(6 Marks) : Test Business Analytics (MGT 555) Answer Scheme A) Briefly Explain About Three (3) Measures of Dispersion
(6 Marks) : Test Business Analytics (MGT 555) Answer Scheme A) Briefly Explain About Three (3) Measures of Dispersion
(6 Marks) : Test Business Analytics (MGT 555) Answer Scheme A) Briefly Explain About Three (3) Measures of Dispersion
ANSWER SCHEME
QUESTION 1
Common statistical measures of dispersion are the range, variance and standard
deviation
o Range: the difference between the largest and smallest values of the
data set. State formula Range = largest value minus smallest value (2m)
o Variance: The variance is the “average” of the squared deviations from
the mean @ the extent of dispersion of the data from the mean.
State formula (2m)
o Standard deviation: is the square root of the variance.
State formula (2m)
b) The closing stock price data below shows the result for coefficient of variation.
Based on result above, state the formula for coefficient of variation and interpret the
values. (4 marks)
Based on the COV above, the smaller the coefficient of variation, the better the
risk return trade off. GE is the best one because the smallest value the COV for
GE is lower than others and this implies that INTC is highest risk more than
others (2m)
QUESTION 2
An industry trade publication stated that the average profit per customer for his industry was
at least $5000. Based on the output below, determine if the data support this claim or not by
using the critical value approach only.
Result/output
-1.014
-1.67
t −stat value is fall under the non rejection area, thus we fail ¿ reject Ho
QUESTION 3
Wedding Data below is about the wedding cost and the other variables. Based on the
summary output from regression, answer the following questions.
Regression output
For example, let's look at the trail of an accused criminal. The null hypothesis is
that the person is innocent, while the alternative is guilty. A Type I error in this
case would mean that the person is not found innocent and is sent to jail, despite
actually being innocent. (2m)
b) Based on the correlation matrix (house sales data) below, answer the following
question.
Correlation matrix
Refer to the result from correlation above, what is the purpose to test the correlation matrix
between variables. Is there any potential problem between variables? Briefly explain your
answer. (6 marks)
Correlation is a statistic that measures the degree to which two variables or more
move in relation to each other. (2m)
Based on the result above there is no multicollinearity problem for both house age
and square feet and square feet with low cost since the rule thumb is 0.7. (3m)
THE END
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