Lahore University of Management Sciences

DISC 203 – Probability and Statistics

Fall 2013-14

Instructor Muhammad Asim

Room No. 4-39 SDSB Building
Office Hours MW 11:00 – 12:30
Email Muhammad.asim@lums.edu.pk
Telephone Ext. 5232
Secretary Abdul Basit
TA Office Hours TBA
Course URL (if any) www.lms.lums.edu.pk

Course Basics
Credit Hours 4
Lecture(s) Nbr of Lec(s) Per Week 2 Duration 100 minutes
Recitation/Lab (per week) Nbr of Lec(s) Per Week N/A Duration N/A
Tutorial (per week) Nbr of Lec(s) Per Week 1 Duration 75 minutes

Course Distribution
Core Yes
Elective
Open for Student Category
Close for Student Category

COURSE DESCRIPTION
This course is designed to provide students majoring in management, finance and other fields of business administration with an introductory
survey of the many applications of descriptive and inferential statistics. We first review techniques for organizing and presenting the raw data and
elementary probability theory. Next, we discuss various techniques to make inferences. Basic probability theory, sampling distribution and central
limit theorem shall be discussed. The idea of central limit theorem will naturally lead towards the confidence intervals and hypothesis tests for
mean and proportion. We follow this discussion with single and multiple regression analysis, model building, and design of experiments.

COURSE PREREQUISITE(S)

• Calculus I or Pre-Calculus
•
•

COURSE OBJECTIVES

• To develop statistical thinking and introduce students to the theory of inferential statistics
• To enable students to accomplish empirical projects by using appropriate statistical methods
• To enable students to critically assess statistical studies
• To serve as a sound foundation for Econometrics and advanced courses in Finance and Management
 Lahore University of Management Sciences
Learning Outcomes
By the end of the course, students should be able to:
• use a software for statistical analysis of data
• summarize the data in a useful and informative manner
• use the basic concepts of probability and random variables
• explain the concept of the sampling distribution of a static, and in particular describe the behavior of the sample mean
• describe the foundations of classical inference involving confidence intervals and hypothesis testing and apply inferential
methods
• apply modeling techniques in simple and multiple linear regression analysis
• discuss critical elements in the design of a sampling experiment and analyze designed experiments using analysis of variance
• analyze count data with two or more categories

Grading Breakup and Policy

Assignment(s): 10 %
Home Work:
Quiz(s): 20 %
Class Participation:
Attendance: 10 %
Midterm Examination: 25%
Project:
Final Examination: 35%

Examination Detail

Yes/No: Yes
Combine Separate: Combine
Midterm
Duration: 100 minutes
Exam
Preferred Date:
Exam Specifications: closed book, closed notes, calculators allowed

Yes/No: Yes
Combine Separate: Combine
Final Exam
Duration: 100 minutes
Exam Specifications: closed book, closed notes, calculators allowed

