Statistics for Economics and Finance
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Course Introduction
This course introduces the fundamental concepts and tools of statistics as applied to economics and finance. Students will explore data collection methods, descriptive statistics, probability theory, and the basics of inferential statistics such as hypothesis testing and confidence intervals. Emphasis is placed on understanding and applying statistical techniques to real-world economic and financial data, including regression analysis, time series analysis, and risk assessment. By the end of the course, students will be equipped to interpret statistical results, make informed decisions, and critically analyze quantitative information in the context of economic and financial environments.
Recommended Textbook Essentials of Business Statistics 1st Canadian Edition by Ken Black
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Page 2
Chapter 1: Introduction to Statistics
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Sample Questions
Q1) Sue Taylor, Director of Global Industrial Sales, is concerned by a deteriorating sales trend. Specifically, the number of industrial customers is stable at 1,500, but they are purchasing less each year. She orders her staff to search for causes of the downward trend by selecting a focus group of 40 industrial customers. For this study, the set of 40 industrial customers is ___.
A) a parameter
B) a sample
C) the population
D) a statistic
E) the frame
Answer: B
Q2) Calculation of population parameters is usually either impossible or excessively time consuming and costly.
A)True
B)False
Answer: True
Q3) List the four key elements of business statistics.
Answer: Collect data, analyze data, interpret data, and present findings.
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3
Chapter 2: Organizing and Visualizing Data
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Sample Questions
Q1) Consider a scatterplot showing the relationship between years of formal education and life expectancy. Which of the following statements is false?
A) If more years of formal education are correlated with higher life expectancy, then the scatterplot would exhibit a positive slope.
B) If more years of formal education are not correlated with higher life expectancy, then the scatterplot would exhibit a flat slope.
C) If more years of formal education are not correlated with higher life expectancy, then the scatterplot would exhibit a flat or negative slope.
D) If more years of formal education are negatively correlated with higher life expectancy, then the scatterplot would exhibit a negative slope.
E) If other research shows a causal effect between years of formal education and higher life expectancy (additional years of formal education cause a higher life expectancy), then the scatterplot could not be flat.
Answer: C
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Chapter 3: Descriptive Statistics
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Sample Questions
Q1) The sample standard deviation is calculated by taking the square root of the population standard deviation.
A)True
B)False
Answer: False
Q2) A statistics student made the following grades on five tests: 84, 78, 88, 72, and 72.
What is the median grade?
A) 88
B) 72
C) 78
D) 80
E) 82
Answer: C
Q3) You do \(\textbf{ not }\) need to highlight the data in Excel to use it for your analysis.
A)True
B)False
Answer: False
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Chapter 4: Gathering Data
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Sample Questions
Q1) On Saturdays, cars arrive at David Zebda's Scrub and Shine Car Wash at the rate of 80 cars per hour during the ten-hour shift. David wants a sample of 40 Saturday customers to answer the long version of his quality service questionnaire. He randomly selects 9 as a starting point and instructs the crew to select the 9th customer and each customer at intervals of 20 (9, 29, 49, etc.). His sample is a ___.
A) convenience sample
B) simple random sample
C) unsystematic sample
D) stratified sample
E) systematic sample
Q2) What is the difference between a census and a sample?
Q3) In some situations, sampling may be the only option because the population is inaccessible.
A)True
B)False
Q4) A population list, map, directory, or other source used to represent the population from which a sample is taken is called a frame.
A)True
B)False
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Chapter 5: Probability
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Sample Questions
Q1) If E and F are mutually exclusive, then ___.
A) the probability of the union is zero
B) P(E) = 1 - P(F)
C) the probability of the intersection is zero
D) the probability of the union is one
E) P(E) = P(F)
Q2) If two events are mutually exclusive, then the two events are also independent. A)True
B)False
Q3) If two events are mutually exclusive, then their joint probability is always zero. A)True
B)False
Q4) Given that two events, A and B, are independent, if the marginal probability of A is 0.6, the conditional probability of A given B will be 0.4. A)True B)False
Q5) The list of all elementary events for an experiment is called the sample space. A)True
B)False
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Chapter 6: Decision Analysis and Expected Value
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Sample Questions
Q1) The volume of liquid in an unopened 5.68 litre can of paint is an example of ___.
A) the binomial distribution
B) both discrete and continuous variable
C) a continuous random variable
D) a discrete random variable
E) a constant
Q2) The mean or the expected value of a discrete distribution is the long-run average of the occurrences.
A)True
B)False
Q3) To compute the variance of a discrete distribution, it is \(\textbf{ not }\) necessary to know the mean of the distribution.
A)True
B)False
Q4) The variance of a discrete distribution increases if we add a positive constant to each one of its value.
A)True
B)False
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Chapter 7: Discrete Probability Distributions
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Sample Questions
Q1) If x is a binomial random variable with n = 10 and = 0.8, the standard deviation of x is ___.
A) 8.0
B) 1.26
C) 1.60
D) 64.0
E) 10
Q2) For the Poisson distribution the mean represents twice the value of the standard deviation.
A)True
B)False
Q3) The service centre of an automotive dealership expects an average of 4 complaints per day. Assume the number of complaints per day is described by a Poisson distribution,
a) what is the probability of at least 2 complaints?
b) how many complaints would you expect in a 2 day period?
Q4) At A-Life Corporation, managers begin at $35/hour until they reach $50/hour. If the variable x = hourly wage has a discrete uniform distribution, what is the probability that a manager's wage is between $42 and $45?
