This document contains instructions for a midterm exam in a quantitative analysis class. Students are allowed to use notes and calculators, and must show all work. The exam contains 5 problems worth 25 points each, but students only need to complete 4 problems. Questions involve probability, hypothesis testing, regression, and confidence intervals related to business scenarios.

1. Name ______________________________ Signature
___________________________
QSO 510 Quantitative Analysis for Decision Making
Winter 2012 Mid-term Exam - Instructor: Dr. Derek Kane
Instructions
1. This exam is taken in-class, you may use any notes or books
that you care to. You may only use your own notes.
2. The exam only requires the use of a hand calculator. You may
use notes you have taken on the
3. Answer all questions in the context of the problem. General
answers are not expected.
4. You must show all steps including formulas used and all
calculations done to arrive at the final answers. Incomplete
solutions will receive partial credit.
5. Use at least four significant digits at all intermediate steps.
Round off the final answers appropriately. Note: 0.0042 is only
two significant digits as leading zeros are not considered
significant. Trailing zeros are considered significant.
6. You only need to do four problems. If you do all five
problems indicate which four you want me to grade.
7. You are welcome to ask questions you have on the problems.
Please do not ask any questions relating to the solution of any
problem.
8. You must work on the exam by yourself.
(For Instructor’s use)
Problem
Points
1
2
3

2. 4
5
Total
Problem 1 (25 points)
You have an assembly line which produces 5kg bags of flour
with a standard deviation of 0.5kg.
a) Assuming the distribution of weight is normal, what is the
chance any single bag’s weight is between 4.8kg and 5.2kg?
b) If you chose 60 bags at random, what would be the expected
average weight of the bags in your sample? What would the
standard deviation of the sample average be? What is the shape
of this distribution? Give reasons for your answers.
c) If you pulled a sample of 64 bags, what is the chance that you
would find the average weight was less than 4.95kg?
Write your answers in the space below and continue on the next
page.
a) We have
Calculate the z-scores
Look up the probabilities and finish.
b) The mean is still 5, the standard deviation is

3. The shape is Gaussian because we have more than 30 items in
the sample and the Central Limit Theorem applies.
c) We have
Calculate the z-scores
Look up the probabilities and finish.
Problem 2 (25 points)
We want to look at US attitudes toward the federal government.
Suppose that we sample 1011 US citizens about whether they
are satisfied with the size and power of the federal government
and find that 293 are satisfied with the size and power of the
federal government.
a) Compute the sample proportion and sample standard
deviation of people who are satisfied with the federal
government’s size and power.
b) Construct a 95% confidence interval for people who support
President Obama’s decision.
c) If you are working for CNN, how would you explain the
confidence interval to your audience? Does the confidence
interval seem small enough? If not, how would you make the
interval smaller? Provide a clear and complete answer.
Begin your answer below and continue on the next page.
a) The sample proportion is:
0.2898
The standard deviation is
b) The 95% confidence interval is

4. c) We are 95% sure that the true portion of the population
satisfied with the federal government’s size and power is in this
range. Make the interval smaller by using a larger sample.
Problem 3 (25 points)
According to a recent Gallup Poll 63% of all US adults are
dissatisfied with the size and influence of major corporations.
You perform a survey of 100 US citizens who identify
themselves as political independents and find that 71 are
dissatisfied with the size and influence of major corporations.
Perform a hypothesis test to determine whether your survey
indicates that political independents have a different view of
corporate influence than the general US population.
Begin your answer below and continue on the next page.
Step 1:
H0:
Ha:
Step 2:
z-test because it is a population proportion problem.
Step 3:
Step 4:
Threshold is (95% confidence, two-sided test):
Accept Ha if z-score < -1.96
Accept H0 if -1.96 ≤ z-score ≤ 1.96
Accept Ha if z-score > 1.96

