Exercise

1. According to the U.S. Census Bureau, approximately 6% of all workers in Jackson,

Mississippi, are unemployed. In conducting a random telephone survey in Jackson, what is
the probability of getting two or fewer unemployed workers in a sample of 20?
2. Bank customers arrive randomly on weekday afternoons at an average of 3.2 customers every
4 minutes. What is the probability of having more than 7 customers in a 4-minute interval on
a weekday afternoon?
3. Monthly sales have a mean of $25,000 and a standard deviation of $4,000. Profits are
calculated by multiplying sales by 30% and subtracting fixed costs of $6,000. Find the mean
monthly profit. Find the standard deviation of monthly profits.
4. Consider an investor who forms a portfolio, consisting of only two stocks, by investing
$4,000 in one stock and $6,000 in a second stock. Suppose that the results after 1 year are:
One-Year Results
Initial
Value of Investment
Rate of Return
Stock
on Investment
1
$4,000
R1 = .25 (25%)
2
$6,000
R2 =-.10 (-10%)
Calculate the returns rate and value after one year
5. An investor has decided to form a portfolio by putting 25% of his money into McDonalds
stock and 75% into Cisco Systems stock. The investor assumes that the expected returns will
be 8% and 15%, respectively, and that the standard deviations will be 12% and 22%,
respectively.
a Find the expected return on the portfolio.
b Compute the standard deviation of the returns on the portfolio assuming that
(i) the two stocks returns are perfectly positively correlated
(ii) the coefficient of correlation is .5
(iii) the two stocks returns are uncorrelated
6. Pat Statsdud is a (not good) student taking a statistics course. Pats exam strategy is to rely on
luck for the next quiz. The quiz consists of 10 multiple-choice questions. Each question has
five possible answers, only one of which is correct. Pat plans to guess the answer to each
question.
a. What is the probability that Pat gets no answers correct?
b. What is the probability that Pat gets two answers correct?
7. A statistics instructor has observed that the number of typographical errors in new editions of
textbooks varies considerably from book to book. After some analysis he concludes that the
number of errors is Poisson distributed with a mean of 1.5 per 100 pages. The instructor
randomly selects 100 pages of a new book. What is the probability that there are no typos?
8. Suppose that the instructor has just received a copy of a new statistics book. He notices that
there are 400 pages.
a What is the probability that there are no typos?

b What is the probability that there are five or fewer typos?

9. The amount of gasoline sold daily at a service station is uniformly distributed with a
minimum of 2,000 gallons and a maximum of 5,000 gallons. Find the probability that daily
sales will fall between 2,500 and 3,000 gallons. What is the probability that the service
station will sell at least 4,000 gallons? What is the probability that the station will sell exactly
2,500 gallons?
10. Suppose that at another gas station the daily demand for regular gasoline is normally
distributed with a mean of 1,000 gallons and a standard deviation of 100 gallons. The station
manager has just opened the station for business and notes that there is exactly 1,100 gallons
of regular gasoline in storage. The next delivery is scheduled later today at the close of
business. The manager would like to know the probability that he will have enough regular
gasoline to satisfy todays demands. Find the probability P(X < 1,100).
11. Consider an investment whose return is normally distributed with a mean of 10% and a
standard deviation of 5%.
a. Determine the probability of losing money.
b. Find the probability of losing money when the standard deviation is equal to 10%.
12. Two ideal dices are thrown. Let X be the score on first dice and Y be the larger of two scores.
a. Write down the joint distribution of X and Y.
b. Find mean, variance and covariance.
13. Find the probability that among 10,000 random digits, the digit 7 appears not more than 968
times.
14. Find an approximation to the probability that the number of aces (number 6) obtained in
12,000 rollings of a dice is between 1900 and 2150.
15. A bridge player had no ace in three consecutive hands. Did he have a reason to complain of
ill luck?