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Chapter 8: Continuous Distributions
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Sample Questions
Q1) Let z be a normal random variable with mean 0 and standard deviation 1. The 90<sup>th</sup> percentile of z is ___.
A) 1.645
B) -1.25
C) 1.96
D) 1.28
E) -1.645
Q2) The standard normal distribution is also called a finite distribution because its mean is zero and standard deviation one, always.
A)True
B)False
Q3) A standard normal distribution has the following characteristics:
A) the mean and the variance are both equal to 1.
B) the mean and the variance are both equal to 0.
C) the mean is equal to the variance.
D) the mean is equal to 0 and the variance is equal to 1.
E) the mean is equal to the standard deviation.
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Chapter 9: Sampling Distributions
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Sample Questions
Q1) Increasing the sample size causes the numerical value of standard error of the sample means to increase.
A)True
B)False
Q2) According to the central limit theorem, for samples of size 64 drawn from a population with \(\mu\) = 800 and \(\sigma\)= 56, the standard deviation of the sampling distribution of sample means would equal ___.
A) 7
B) 8
C) 100
D) 800
E) 80
Q3) Suppose 30% of the population has green eyes. If a random sample of size 1200 is drawn, then the probability that less than 348 U.S. citizens have green eyes is ___.
A) 0.2236
B) 0.2764
C) 0.2900
D) 0.7764
E) 0.3336
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Page 11
Chapter 10: Confidence Intervals
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Sample Questions
Q1) A researcher is interested in estimating the mean weight of a semi-tracker truck to determine the potential load capacity. She takes a random sample of 17 trucks and computes a sample mean of 20,000 pounds with sample standard deviation of 1,500. The 95% confidence interval for the population mean weight of a semi-tracker truck is
A) 19,232 to 20,768
B) 19,365 to 20,635
C) 19,229 to 20,771
D) 19,367 to 20,633
E) 119.89 to 122.12
Q2) If you need to estimate the population mean within 2.5 units and with a confidence level of 95%, the minimum value observed is 15 and the maximum 65. What sample size would you use?
A) 9
B) 10
C) 81
D) 96
E) 97
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Chapter 11: Hypothesis Testing for Single Populations
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Sample Questions
Q1) Power is equal to (1 -\(\beta\)), the probability of a test rejecting the null hypothesis that is indeed \(\textbf{ false. }\)
A)True
B)False
Q2) In performing a hypothesis test where the null hypothesis is that the population mean is 6.9 against the alternative hypothesis that the population mean is \(\textbf{ not }\) equal to 6.9, a random sample of 16 items is selected. The sample mean is 7.1 and the sample standard deviation is 2.4. It can be assumed that the population is normally distributed. The level of significance is selected as 0.05. The critical t value for this problem is ___.
A) 1.753
B) 2.947
C) 2.120
D) 2.131
E) 2.311
Q3) When a \(\textbf{ false }\) null hypothesis is rejected, the researcher has made a Type II error.
A)True
B)False
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Page 13
Chapter 12: Hypothesis Testing for Two Populations
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Sample Questions
Q1) If the populations are normally distributed and the variances of the two populations are \(\textbf{ not }\) equal, it is appropriate to use the "unpooled" formula to determine the t statistic for the hypothesis test of the difference in the two population means.
A)True
B)False
Q2) A researcher wishes to determine the difference in two population means. To do this, she randomly samples 9 items from each population and computes a 90% confidence interval. The sample from the first population produces a mean of 780 with a standard deviation of 240. The sample from the second population produces a mean of 890 with a standard deviation of 280. Assume that the values are normally distributed in each population. The point estimate for the difference in the means of these two populations is ___.
A) -110
B) 40
C) -40
D) 0
E) 240
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14
Chapter 13: Analysis of Variance Anova
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Sample Questions
Q1) A completely randomized design has been analyzed by using a one-way ANOVA. There are three treatment groups in the design, and each sample size is four. The mean for group 1 is 25.00 and for group 3 it is 27.50. MSE is 3.19. Using =0.05 there is a significant difference between these two groups.
A)True
B)False
Q2) The statistical methods of analysis of variance assume that the populations are normally distributed.
A)True
B)False
Q3) Determining the table value for the F distribution requires two values for degrees of freedom.
A)True B)False
Q4) The statistical methods of analysis of variance assume equal sample means. A)True
B)False
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Chapter 14: Linear Correlation and Simple Linear Regression Analysis
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Sample Questions
Q1) In simple regression analysis the error terms are assumed to be independent and normally distributed with zero mean and constant variance.
A)True
B)False
Q2) A quality manager is developing a regression model to predict the total number of defects as a function of the day of week the item is produced. Production runs are done 10 hours a day, 7 days a week. The explanatory variable is ___.
A) day of week
B) production run
C) percentage of defects
D) number of defects
E) number of production runs
Q3) The coefficient of determination is the proportion of variability of the dependent variable (y) accounted for or explained by the independent variable (x).
A)True
B)False
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Chapter 15: Categorical Versus Categorical: Tests
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Sample Questions
Q1) The null hypothesis for a chi-square test of independence is that the two variables are not related.
A)True
B)False
Q2) A travel agent believes that vacation destinations are independent of the region of the country that the vacationer resides. She has compiled a table with six vacation destinations and five regions throughout Canada. When applying a chi-square test of independence to this table, the number of degrees of freedom is ___.
A) 9
B) 20
C) 30
D) 11
E) 12
Q3) A two-way table used for a test of independence is sometimes called a contingency table.
A)True
B)False
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