5. Step 5:
Step 6:
Calculate the z-score
Accept the null hypothesis, H0.
Step 7:
We don’t have statistical evidence indicating that political
indenpendents differ from the rest of the population.
Problem 4 (25 points)
The following table shows the life expectancy for 5 countries
and the logarithm to the base 10 (log10) of income in these
same countries.
Log10 income
Life Expectancy
SSXX
SSXY
SSYY
2.88
48.5
0.813604
16.70504
342.9904
3.17
53.5
0.374544
8.27424
182.7904
3.78
75.9
4E-06
-0.01776
78.8544
4.40

6. 80.3
0.381924
8.20704
176.3584
4.68
76.9
0.806404
8.87224
97.6144
3.782
67.02
2.37648
42.0408
878.608
(a)
Compute the values of, , SSXX, SSYY, SSXY.
(b) Determine the regression equation using life expectancy as
the dependent variable.
(c) Compute the standard error of the estimate se.
(d)
Determine 95% confidence interval for life expectancy of a
country which has a log10 income of 3.0.
Begin your answer in the space below and continue on the next
page
b) The regression equation is given by:
So the equation is

7. c) The standard error is:
Part (c) and (d) are not in the upcoming midterm.
d) The confidence interval is
We have:
x0 = 3.0
n = 5
se = 6.705
t in the 0.025 column for 3 degrees of freedom is 3.1824
Putting it together is:
Problem 5 (25 points)
The following is a portion of the data collected to investigate
the variables affecting meat consumption. The data includes
whether the person is a man (=1) or woman, their age, their
average income, and whether they live in an urban area:
Man
age
Income ($1000)
Weight (lbs)
urban
Meat consumption
0
16

8. 67.86
145.8
0
282.8
0
41
30.03
188.2
1
260.7
1
45
-14.43
111.2
1
236.6
0
55
72.91
144.7
1
238.5
0
38
53.46
161.1
1
278.6
1
68
61.19
124.0
0
262.2
1
45

9. 80.63
237.9
1
364.5
0
35
22.22
121.2
1
221.7
0
60
68.32
219.6
0
278.4
1
47
81.75
190.3
1
362.0
0
17
51.44
161.6
1
286.3
1
48
21.21
145.8
0
297.4
1
55

10. 40.85
119.9
1
292.6
1
62
86.29
157.4
0
315.6
1
65
77.00
161.6
1
315.7
0
34
-18.17
188.4
1
211.8
1
39
49.47
186.9
1
322.4
0
20
3.18
144.1
1
235.7
0
58

11. 14.17
158.3
1
228.3
0
30
46.30
165.4
1
279.8
0
20
32.66
128.6
1
229.9
0
31
32.66
121.3
1
250.3
1
43
96.00
161.2
0
327.8
0
41
58.27
207.9
0
292.6

12. Regression Statistics
Multiple R
0.9411
R Square
0.8857
Adjusted R Square
0.8796
Standard Error
14.72
Observations
100

13. ANOVA
df
SS
MS
F
Significance F
Regression
5
157833
31566.64
145.70
1.12E-42
Residual
94
20366

14. 216.66
Total
99
178199
Coefficients
Standard Error
t Stat
P-value
Lower 95%
Upper 95%
Intercept
200.55
9.01
22.26
2.97E-39
182.66
218.44
Man
56.91
3.07
18.53

15. 3.82E-33
50.82
63.01
age
-0.97
0.09
-10.69
6.32E-18
-1.15
-0.79
income
0.83
0.05
15.53
1.09E-27
0.72
0.93
weight
0.34
0.04
8.31
7.15E-13
0.26
0.42
urban
4.41
3.26
1.35
1.80E-01
-2.07
10.88
Answer the following questions based on the Excel output
report. Support your answers with numbers from the output
report. Use level of significance = 0.05.
a) Write the estimated multiple regression equation. Note: Use
actual variable names and numbers. If using symbols, define