COURSE OVERVIEW
Recommended
Lecture Topics Objectives
Readings
Statistics, Data and Statistical Thinking Chapter 1 • Understand the nature and scope of
The Science of Statistics; Types of Statistical Statistics
1
Applications in Business; Fundamental Elements of Statistics;
Types of Data
Methods of Describing Sets of Data Chapter 2 • Choose a suitable way of presenting
2&3 Graphical Methods; Summation Notation; Central raw Statistical Data
Tendency; Variability; Relative Standing; Standard Deviation; • Discuss the advantages and
Distorting the Truth with Descriptive Techniques disadvantages of different ways of
representing data
• Calculate and interpret measures of
central tendency and variability
4 Lab Session • Describe data using Excel and Stata
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Probability Chapter 3 • Describe the sample space for
Events, Sample Spaces and Probability; Unions and certain random experiments
Intersections; Complementary Events; The Additive Rule and • Compute probabilities
5&6
Mutually Exclusive Events; Conditional Probability; The • Understand the notion of Random
Multiplicative Rule and Independent Events; Random Sampling
Sampling; Bayes’ Rule
Random Variables and Probability Distributions • Find probabilities for distributions
Two Types of Random Variables: over discrete sets
Discrete Random Variables: Probability Distributions for Chapter 4 • Calculate the mean and variance of
Discrete Random Variables; Expected Values of Discrete a discrete random variable
Random Variables; The Binomial Random Variable; The • Recognize cases where Binomial
Poisson Random Variable Distribution could be an appropriate
Continuous Random Variables: Probability Distributions for model; compute probabilities for a
Continuous Random Variables; The Uniform Distribution; Chapter 5 Binomial Distribution and
7, 8, 9 & 10 The Normal Distribution; Approximating a Binomial approximate Binomial probabilities
Distribution with a Normal Distribution; The Exponential using a Normal Distribution;
Distribution • Find probabilities for continuous
Sampling Distributions: The Concept of Sampling Chapter 6 distributions
Distributions; Properties of Sampling Distributions: • Use the key properties of the
Unbiasedness and Minimum Variance; The Sampling Normal Distributions
Distribution of the Sample Mean • Recognize cases where Poisson,
Uniform and Exponential
Distributions could be appropriate
and compute corresponding
probabilities
• Describe properties of the sampling
distribution of sample mean
• Understand and apply Central Limit
Theorem
Inference Based on a Single Sample: • Calculate and interpret Confidence
Estimation with Confidence Intervals Chapter 7 Intervals and Confidence Levels
Large-Sample Confidence interval for a Population Mean; • Remember steps in Classical
Small-Sample Confidence Interval for a Population Mean; Hypothesis testing
Large-Sample Confidence Interval for a Population • Describe Type I and Type II Errors
Proportion; Determining the sample size; Sample Survey • Conduct Tests of Hypothesis
Designs according to a given situation and
11 , 12 & 13 Tests of Hypothesis interpret the results.
The Elements of a Test of Hypothesis; Large-Sample Test of Chapter 8
Hypothesis About a Population Mean; Small-Sample Test of
Hypothesis About a Population Mean; Large-Sample Test of
Hypothesis About a Population Proportion; Observed
Significance Levels: p-values
14 Midterm Exam
Inference Based on Two Samples Chapter 9 • Apply Classical Hypothesis Testing
Comparing Two Population Means: Independent to compare two populations and
Sampling; Comparing Two Population Means: Paired draw inference
15 & 16 Difference Experiments; Comparing Two Population
Proportions: Independent Sampling; Determining the
Sample Size; Comparing Two Population Variances:
Independent Sampling
Simple Linear Regression Chapter 10 • Define the concept of least squares
Probabilistic Models; Fitting the Model: The Least estimation in linear regression
Squares Approach; Model Assumptions; Assessing the Utility • Explain why correlation need not
17 & 18 of the Model: Making Inference about the Slope; The necessarily imply causation
Coefficients of Correlation and Determination; Using the • Evaluate the fit of a linear model
Model for Estimation and Prediction • Conduct inference for the slope and
intercept parameters
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Lab Session • Fit a linear regression model using
Excel and Stata, do post-estimation
19
analysis and explain computer
output
Multiple Regression and Model Building Chapter 11 • Define the concept of Least Squares
Regression in Multiple Regression
20 & 21 Multiple Regression • Test the utility of a Multiple
Multiple Regression: The Model and the Procedure; Regression Model and use it for
The Least Squares Approach; Model assumptions; Inference estimation and prediction
About the Slope Parameters; Checking the Usefulness of the • Interpret the results of a Multiple
2
Model: R and the Analysis of Variance F-Test; Using the Regression Model and draw
Model for Estimation and Prediction, Residual Analysis: inference
Checking the Regression Assumptions • Understand how to select a model
that is appropriate for given data
Model Building
22 & 23 The Two Types of Independent Variables:
Quantitative and Qualitative; Models with a Single Chapter 12
Quantitative Independent Variable; Models with Two or
More Quantitative Independent Variables; Testing Portions
of a Model; Models with One Qualitative Independent
Variable; Comparing the Slopes of Two or More Lines;
Comparing Two or More Response Curves; Stepwise
Regression
Lab Session • Use Excel and Stata for Multiple
24
Regression Analysis
Design of Experiments Chapter 15 • Discuss the critical elements in the
Elements of a Designed Experiment; The Completely design of a sampling experiment
25 & 26
Randomized Design: Single Factor; Multiple Comparisons of • Analyze designed experiments
Means; Factorial Experiments
Categorical Data Analysis: The Chi-Square Test and the Chapter 17 • Use Multinomial Distribution
Analysis of Contingency Tables • Construct Contingency Tables
27
The Multinomial Distribution; Contingency Tables; A • Conduct Chi-Squared Test
Word of Caution About Chi-Square Tests
Review
28

Textbook(s)/Supplementary Readings
Required Text:

James McClave, P.George Benson, Terry Sincich. Statisitcs for Business and Economics. 7th Edition. Prentice Hall, NJ. 1998.
Datasets at:
http://media.pearsoncmg.com/ph/esm/statistics_datasets/stats_datasets.html#mcclave3