Set - 2

BUSINESS STATISTICS
SCHEME OF VALUATION
I
1. Distrust of Statistics refers to disbelief or lack of faith in statistics. Statistics are
liable to be manipulated and misused.
2. Questionnaire is a set of questions pertaining to the problem under study which is
prepared by the investigator and filled by the informants.
3. Harmonic mean is a mathematical average which is the reciprocal of the
arithmetic average of the reciprocals of the values of a variable.
4. Standard deviation is the square root of the arithmetic average of the squares of
deviations taken from the arithmetic average of a series. It is the square root of
the deviation from arithmetic average.
5. Correlation refers to the relationship between any two or more variables.
6. The regression between the variables under study is termed as linear, if the
regression curve is a straight line.
7. NIFTY stands for National Stock Exchanges Fifty. ie., an index computed from
the performance of top stocks of 50 companies from different sectors listed on
NSE.
8. Time reversal test is a test propounded by Prof. Irving Fisher.
9. Time series analysis is an analysis of a statistical series based on time.
10. Rank correlation co-efficient is always between ± 1 (+1 and -1).
II
11. Simple bar diagrams, Sub-divided bar diagrams, multiple bar diagrams,
percentage bar diagrams, Deviation bar Diagrams, Broken bars etc. are the types
of bar diagrams, Broken bars etc are the types of bar diagrams (Give marks for
any 4 types).
12. Mode = (3 x 29) – (2 x 27) 87 – 54 = 33
13. Scatter diagram method is a method for determining the relationship between two
variables.
14. When the values of both the variables under study change at a constant ratio
irrespective of the direction, it is called perfect correlation and when the values of
the variables under study change at different ratios, it is called imperfect
correlation.
15. Mode = 3 median – 2 mean
65 = (3 x 68) - 2 mean
65 = 204 – 2 mean
2 mean = 204 – 65 = 139
139
Mean = = 69.5
2
====
16. The Chief limitation of standard deviation is that it cannot be used for comparing
the dispersion of two or more series of observations given in different units.
17. Regression analysis is a valuable tool for solving many problems especially for
prediction or estimation of future production, price, sales, incomes profits etc.
18. Standard Error (SE =
(1−r 2) 1−0.36 0.64
= ¿¿ = = = 0.08
√n 8 8
19. Steps for calculating geometric mean –
Find the logarithm of all values
Add the logarithmic values
Divide them by the number of items (N)
Then find the logarithm
20. Limitation of range –
1. Not based on all observations of the series
2. Very much affected by fluctuations of sampling
3. Not capable of further mathematical treatment
4. Does not take into account the frequencies of the distributions.
21. Index numbers are called specialized type of averages as it helps in comparing
changes in series which are in different units.
22. Horace Secrist defined statistics as “aggregate of facts affected to a marked extent
by multiplicity of causes numerically expressed, enumerated or estimated
according to reasonable standards of accuracy, collected in systematic manner for
a pre-determined purpose and placed in relation to each other.
III
23. For averaging the speed of a vehicle, harmonic mean is appropriate

x 1
x
100 0.0100
200 0.0050
300 0.0033
400 0.0025
0.0208
N
4
H.M. = Σ 1 = = 192 km/hr
0.0208
x
24.
Census method Sampling method
Information is collected from the Information is collected from the
entire units or population representative units of population.
Accurate and adequate information Inaccurate and inadequate information
Time consuming Less time consuming
Cost involved is high Cost involved is less
Detailed study is not possible Detailed study of items is possible.
25. Conversion of fixed base to chain base index

Year Fixed Base Index Numbers Chain Base index numbers

2014 380 100
2015 400 400
x 100 = 105.26
380
2016 440 440
x 100 = 110.00
400
2017 480 480
x 100 = 109.09
440
2018 500 500
x 100 = 104.16
480
2019 550 550
x 100 = 110.00
500