16. them before using in the equation.
b) Clearly explain the meaning of b1 (the coefficient of Man).
Note: Use actual variable names and numbers in answering your
question. b1 is the slope is not a sufficient answer.
If the person is a man, they consume an additional 56.91kg of
meat.
c) Clearly explain the meaning of b2 (the coefficient of age).
Note: Use actual variable names and numbers in answering your
question. b2 is the slope is not a sufficient answer.
For every year of age, the person eats 0.97kg less meat.
d) Clearly explain the meaning of b3 (the coefficient of
income). Note: Use actual variable names and numbers in
answering your question. b3 is the slope is not a sufficient
answer.
For every additional $1000 in income, the person eats an
additional 0.83kg of meat.
e) Clearly explain the meaning of b4 (the coefficient of weight).
Note: Use actual variable names and numbers in answering your
question. b4 is the slope is not a sufficient answer.
For every additional pound of weight, the person eats an
additional 0.34kg of meat.
f) Clearly explain the meaning of b5 (the coefficient of urban).
Note: Use actual variable names and numbers in answering the
question. b5 is the slope is not sufficient.
If the person lives in an urban area, they eat 4.41kg more meat.
g) Is the regression equation significant? Give reasons for your
answer. (Hint: The answer to this question requires test of the
hypothesis: Ho: 1 = 2 = 3 = 4 = 0 vs. Ha: At least one j is not
equal to zero, where j = 1, 4)
The regression equation is significant, because four of the
variables are signficant
h) Which variables in the current equation are significant and
which are not significant? Give reason for your answer. (Hint:
The answer to this question requires test of hypothesis: Ho: j =
0 vs. Ha: j 0 for j = 1, 4).

17. Every variable but Urban is significant
i) Is there anything in this model you find questionable?
Begin your answer in the space below and continue on the next
page
Y
Y
ˆ
X
Name ______________________________ Signature
___________________________
QSO 510 Quantitative Analysis for Decision Making
Summer 2012 Mid-term Exam - Instructor: Dr. Derek Kane
Instructions
1. This exam is taken in-class, you may use any notes or books
that you care to. You may only use your own notes.
2. The exam only requires the use of a hand calculator. You may
use notes you have taken on the
3. Answer all questions in the context of the problem. General
answers are not expected.
4. You must show all steps including formulas used and all
calculations done to arrive at the final answers. Incomplete
solutions will receive partial credit.
5. Use at least four significant digits at all intermediate steps.
Round off the final answers appropriately. Note: 0.0042 is only
two significant digits as leading zeros are not considered
significant. Trailing zeros are considered significant.
6. You only need to do four problems. If you do all five
problems indicate which four you want me to grade.
7. You are welcome to ask questions you have on the problems.
Please do not ask any questions relating to the solution of any
problem.
8. You must work on the exam by yourself.
(For Instructor’s use)

18. Problem
Points
1
2
3
4
5
Total
Problem 1 (25 points)
You have an assembly line which produces 50kg bags of flour
with a standard deviation of 2.0kg.
a) Assuming the distribution of weight is normal, what is the
chance any single bag’s weight is less than 49kg?
b) If you chose 81 bags at random, what would be the expected
average weight of the bags in your sample? What would the
standard deviation of the sample average be? What is the shape
of this distribution? Give reasons for your answers.
c) If you pulled a sample of 64 bags, what is the chance that you
would find the average weight was between 49.25 and 50.25kg?
Write your answers in the space below and continue on the next
page.
a) The probability we are looking for is

19. Thus there is a 30.85% chance that the weight will be less than
49kg.
b) Because there are more than 30 items in the sample, the
Central Limit Theorem applies and
The shape is Gaussian.
c) The probability is:
There is an 84% chance that the sample will weigh between
49.25 and 50.25.
Problem 2 (25 points)
We want to look at economic opportunity for women. Gallup
conducted a survey of women’s employment in Greece and
found that 205 of 500 women surveyed were employed
a) Compute the proportion and standard deviation of Greek
women who are employed.
b) Construct a 95% confidence interval for women’s
employment in Greece.

