Consider these events.
A = The survey respondent is less than 40 years old.
B = The survey respondent is 40 years or older.
Events A and B are mutually exclusive and exhaustive.
A)True
B)False
Q2) Let P(A) = 0.6, P(B) = 0.3, and P(A B<sup>C</sup>) = 0.1. Calculate P(A B).
A) 0
B) 0.3
C) 0.9
D) Not enough information to calculate.
Q3) Which of the following is not an event when considering the sample space of tossing two coins?
A) {HH, HT}
B) {HH, TT, HT}
C) {HH, TT, HTH}
D) {HH, HT, TH, TT}
Q4) The intersection of two events is the event consisting of all outcomes in A ________ B.
Q5) Probabilities can be expressed as fractions, percentages, and ________.
Page 6
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Chapter 5: Discrete Probability Distributions
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Sample Questions
Q1) Which of the following statements is the most accurate about a binomial random variable?
A) It has a bell-shaped distribution.
B) It is a continuous random variable.
C) It counts the number of successes in a given number of trials.
D) It counts the number of successes in a specified time interval or region.
Q2) A construction company found that on average its workers get into four car accidents per week.
A) What is the probability of exactly six car accidents in a random week?
B) What is the probability that there are fewer than two car accidents in a random week?
C) What is the probability that there are exactly eight car accidents over the course of three weeks?
Q3) A risk-loving consumer will take on risk even if the expected gain is negative. A)True
B)False
Q4) An urn is filled with three different colors of balls: red, blue, and white. There are three red balls, seven blue balls, and five white balls. If four balls are drawn, what is the probability of drawing two blue balls?
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Page 7
Chapter 6: Continuous Probability Distributions
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Sample Questions
Q1) The time for a professor to grade a student's homework in statistics is normally distributed with a mean of 12.6 minutes and a standard deviation of 2.5 minutes. What is the probability that randomly selected homework will require less than 16 minutes to grade?
A) 0.1401
B) 0.5910
C) 0.7734
D) 0.9131
Q2) Patients scheduled to see their primary care physician at a particular hospital wait, on average, an additional eight minutes after their appointment is scheduled to start. Assume the time that patients wait is exponentially distributed. What is the probability a randomly selected patient will see the doctor within five minutes of the scheduled time?
A) 0.2019
B) 0.4647
C) 0.5353
D) 0.7981
Q3) The standard normal table is also referred to as the z table.
A)True
B)False
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8
Chapter 7: Sampling and Sampling Distributions
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Sample Questions
Q1) How does the variance of the sample mean compare to the variance of the population?
A) It is smaller and therefore suggests that averages have less variation than individual observations.
B) It is larger and therefore suggests that averages have less variation than individual observations.
C) It is smaller and therefore suggests that averages have more variation than individual observations.
D) It is larger and therefore suggests that averages have more variation than individual observations.
Q2) The central limit theorem approximation improves as the sample size decreases. A)True
B)False
Q3) The central limit theorem states that, for any distribution, as n gets larger, the sampling distribution of the sample mean ________.
A) becomes larger
B) becomes smaller
C) is closer to a normal distribution
D) is closer to the standard deviation
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Chapter 8: Interval Estimation
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Sample Questions
Q1) The ________ determine the extent of the broadness of the tails of the distribution.
Q2) Professors of accountancy are in high demand at American universities. A random sample of 28 new accounting professors found the average salary was $135 thousand with a standard deviation of $16 thousand. Assume the distribution is normally distributed. Construct a 95% confidence interval for the salary of new accounting professors. Answers are in thousands of dollars.
A) [102.1680, 167.832]
B) [127.8247, 142.1753]
C) [128.7958, 141.2042]
D) [129.0735, 140.9265]
Q3) Excel does not have a special function that allows to calculate t values.
A)True
B)False
Q4) For a given sample size n and population standard deviation , the width of the confidence interval for the population mean is wider, the smaller the confidence level 100(1 - )%.
A)True
B)False
Q5) The confidence coefficient is equal to ________.
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Chapter 9: Hypothesis Testing
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Sample Questions
Q1) A university is interested in promoting graduates of its honors program by establishing that the mean GPA of these graduates exceeds 3.50. A sample of 36 honors students is taken and is found to have a mean GPA equal to 3.60. The population standard deviation is assumed to equal 0.40. The parameter to be tested is ________.
A) the mean GPA of all university students
B) the mean GPA of the university honors students
C) the mean GPA of 3.60 for the 36 selected honors students
D) the proportion of honors students with a GPA exceeding 3.50
Q2) The alternative hypothesis typically agrees with the status quo.
A)True
B)False
Q3) A Type II error is made when we reject the null hypothesis and the null hypothesis is actually false.
A)True
B)False
Q4) We define the allowed probability of making a Type I error as , and we refer to 100 % as the ________.
Q5) The hypothesis statement H: < 60 is an example of a(an) ________ hypothesis.
Q6) The hypothesis statement H: µ = 25 is an example of a(an) ________ hypothesis.
