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    (6 Marks) : Test Business Analytics (MGT 555) Answer Scheme A) Briefly Explain About Three (3) Measures of Dispersion

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    This document contains 4 questions regarding business analytics measures. Question 1 asks about measures of dispersion like range, variance, and standard deviation. It also asks about interpreting the coefficient of variation from sample data. Question 2 involves hypothesis testing to determine if sample data supports a claim about average profits. Question 3 develops a regression model to explain wedding costs and analyzes the model's variance and variables' significance. Question 4 discusses type 1 errors in hypothesis testing and explains using a correlation matrix to check for multicollinearity between variables.

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    (6 Marks) : Test Business Analytics (MGT 555) Answer Scheme A) Briefly Explain About Three (3) Measures of Dispersion

    Uploaded by

    azlin natasya
    3K views4 pages
    This document contains 4 questions regarding business analytics measures. Question 1 asks about measures of dispersion like range, variance, and standard deviation. It also asks about interpreting the coefficient of variation from sample data. Question 2 involves hypothesis testing to determine if sample data supports a claim about average profits. Question 3 develops a regression model to explain wedding costs and analyzes the model's variance and variables' significance. Question 4 discusses type 1 errors in hypothesis testing and explains using a correlation matrix to check for multicollinearity between variables.

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    This document contains 4 questions regarding business analytics measures. Question 1 asks about measures of dispersion like range, variance, and standard deviation. It also asks about interpreting the coefficient of variation from sample data. Question 2 involves hypothesis testing to determine if sample data supports a claim about average profits. Question 3 develops a regression model to explain wedding costs and analyzes the model's variance and variables' significance. Question 4 discusses type 1 errors in hypothesis testing and explains using a correlation matrix to check for multicollinearity between variables.

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    (6 Marks) : Test Business Analytics (MGT 555) Answer Scheme A) Briefly Explain About Three (3) Measures of Dispersion

    Uploaded by

    azlin natasya
    This document contains 4 questions regarding business analytics measures. Question 1 asks about measures of dispersion like range, variance, and standard deviation. It also asks about interpreting the coefficient of variation from sample data. Question 2 involves hypothesis testing to determine if sample data supports a claim about average profits. Question 3 develops a regression model to explain wedding costs and analyzes the model's variance and variables' significance. Question 4 discusses type 1 errors in hypothesis testing and explains using a correlation matrix to check for multicollinearity between variables.

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    of 4

    TEST

    BUSINESS ANALYTICS (MGT 555)

    ANSWER SCHEME

    QUESTION 1

    a) Briefly explain about three (3) measures of dispersion. (6 marks)

    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)

    Coefficient of variation can be defined as the ratio of standard deviation to the


    mean,
    CV = standard deviation/mean (2m)

    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

    a) Step 1 : state the hypothesis testing (2 marks)


    H0: mean <= $5000
    H1: mean > $5000
    b) Step 2: state the significant level (2 marks)
    0.05 @ 5%
    c) Step 3: select test statistic (2 marks)
    T test because standard deviation not given
    t = -1.01405
    d) Step 4: determine decision rule (2 marks)
    Compare t stat and critical t

    -1.014

    -1.67

    t −stat value is fall under the non rejection area, thus we fail ¿ reject Ho

    e) Step 5: draw a conclusion (2 marks)


    The data does not support the claim of the industry trade publication that
    the average profit per customer for his industry was at least $5000.

    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

    a) Develop a regression model (2 marks)


    Y = -705.4935 + 0.3168Couple’s income -229.3044bride’s age +
    49.2808attendance

    b) Interpret the R² (2 marks)


    0.73 Or 73% variation in wedding cost can be explained by couple’s income,
    bride’s age and attendance.

    c) Analysis of variance (hypothesis testing) (3 marks)


     State H0:
    H1: (1m)
     Decision - when significant F (p value) is less than 0.05 (1m)
     Conclusion - couples income, brides age and attendance are significant
    influences the wedding cost (1m)

    d) t test (hypothesis testing) (6 marks)


    For each variable (2m of each)
     State hypothesis testing
     Decision
     Conclusion
    QUESTION 4

    a) Briefly explain what is type one error in hypothesis testing (4 marks)


    A type 1 error is also known as a false positive and occurs when a researcher
    incorrectly rejects a true null hypothesis. The probability of making a type I
    error is represented by your alpha level (α), which is the p-value below which you
    reject the null hypothesis. (2m)

    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)

    Multicollinearity problem. (1m)

    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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