20. c) If you are working for CNN, how would you explain the
confidence interval to your audience? Does the confidence
interval seem small enough? If not, how would you make the
interval smaller? Provide a clear and complete answer.
Begin your answer below and continue on the next page.
a) The proportion and standard deviation is
b) The confidence interval is
c) This is the range where we are 95% sure the true proportion
lies. We should take a larger sample to get a smaller confidence
interval.
Problem 3 (25 points)
According to the same Gallup poll, 46% of men in Greece are
employed. Perform a 95% hypothesis test to determine whether
the survey of 500 women showing 41% employment indicates
that women have a lower employment rate than men in Greece.
Begin your answer below and continue on the next page.
The hypotheses are
The value of α is given as 0.05 and the number of people in the
survey is n=500
The threshold of this one-sided z-test is 1.645

21. The proportion is so the z-statistic is
We accept the alternate hypothesis.
There is statistical evidence that women in Greece have a lower
employment rate than men.
Problem 4 (25 points)
The following table shows the Housing Starts in thousands for
the past five quarters.
Quarter
Housing starts (1000s)
SSXX
SSXY
SSYY
1
90
4
34.8
302.76
2
123
1
-15.6
243.36
3
118
0
0
112.36
4
100
1
-7.4
54.76
5

22. 106
4
-2.8
1.96
3
107.4
10
9
715.2
(a)
Compute the values of, , SSXX, SSYY, SSXY.
(b) Determine the regression equation using Housing Starts as
the dependent variable.
(c) Compute the standard error of the estimate se.
Part (c) and (d) are not going to be on the upcoming midterm.
(d)
Determine 95% confidence interval for housing starts in the 6th
quarter.
Begin your answer in the space below and continue on the next
page
Problem 5 (25 points)

23. The following is a portion of the data collected to investigate
the correlations between four stocks and the S&P 500 Industrial
Average:
Date
JP Morgan
Walmart
Exxon
Apple
S&P
7/6/2012
33.9
71.08
84.8
605.88
1354.68
7/5/2012
34.38
71.08
85.57
609.94
1367.58
7/3/2012
35.88
70.75
86.28
599.41
1374.02
7/2/2012
35.98
69.35
85.34
592.52
1365.51
6/29/2012
35.43

24. 69.72
85.57
584
1362.16
6/28/2012
35.58
68.3
83.1
569.05
1329.04
6/27/2012
36.48
68.59
83.2
574.5
1331.85
6/26/2012
35.41
68.58
82.4
572.03
1319.99
6/25/2012
35.03
68.18
81.24
570.77
1313.72
6/22/2012
35.69
67.3
82.11
582.1
1335.02
6/21/2012
35.22

25. 67.7
82.11
577.67
1325.51
6/20/2012
36.15
68.52
84.97
585.74
1355.69
6/19/2012
35.09
67.81
84.48
587.41
1357.98
6/18/2012
34.33
68.12
83.11
585.78
1344.78
6/15/2012
34.74
67.75
83.22
574.13
1342.84
6/14/2012
34.36
67.63
82.13
571.53
1329.1
6/13/2012
34.02

26. 67.07
80.63
572.16
1314.88
6/12/2012
33.49
67.72
81.26
576.16
1324.18
6/11/2012
32.55
67.53
80.27
571.17
1308.93
6/8/2012
33.4
68.22
80.84
580.32
1325.66
6/7/2012
32.54
65.87
80.69
571.72
1314.99
6/6/2012
32.8
65.93
80.18
571.46
1315.13
6/5/2012
31.73

27. 65.5
77.6
562.83
1285.5
6/4/2012
30.74
65.99
77.83
564.29
1278.18
Regression Statistics
Multiple R
0.962267935
R Square
0.925959578
Adjusted R Square
0.925623031

28. Standard Error
45.16258314
Observations
885
ANOVA
df
SS
MS
F

29. Significance F
Regression
4
22447261.48
5611815.37
2751.349908
0
Residual
880
1794899.846
2039.658916
Total
884
24242161.33
Coefficients
Standard Error
t Stat
P-value
Lower 95%

30. Upper 95%
Intercept
172.7601601
31.63797452
5.460531613
6.17796E-08
110.6654669
234.8548532
JP Morgan
11.9624917
0.286137971
41.80672581
2.9476E-211
11.40089919
12.52408421
Walmart
2.290929236
0.655364656
3.495655764
0.000496528
1.004669044
3.577189428
Exxon
3.078491008
0.256273015
12.01254456
6.86108E-31
2.575513354
3.581468662
Apple
0.669893335
0.026953728
24.85345781
1.0171E-103
0.616992241
0.722794428