Page 11
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Chapter 10: Statistical Inference Concerning Two Populations
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Sample Questions
Q1) A statistics professor at a large university hypothesizes that students who take statistics in the morning typically do better than those who take it in the afternoon. He takes a random sample of 36 students who took a morning class and, independently, another random sample of 36 students who took an afternoon class. He finds that the morning group scored an average of 74 with a standard deviation of 8, while the evening group scored an average of 68 with a standard deviation of 10. The population standard deviation of scores is unknown but is assumed to be equal for morning and evening classes. Let µ<sub>1</sub> and µ<sub>2</sub> represent the population mean final exam scores of statistics' courses offered in the morning and the afternoon, respectively. At the 1% significance level, does the evidence support the professor's claim?
A) No, because the test statistic is less than the critical value.
B) Yes, because the test statistic is less than the critical value.
C) No, because the test statistic is greater than the critical value.
D) Yes, because the test statistic is greater than the critical value.
Q2) For a hypothesis test about the difference of two proportions, the standard error can be improved on when the hypothesized difference does not equal zero.
A)True
B)False
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Chapter 11: Statistical Inference Concerning Variance
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Sample Questions
Q1) The skewness of the chi-square distribution depends on the degrees of freedom.
A)True
B)False
Q2) The formula for the confidence interval of the population variance <sup>2</sup> is valid for the random samples drawn from any population.
A)True
B)False
Q3) Statistical inference for <sup>2</sup> is based on the F distribution.
A)True
B)False
Q4) The sample mean and the sample standard deviation of annual returns on a stock over a 12-year period as computed by a stock analyst were 18% and 12%, respectively. The analyst wants to know if the risk, as measured by the standard deviation, differs from 15%.
A) Construct a 90% confidence interval of the population variance and the population standard deviation.
B) What assumption is required in constructing the confidence interval?
C) Based on the above confidence interval, does the risk differ from 15%?
Q5) The F distribution depends on ________ degrees of freedom.
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Chapter 12: Chi-Square Tests
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Sample Questions
Q1) If the null hypothesis is rejected by the goodness-of-fit test, the alternative hypothesis specifies which of the population proportions differ from their hypothesized values.
A)True
B)False
Q2) When applying the goodness-of-fit test for normality, the data are divided into k non-overlapping intervals.
A)True
B)False
Q3) For the Jarque-Bera test for normality, the null and alternative hypotheses are
A) H<sub>0</sub>: S < 0 and K > 0, H<sub>A</sub>: S < 0 or K < 0
B) H<sub>0</sub>: S < 0 and K = 0, H<sub>A</sub>: S > 0 or K 0
C) H<sub>0</sub>: S = 0 and K = 0, H<sub>A</sub>: S 0 or K 0
D) H<sub>0</sub>: S = 0 and K > 0, H<sub>A</sub>: S 0 or K < 0
Q4) The chi-square goodness-of-fit test is a right-tailed test.
A)True
B)False
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Page 14
Chapter 13: Analysis of Variance
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120 Flashcards
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Sample Questions
Q1) Which of these null hypotheses is applicable for a two-way ANOVA test with interaction?
A) There is interaction between factors A and B.
B) Factor A and factor B means differ.
C) There is no interaction between factors A and B.
D) Factor A and factor B means do not differ.
Q2) If the interaction between two factors is not significant, the next tests to be done are ________.
A) none, the analysis is complete
B) none, gather more data
C) tests about the population means of factor A or factor B using two-way ANOVA without interaction
D) Tukey's confidence intervals
Q3) When using Fisher's Least Significant Difference (LSD) where each interval has an error of , the probability of committing a Type I error for at least one of the individual confidence intervals increases as the number of pairwise comparisons increases.
A)True
B)False
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Chapter 14: Regression Analysis
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140 Verified Questions
140 Flashcards
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Sample Questions
Q1) Which of the following Excel functions returns the sample correlation coefficient?
A) CORRELATION
B) CORREL
C) CORREL.S
D) COVARIANCE.S
Q2) Over the past 30 years, the sample standard deviations of the rates of return for stock X and Stock Y were 0.20 and 0.12, respectively. The sample covariance between the returns of X and Y is 0.0096. To determine whether the correlation coefficient is significantly different from zero, the appropriate hypotheses are ________.
A) H<sub>0</sub>: = 0, H<sub>A</sub>: 0
B) H<sub>0</sub>: <sub>xy</sub> = 0, H<sub>A</sub>: <sub>xy</sub> 0
C) H<sub>0</sub>: = 1, H<sub>A</sub>: 1
D) H<sub>0</sub>: <sub>xy</sub> = 1, H<sub>A</sub>: <sub>xy</sub> 1
Q3) The sample correlation coefficient cannot equal zero.
A)True
B)False
Q4) We use ________ to derive the coefficient of determination.
Q5) The correlation coefficient captures only a ________ relationship.
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Chapter 15: Inference With Regression Models
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Sample Questions
Q1) A sample of 200 monthly observations is used to run a simple linear regression: Returns = <sub>0</sub> + <sub>1</sub> Leverage + . A 5% level of significance is used to study if leverage has a significant influence on returns. The value of the test statistic for the regression coefficient of Leverage is calculated as t<sub>198</sub> = -1.09, with an associated p-value of 0.2770. The correct decision is to ________.
