BUSINESS ANALYTICS 2

Question 1

Random variable

Answer 1

a variable whose value is a numerical value that is determined by the outcome of an experiment

Question 2

What are the two types of random variables?

Answer 2

discrete and continuous

Question 3

Discrete random variables

Answer 3

the number of defective units in a batch of 20; a listener rating (on a scale of 1 to 5) in an AccuRating music survey

Question 4

Continuous random variables

Answer 4

may assume any numerical value in one or more intervals; the waiting time for a credit card authorization; the interest rate charged on a business loan

Question 5

What two conditions must discrete probability distribution satisfy?

Answer 5

1. for any value x of the random variable, p(x) > (or equal to) 0
2. the probabilities of all the events in the sample space must sum to 1, that is…

Question 6

What is the mean or expected value of a discrete random variable x?

Answer 6

Question 7

What is the variance of a discrete random variable?

Answer 7

Question 8

What is the standard deviation of a discrete random variable?

Answer 8

Question 9

What are the characteristics of a binomial experiment?

Answer 9

1. experiment consists of n identical trials
2. each trial results in either “success” or “failure”
3. probability of success, p, is constant from trial to trial; the probability of failure, q, is 1 - p
4. trials are independent

Question 10

What is the probability of x successes in n trials given by the binomial distribution?

Answer 10

Question 11

n!

Answer 11

“n factorial” and n! = n x (n - 1) x (n - 2) x…x 1

Question 12

0!

Answer 12

1

Question 13

Binomial probability table

Answer 13

Question 14

Binomial distribution in Excel

Answer 14

• On the Formulas tab, in the Function Library group, click Lookup & Reference, choose insert function
• Search BINOM.DIST function
• Enter your data into the box–BINOM.DIST (x, n, p, cumulative)
  
  • x: the number of successes
  • n: the number of trials
  • p: the probability of success on each trial
  • cumulative: if cumulative is TRUE, otherwise FALSE