31. Answer the following questions based on the Excel output
report. Support your answers with numbers from the output
report. Use level of significance = 0.05.
a) Write the estimated multiple regression equation. Note: Use
actual variable names and numbers. If using symbols, define
them before using in the equation.
b) Clearly explain the meaning of b1 (the coefficient of JP
Morgan). Note: Use actual variable names and numbers in
answering your question. b1 is the slope is not a sufficient
answer.
If the price of JP Morgan increases by $1, then the S&P goes up
11.96.
c) Clearly explain the meaning of b2 (the coefficient of
Walmart). Note: Use actual variable names and numbers in
answering your question. b2 is the slope is not a sufficient
answer.
If the price of Walmart increases by $1, then the S&P goes up
2.291.
d) Clearly explain the meaning of b3 (the coefficient of Exxon).
Note: Use actual variable names and numbers in answering your
question. b3 is the slope is not a sufficient answer.
If the price of Exxon increases by $1, then the S&P goes up
3.078.
e) Clearly explain the meaning of b4 (the coefficient of Apple).
Note: Use actual variable names and numbers in answering your
question. b4 is the slope is not a sufficient answer.
If the price of Apple increases by $1, then the S&P goes up
0.6699.
f) Is the regression equation significant? Give reasons for your
answer. (Hint: The answer to this question requires test of the
hypothesis: Ho: 1 = 2 = 3 = 4 = 0 vs. Ha: At least one j is not
equal to zero, where j = 1, 4)
It is significant, because it has variables with p-values less than
0.05.

32. g) Which variables in the current equation are significant and
which are not significant? Give reason for your answer. (Hint:
The answer to this question requires test of hypothesis: Ho: j =
0 vs. Ha: j 0 for j = 1, 4).
All of the variables are significant.
h) Do you have an explanation for why these stocks and the
S&P 500 index would be so well correlated?
The stocks are all components of the S&P 500.
Begin your answer in the space below and continue on the next
page
Y
Y
ˆ
X
Name ______________________________ Signature
___________________________
QSO 510 Quantitative Analysis for Decision Making
Summer 2013 Mid-term Exam - Instructor: Dr. Derek Kane
Instructions
1. The exam is due midnight Thursday, July 25.
2. You may either write out the answers to the exam by hand, or
you may word-process the answers into the exam document.
3. If you word-process your exam, you may submit it
electronically or print it and submit a hard copy.
4. Answer all questions in the context of the problem. General
answers are not expected.
5. You must show all steps including formulas used and all
calculations done to arrive at the final answers. Incomplete
solutions will receive partial credit.
6. Use at least four significant digits at all intermediate steps.
Round off the final answers appropriately. Note: 0.0042 is only
two significant digits as leading zeros are not considered
significant. Trailing zeros are considered significant.

33. 7. You only need to do four problems. If you do all five
problems indicate which four you want me to grade.
8. You are welcome to ask questions you have on the problems.
Please do not ask any questions relating to the solution of any
problem.
9. It is not forbidden to work with other people on the exam.
You are expected to submit your own answers to the questions.
(For Instructor’s use)
Problem
Points
1
2
3
4
5
Total
Problem 1 (25 points)
You have an assembly line which produces 1L bottles of soda
with a standard deviation of 0.05L.
a) Assuming the distribution of volume is normal, what is the
chance any single bottle’s volume is greater than 1.1.?
b) If you chose 100 bottles at random, what would be the
expected average volume of the bottles in your sample? What
would the standard deviation of the sample average be? What is
the shape of the distribution of the sample average? Give
reasons for your answers.
c) If you pulled a sample of 50 bottles, what is the chance that