A) reject the null hypothesis; we can conclude that leverage significantly explains returns
B) reject the null hypothesis; we cannot conclude that leverage significantly explains returns
C) not reject the null hypothesis; we cannot conclude that leverage significantly explains returns
D) not reject the null hypothesis; we can conclude that leverage significantly explains returns
Q2) When some explanatory variables of a regression model are strongly correlated, this phenomenon is called serial correlation.
A)True
B)False
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Chapter 16: Regression Models for Nonlinear Relationships
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Sample Questions
Q1) When not all variables are transformed with logarithms, the models are called ________ models.
Q2) For the exponential model ln(y) = <sub>0</sub> + <sub>1</sub>x + , if x increases by one unit, then E(y) changes by approximately
A) <sub>1</sub> × 100%
B) <sub>1 </sub>× 100 units
C) <sub>1</sub>%
D) <sub>1 </sub>units
Q3) A model in which both the response variable and the explanatory variable have been log transformed is called a(n) ________.
A) exponential model
B) logarithmic model
C) linear model
D) log-log model
Q4) A cubic regression model is a polynomial regression model of order 2.
A)True
B)False
Q5) The cubic regression model allows for ________ change(s) in slope.
Q6) The quadratic regression model allows for one change in ________.
Page 18
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Chapter 17: Regression Models With Dummy Variables
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Sample Questions
Q1) For the logit model, the predicted values of the response variables can always be interpreted as probabilities.
A)True
B)False
Q2) Gender is an example of ________ variable.
Q3) Which of the following predictions can be described by a binary choice model?
A) Predict the day's temperature in degrees Fahrenheit.
B) Predict whether a student will pass or fail a test.
C) Predict today's price of gasoline per gallon in dollars.
D) Predict the rainfall in millimeters today.
Q4) A dummy variable can be used to create a(n) ________ variable between the dummy variable and a quantitative variable x, which allows the predicted y to differ between the two categories by a varying amount across the values of x.
Q5) A binary choice model is also referred to as a discrete choice model.
A)True
B)False
Q6) The logit model can be estimated with standard ordinary least squares.
A)True
B)False
Page 19
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Chapter 18: Time Series and Forecasting
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Sample Questions
Q1) Which of the following R functions is used to do the exponential smoothing method?
A) EMA
B) SMA
C) DLM
D) LM
Q2) Which of the following is a centered moving average?
A) The average of all moving averages in a series.
B) The average of all observations of a series.
C) The average of alternative moving averages in a series.
D) The average of two consecutive moving averages in a series.
Q3) Which of the following models is not called a causal forecasting model?
A) y<sub>t</sub> = <sub>0</sub> + <sub>1</sub>t + <sub>1</sub>y<sub>t</sub><sub>-1</sub> + <sub>t</sub>
B) y<sub>t </sub>= <sub>0</sub> + <sub>1</sub>y<sub>t</sub><sub>-1</sub> + <sub>t</sub>
C) y<sub>t </sub>= <sub>0</sub> + <sub>1</sub>t + <sub>t</sub>
D) y<sub>t</sub> = <sub>0</sub> + <sub>1</sub>x<sub>t</sub><sub>-1</sub> + <sub>t</sub>
Q4) ________ patterns are caused by the presence of a random error term.
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Chapter 19: Returns, Index Numbers, and Inflation
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Sample Questions
Q1) A ________ series is obtained by adjusting the given time series for changes in prices, or inflation.
Q2) Which of the following statements is true about the comparison between the Laspeyres and Paasche indices?
A) The Laspeyres index is more expensive to compute than the Paasche index.
B) The data requirements are more stringent for the Laspeyres index than for the Paasche index.
C) Unlike the Laspeyres index, the Paasche index incorporates current expenditure patterns of consumers.
D) Unlike the Paasche index, the Laspeyres index requires that the weights be updated each year and the index numbers be recomputed for all of the previous years.
Q3) Because both the Laspeyres and Paasche indices are weighted aggregate price indices, they will yield the same value for a given evaluation period. A)True B)False
Q4) The ________ price index uses quantities evaluated in the base period to compute the weighted aggregate price index.
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21
Chapter 20: Nonparametric Tests
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Sample Questions
Q1) For the Kruskal-Wallis test with n<sub>i</sub> 5, the sampling distribution of the test statistic, H, can be approximated by the ________.
A) normal distribution
B) F distribution
C) chi-square distribution
D) t distribution
Q2) If the distributional assumptions of a parametric test are valid yet we choose to use a nonparametric test, the nonparametric test is more powerful.
A)True
B)False
Q3) The Wilcoxon signed-rank test for a population median does not assume anything about the distribution of the population.
A)True
B)False
Q4) If we wish to compare central tendencies from nonnormal populations, then the Wilcoxon signed-rank test serves as the nonparametric counterpart to the ________ test.
Q5) The Kruskal-Wallis test is always a ________-tailed test.
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