FACULTY OF COMMERCE AND LAW

BACHELOR OF COMMERCE (HONOURS)

ACCOUNTING/BANKING & FINANCE/MARKETING/HUMAN
RESOURCE AND INDUSTRIAL RELATIONS MANAGEMENT

BBFH107: BUSINESS STATISTICS II

May 2014

Time: 3 Hours

INSTRUCTIONS
Answer ALL questions in Section A and any Three in Section B.

Use of silent and non-programmable scientific calculators is permissible.

Show all necessary working. Answers should be given to 4 decimal

places where necessary.

You will be provided with graph paper, formula sheet and statistical
tables.

Answer all questions in Answer Books provided.

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Questions

Section A: Answer ALL questions being careful to number them A1 to A3

[40 marks]

Question A1

(a) State any three characteristics of the normal distribution. [3]

(b) Suppose Z is a standard normal variable. State the mean and standard deviation of Z.
[2]

(c) The final exam scores in Business Statistics for Intake 25 students are normally
distributed with mean 60 and standard deviation 10.

(i) If the lowest passing score is 48, what percentage of the class is failing? [4]

(ii) If a distinction is awarded for a score of at least 75, out of 200 students who
wrote the exam how many got a distinction? [6]

Question A2

A small business is investigating the entry salary level of a salesperson. They collected
information from each of 10 randomly selected rival companies and got the following entry
salaries in thousands of rands:

2.00 1.50 1.20 2.40 2.50 1.85 2.00 1.80 1.95 2.00

(a) Find a point estimate of the:

i. Mean salary [3]

ii. Standard deviation [5]

(b) Obtain a 90% confidence interval for the mean salary of a salesperson employed in
this industry. [5]

Question A3

The financial highlights represented in Figure 1 appeared in the Business Herald of Thursday
12 December 2013.

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Figure 1: ZSE industrial index for five days

(a) (i) What is the purpose of the industrial index? [2]

(ii) Comment on the industrial index trend shown in the graph. [2]

(b) If you intend to use this data in a research paper, would you regard it as primary or
secondary data? Justify your answer. [2]

(c) Explain any three problems encountered in the construction of index numbers. [6]

Section B: [60 marks] You may attempt any three questions being careful to number
them B4 to B7.

Question B4

(a) A manufacturer of light bulbs wants to estimate the proportion of defective light bulbs
to be within 0.01 with a 95% degree of confidence. What is the minimum sample
size required if previous experience indicates that the proportion of defective light
bulbs produced is 0.2? [6]

(b) An examiner and a moderator marked 7 examination scripts during a standardisation

process and awarded the following percentage scores:

Script Number 1 2 3 4 5 6 7
Examiner 67 54 38 70 42 70 80
Moderator 58 60 38 67 44 69 76

Calculate Spearman’s rank correlation coefficient. To what extend do the moderator

and examiner agree in their assessment of the scripts? [14]

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Question B5

An A1 farmer is investigating the relationship between maize yield and quantity of fertiliser
applied. He postulated the following model:

Maize yield Amount of fertiliser

(a) (i) Suggest two other factors that may have an influence on the maize yield.
[2]

(ii) What is role of the error term in the model? [2]

(b) The farmer collected the following data:

Fertiliser 2 3 5 7 9 10 12
(bags)
Yield 5 4 7 7 11 9 13
(tonnes)

(i) Plot a scatter diagram to show the relationship between fertilizer and yield of maize
and comment on the relationship shown. [4]

(ii) Estimate the regression line used to predict yield from amount of fertilizer. [5]

(iii) Predict the yield of maize when 11bags of fertilizer were applied per plot. [2]

(iv) Calculate the coefficient of determination and interpret the result. [5]

Question B6

(a) (i) Define a time series. [2]

(ii) Why do organisations collect time series data? [3]

(b) Distinguish between the seasonal component and the cyclical component of a time
series with the aid of suitable graphical illustrations. [6]

(c) Suppose you are given the following data pertaining to successive annual production
of maize (in tons) at a certain farm.

