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Probability

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Assignment 2
Problem 1:
Question 1. The probability of a case being appealed for each judge in Common Pleas Court. p(a) | 0.04511031 | 0.03529063 | 0.03497615 | 0.03070624 | 0.04047164 | 0.04019435 | 0.03990765 | 0.04427171 | 0.03883194 | 0.04085893 | 0.04033333 | 0.04344897 | 0.04524181 | 0.06282723 | 0.04043298 | 0.02848818 |

Question 2. The probability of a case being reversed for each judge in Common Pleas Court. P® | 0.00395127 | 0.0029656 | 0.0063593 | 0.0035824 | 0.00223072 | 0.00795053 | 0.00725594 | 0.00675904 | 0.00434918 | 0.00477185 | 0.002 | 0.00404176 | 0.00561622 | 0.0104712 | 0.00413881 | 0.00194238 |

Question 3. The probability of reversal given an appeal for each judge in Common Pleas Court. p(R/A) | 0.08759124 | 0.08403361 | 0.18181818 | 0.11666667 | 0.05511811 | 0.1978022 | 0.18181818 | 0.15267176 | 0.112 | 0.11678832 | 0.04958678 | 0.09302326 | 0.12413793 | 0.16666667 | 0.1023622 | 0.06818182 |
Question 4. The probability of cases being appealed in Common Pleas Court. Probability of cases being appealed in common pleas court | 0.0400956 |
Question 5. Identify the best judges in Common Pleas Court according to the three criteria in
Questions 1-3: 1) The best judge in Common Pleas Court with the smallest probability in Question 1; Ralph Winkler

2) The best judge in Common Pleas Court with the smallest probability in Question 2; and Ralph Winkler

3) The best judge in Common Pleas Court with the smallest probability in Question 3. Ralph Winkler

Problem 2
The 2002 New York City Housing and Vacancy Survey showed a total of 59,324 rent-controlled housing units and 236,263 rent-stabilized units built in 1947 or later. For these rental units, the probability distributions for the number of persons living in the units are given (www.census.gov, January 12, 2004).

Number of Persons | Rent-Controlled | Rent-Stabilized | 1 | .61 | .41 | 2 | .27 | .30 | 3 | .07 | .14 | 4 | .04 | .11 | 5 | .01 | .03 | 6 | .00 | .01 |

Q1. What is the expected value of the number of persons living in each type of unit?

PF(x) | PF(x) | 0.61 | 0.41 | 0.54 | 0.6 | 0.21 | 0.42 | 0.16 | 0.44 | 0.05 | 0.15 | 0 | 0.06 | E(X)=1.57 | E(X)=2.08 |

E(X) RENT CONTROLLED | 1.57 | | | | | E(X) RENT STABLISED | 2.08 |

Q2. What is the variance of the number of persons living in each type of unit?

| | RENT CONTROLLED | | | X-u | (X-u)^2 | F(X) | (X-u)^2*F(X) | 1 | -0.57 | 0.3249 | 0.61 | 0.198189 | 2 | 0.43 | 0.1849 | 0.27 | 0.049923 | 3 | 1.43 | 2.0449 | 0.07 | 0.143143 | 4 | 2.43 | 5.9049 | 0.04 | 0.236196 | 5 | 3.43 | 11.7649 | 0.01 | 0.117649 | 6 | 4.43 | 19.6249 | 0 | 0 | | | | | 0.7451 | | | | | |

| | RENT STABILISED | | | X-u | (X-u)^2 | F(X) | (X-u)^2*F(X) | 1 | -1.08 | 1.1664 | 0.41 | 0.478224 | 2 | -0.08 | 0.0064 | 0.3 | 0.00192 | 3 | 0.92 | 0.8464 | 0.14 | 0.118496 | 4 | 1.92 | 3.6864 | 0.11 | 0.405504 | 5 | 2.92 | 8.5264 | 0.03 | 0.255792 | 6 | 3.92 | 15.3664 | 0.01 | 0.153664 | | | | | 1.4136 |

VARIANCE RENT CONTROLLED | 0.7451 | VARIANCE RENT STABLISED | 1.4136 |

Q3. Make some comparisons between the number of persons living in rent-controlled units and the number of persons living in rent-stabilized units by comparing their expected values and their standard deviations. Rent stabilized units Rent controlled units
Variance 1.4136 0.7451
Standard deviation 1.188949116 0.863191
Expected value 2.08 1.57

Problem 3
A university found that 20% of its students withdraw without completing the introductory statistics course. Assume that 20 students registered for the course. Suppose that the number of students withdraw from the course follows a Binomial distribution.

Q1. Compute the probability that two or fewer will withdraw.
BINOM.DIST(2,20,0.2,TRUE)= 0.2060847

Q2. Compute the probability that exactly four will withdraw.
BINOM.DIST(4,20,0.2,FALSE) =0.2181994

Q3. Compute the probability that more than three will withdraw.
1-BINOM.DIST(3,20,0.2,TRUE) =0.5885511

Q4. Compute the expected number of withdrawals.
E(X)=NP=4

Problem 4
Trading volume on the New York Stock Exchange is heaviest during the first half hour (early morning) and the last half hour (late afternoon) of the trading day. The early morning trading volumes (millions of shares) for 13 days in January and February were recorded in the data file Volume.xls (Barron’s, January 23, 2006; February 13, 2006; and February 27, 2006). The probability distribution of trading volume is approximately normal. (1) Compute the mean and standard deviation to use as estimates of the population mean and standard deviation (please round the mean and the standard deviation to the nearest integer, e.g., 199.98≈200, 26.04≈26)
.
Mean | 199.6923077 | Standard Error | 7.222103372 | Median | 201 | Mode | 211 | Standard Deviation | 26.03966403 | Sample Variance | 678.0641026 | Kurtosis | 2.480119959 | Skewness | 1.051066108 | Range | 102 | Minimum | 163 | Maximum | 265 | Sum | 2596 | Count | 13 |

(2) What is the probability that, on a randomly selected day, the early morning trading volume will be less than 180 million shares?
NORM.DIST(180,200,26,TRUE)= 0.22087816 (3) What is the probability that, on a randomly selected day, the early morning trading volume will exceed 230 million shares?
NORM.DIST(230,200,26,TRUE)=0.87571838
1-0.87571838= 0.12428162

(4) What is the probability that, on a randomly selected day, the early morning trading volume will be between 180 million shares and 230 million shares?
0.22087816-0.12428162=0.09659654

(5) How many shares would have to be traded for the early morning trading volume on a particular day to be among the busiest 5% of days? That is, what is the x-value so that the probability P(X>x)=5%, or P(X<x)=1-5%=95%? Use inverse normal in Excel to derive the answer.
NORM.INV(0.95,200,26)= 242.766194

Journal 2

A store has normally distributed daily sales. The average daily sales =$2000 and the daily sales standard deviation=$500 , what is the probability that the sales during one day will fall below $1000?
=NORM.DIST(1000,2000,500,true)
=0.022750132

From the above normal distribution we can that the chances of sales value falling below $1000 is 2%

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