You are on page 1of 3

605 Solution for Midterm 2016

Q#1: Numerical:
In a math class of 30 students, 17 are boys and 13 are girls. On a unit test, 4 boys and 5

Girls made an A grade. If a student is chosen at random from the class, what is the Probability of
choosing a girl or an A student?

P (girl or A) = P (girl) + P (A) - P (girl and A) = 13/30+9/30-5/30=17/30

Q#2:
Mutually exclusive Collectively exhaustive events
Occurrence of one event precludes the Exhaust all the possible outcomes of an
occurrence of another event. experiment.
If only one of the event can occur on any one E.g. Event (A) two heads (B) two tails and (C)
trail. one tail, one exhaust all the outcomes, hence
they are collectively exhaustive events.
LAW P(AUB)= P(A) + P(B)
E.g. S=(1,2,3,4,5,6) A= Event (Even #
appears) B= Event (Odd # appears)

Q#3:

Sampling: is the process by which the selected sample is chosen. It is applied in all the field of
sciences.

Aims: 1) to get maximum information about the population by studying only a small part of it
i.e., sampling.
2) To get the reliability of the estimates. It is obtained by estimating the standard error of
estimates.
Q#4:
Type I Error Type II Error
Also known as error of 1st kind Also known as error of 2nd kind
Involves the rejection of a null Occurs when we do not reject a null hypothesis
hypothesis that is actually true. that is false.
E.g. Drug being used to treat a disease. If we E.g. A type II error would occur if we accepted

1|Page
605 Solution for Midterm 2016

reject the null hypothesis in this situation, that the drug had no effect on a disease, but in
then our claim is that the drug does in fact reality it did.
have some effect on a disease. But if the null
hypothesis is true, then in reality the drug
does not combat the disease at all. The drug
is falsely claimed to have a positive effect on
a disease.

Q#5: CLRM:
Model statistical-tool used in predicting future values of a target (dependent) variable on the
basis of the behavior of a set of explanatory factors (independent variables). A type of regression
analysis model, it assumes the target variable is predictable, not chaotic or random.
Assumptions:
The model is Linear in parameters
X values are fixed in repeated sampling. Values taken by the regressor X are
considered fixed in repeated samples. More technically, X is assumed to be non
stochastic. What this means is that our regression analysis is conditional regression
analysis, that is, conditional on the given values of the regressor (s) Xi.
Zero mean value of disturbance Ui.
Given the value of X, the mean, or expected, value of the random disturbance term Ui is
zero.
Homoscedasticity or equal variance of error term.
Given the value of X, the variance of Ui is the same for all observations.
No autocorrelation between the disturbances. Given any two X values, Xi and Xj (i
not equal to j ), the correlation between any two Ui and Uj is zero.
Zero covariance between Ui and Xi
The number of observations n must be greater than the number of parameters to be
estimated.
The X values in a given sample must not all be the same. Technically, Var (X) must be a
finite positive number.

2|Page
605 Solution for Midterm 2016

The regression model is correctly specified. Alternatively, there is no specification bias


or error in the model used in empirical analysis.
There is no perfect Multicollinearity. That is, there are no perfect linear relationships
among the explanatory variables.
Q#6: R2
R2 (multiple regression) is a summary measure that tells how well the sample
Regression line fits the data. The r2 is simply a numerical measure of this overlap. It has two
properties
It is a non negative quantity
It ranges between 0 and 1.
If R2 is 77%, it represent that, model is better fit.

3|Page

You might also like