34. you would find the average volume was less than 0.99L?
Write your answers in the space below and continue on the next
page.
Problem 2 (25 points)
We want to investigate the US citizens on their children
entering politics. The Excel file “Midterm_Data.xslx” contains
a tab “Child in Politics” with survey responses to the question
“Would you like your child to enter politics?”
(This is simulated data based upon the Gallup poll,
http://www.gallup.com/poll/163373/child-avoid-career-
politics.aspx )
a) Compute the survey proportion answering yes and the survey
standard deviation for the data.
b) Construct a 98% confidence interval for the data.
c) If you are working for CNN, how would you explain the
confidence interval to your audience? Does the confidence
interval seem small enough? What would you tell your
audience about the implications of this data? Provide a clear
and complete answer.
d) The Gallup poll found that 31% of US Citizens do not want
their children entering politics. Does the result of this poll of
659 people support or conflict with that result?
Begin your answer below and continue on the next page.
Problem 3 (25 points)
The file Midterm Data.xls has a tab labeled “Son in Politics”.
According to the Gallup poll, 37% of US Citizens want their
daughter to enter politics, when they are asked about their
daughter first. Use the results of the poll in the “Son in
Politics” tab to determine whether there is a statistically
noticeable difference between the respondents who would like
their son to enter politics when they are asked about their son
first.

35. Begin your answer below and continue on the next page.
Problem 4 (25 points)
The file Midterm_Data.xls has a tab labeled “Gasoline versus
Flour” which presents historical price data for these two
commodities. Using the Gasoline price as the X-value and the
Flour price as the Y-value, we will perform a long-form
regression analysis on this data.
(a)
Compute the values of, , SSXX, SSYY, SSXY.
(b) Determine the regression equation.
(c) Compute the standard error of the estimate se.
(d)
Determine the 95% confidence interval for the price of flour, ,
when the price of Gasoline is at $5 per gallon.
(e) Compute the value of correlation coefficient. Is it reasonable
for these two commodities to have a correlation of this value?
Begin your answer in the space below and continue on the next
page
Problem 5 (25 points)The file Midterm Data.xls has a tab
labeled “Many vs. NASDAQ” which presents historical price
data for several stocks and a high volume trading condition
(VIDX = 1 if the NASDAQ volume is greater than 80% of its
maximum). Create a multiple regression model of the NASDAQ
using the other asset prices and volume criterion as the
independent (x) variables.
Answer the following questions based on the Excel output

36. report. Support your answers with numbers from the output
report. Use level of significance = 0.05.
a) Write the estimated multiple regression equation. Note: Use
actual variable names and numbers. If using symbols, define
them before using in the equation.
b) Clearly explain the meaning of b1 (the coefficient of Dow
Chemical). Note: Use actual variable names and numbers in
answering your question. b1 is the slope is not a sufficient
answer.
c) Clearly explain the meaning of b2 (the coefficient of Exxon-
Mobil). Note: Use actual variable names and numbers in
answering your question. b2 is the slope is not a sufficient
answer.
d) Clearly explain the meaning of b3 (the coefficient of Johnson
and Johnson). Note: Use actual variable names and numbers in
answering your question. b3 is the slope is not a sufficient
answer.
e) Clearly explain the meaning of b4 (the coefficient of Union
Pacific). Note: Use actual variable names and numbers in
answering your question. b4 is the slope is not a sufficient
answer.
f) Clearly explain the meaning of b5 (the coefficient of the High
Volume Criteria). Note: Use actual variable names and numbers
in answering your question. b5 is the slope is not a sufficient
answer.
g) Is the regression equation significant? Give reasons for your
answer. (Hint: The answer to this question requires test of the
hypothesis: Ho: 1 = 2 = 3 = 4 = 5 = 0 vs. Ha: At least one j is
not equal to zero, where j = 1…5)
h) Which variables in the current equation are significant and
which are not significant? Give reason for your answer. (Hint:
The answer to this question requires test of hypothesis: Ho: j =
0 vs. Ha: j 0 for j = 1…5).
i) Eliminate all of the insignificant variables and show the final
regression equation.
j) Considering the original regression equation from a), if you

37. already have a NASDAQ fund in your portfolio, what is the best
new asset to place in the portfolio? (Remember, you want your
portfolio to be as diverse as possible.)
Begin your answer in the space below and continue on the next
page
Y
Y
ˆ
X