1200 1280 1310 1270 1190 1290 1410 1360 1430 1280 1410 1390

i. Does the data constitute a time series? Explain. [2]

ii. Calculate a 3-point moving average of the data. [5]
iii. What is the effect of increasing the term of the moving average from 3 to 5? [2]

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Question B7

(a) The following data are July 2009 to July 2010 commodity price indices for a group of
consumer goods:

140 138 124 98 100 152 148 143 150 146 155 158 162

i. What is the base year used here? [1]

ii. Describe the trend in the price of the commodities over this period. [2]

iii. Change the base period to March 2010. [5]

(b) The following data shows the unit prices of three different commodities X, Y and Z for
two consecutive years and the quantities consumed.

Commodity 2010 2011 Quantity

Price per unit Price per unit
X 20 22 20
Y 40 48 2
Z 100 104 10

(i) Calculate a Weighted Average of Price Relative Index (WAPRI) for the commodities
using 2010 as the base period. [9]

(ii) Briefly describe how the Consumer Price Index is constructed. [3]

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LIST OF FORMULAE

8.1 Normal Distribution

8.1.1 An arbitrary normal value X is transformed to a standard normal variable Z by the

transformation
[1.1]
8.2 Statistical Estimation

8.2.1 Point Estimators

Sample mean, [2.1]

Sample variance, [2.2]

Sample population proportion, [2.3]

8.2.2 Confidence Interval Estimation

If the population standard deviation is known, a 100(1 )% confidence interval for is given by:
[2.4]
If the population standard deviation is unknown and , then a 100(1 % confidence interval
for population mean is given by:
[2.5]
If the population standard deviation is unknown and , then a confidence
interval for is given by:
[2.6]
A 100(1 % confidence interval for the population proportion is given by:
[2.7]
The minimum sample size necessary to ensure that the error in estimating will not exceed a
specified amount is given by:

[2.8]

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The minimum sample size required to estimate the population proportion to be within a specified
amount with confidence is given by:

[2-9]

[2.10]

8.3 Hypothesis Testing

8.3.1 Tests Concerning the Population Mean

Test statistic for testing for the mean of a single population

When is known When is unknown

Case I: n is large or small Case II: n is large
~ N(0,1) [3-1] ~N(0,1) [3-2]

Case III: n is small

~ t(n-1) [3-3]

8.3.2 Test Concerning a Population Proportion

The test statistic for testing for a proportion of a single population is given by:
[3-4]

8.4 Simple Linear Regression Analysis

The simple linear regression model is given by

[4-1]

The least squares estimates of and are and respectively

where [4-2]

and [4-3]

8.5 Correlation Analysis

Pearson’s product moment correlation coefficient is given by

[5.1]

Spearman’s Rank Correlation Coefficient is given by

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 [5-2]

8.5.1 Testing for the existence of a linear relationship between X and Y

The test statistic is given by:

[5.3]
We would reject if . [5.4]

8.6 Introduction to Time Series Analysis

8.6.1 Trend Analysis

The fitted trend line: [6.1]

The intercept and slope and of the estimated trend line are given by

[6.2]

[6.3]

8.6.2 Seasonal Analysis

Seasonal ratio
[6.4]

Deseasonalised Y =
[6.5]

8.7 Index Numbers

8.7.1 Simple Index Numbers

Simple Price Index [7.1]

Simple Quantity Index [7.2]

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8.7.2 Changing the Base period

New index value =

[7.3]

8.7.3 Weighted Index Numbers

Weighted Average of Price Relative Index (WAPRI) is given by:

WAPRI [7.4]

Laspeyre Price Index, LPI [7.5]

Laspeyre Quantity Index, LQI [7.6]

Paasche Price Index, PPI [7.7]

Paasche Quantity Index, PQI [7.8]

Fisher Price Index, FPI [7.9]

Fisher Quantity Index, FQI [7.10]

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