26. (i) Can derive precise degree and direction of relationship

(ii) reduce uncertainly in prediction.
(iii) Help in presenting average relationship between any 2 variables.
(iv) Helped in Economics, business and Science and technology
27. Range = L-S = 150 – 0 = 150
L−S 150−0 150
Co-efficient of range = = = = 1
L+S 150+0 150
28. The following are the important uses of regression analysis
(i) Helps in establishing a functional relationship between 2 or more variables.
(ii) Valuable tool for many problems of economic and business reasons.
(iii) Can be used for prediction or estimation of future production price, sales,
income profits etc.
(iv) Provide - measures of co-efficient of correlation.
(v) Useful in daily life, sociological studies etc.
29. Tabulation is systematic presentation of collected and classified numerical data in
columns and rows on the basis of their salient features. The following are the
rules for tabulation –
1. Should be simple and compact
2. Caption and tabs should be arranged in a systematic order
3. Should suit the purpose.
4. Unit of measurement should be clearly defined.
5. Figures may be rounded off
6. Suitable approximations may be adopted.
7. Miscellaneous column may be added for unimportant items.
 8. Should be complete and self explanatory
9. Should be attractive
10. Abbreviation should be avoided
11. Do not use ditto marks
12. Proper lettering will be useful

30. a) Merits and demerits of standard deviation

Merits
1. It is rigidly defined.
2. It is based on all the observations.
3. It strictly follows the algebraic principles and never ignores plus and minus
signs.
4. It is capable or further algebraic treatment.
5. It is not much affected by the fluctuations in sampling
6. It enables us to make a comparative study of the two or more series and to
tell upon their consistency or stability.
7. It enables us to determine the reliability of the mean of two or more series
when they show the identical means.
8. It is possible for the calculation of two or more groups.
9. It is used in testing of hypothesis.
10. Standard deviation is the standard measure of dispersion.
Demerits
1. It is not understood by a layman.
2. Its calculation is difficult as it involves many mathematical models.
3. It is affected very much by the extreme values of the series.
4. The chief limitation of standard deviation is that it cannot be used for
comparing the dispersion of two or more series of observations given in
different units.
b)
x d d2
10 -45 2025
20 -35 1225
30 -25 625
40 -15 225
50 -5 25
60 5 25
70 15 225
80 25 625
90 35 1225
 100 45 2025
∑ x = 550 ∑ d2 = 8250

∑x 550
x́ = = = = 55
N 10

∑ d2 8250
S.D =
√ N
=
√ 10
= √ 825 = 28.72

31. Index numbers are useful in studying :-Trends in exports, imports, balance of
payments etc. Policy decisions of govt. Purchasing power of money, National
Income Pulse of the economy i.e. the general economic conditions.
IV
32. Computation of correlation co -efficient between height of father and son
Height of X–X X2 Height of Y–Y
father son
(X -168) (Y -169)
X Y y xy
y2
165 -3 9 167 -2 4 6
166 -2 4 168 -1 1 2
167 -1 1 165 -4 16 4
167 -1 1 168 -1 1 1
168 0 0 172 3 9 0
169 1 1 172 3 9 3
170 2 4 169 0 0 0
172 4 16 171 2 4 8
Ʃx = 1344 Ʃx2 =36 ƩY = 1352 ƩY2 =44 Ʃxy =24
n=8

Average height of father (X) = Ʃx = 1344 = 168

n 8

Average height of son (Y) = Ʃy = 1352 = 169

n 8
r = Ʃxy = 24 = 24 = 24 = 0.603
√ Ʃ x 2+ Ʃ y 2 √ 36 x 44 √ 1584 39 80
33.Calculation of Correlation Co-efficient
(X-25) (Y -8)
x dx dx2 y dy dy2 dxd
29 +4 16 8 0 0 0
23 -2 4 3 -5 25 +10
25 0 0 7 -1 1 0
15 -10 100 5 -3 9 +30
27 +2 4 8 0 0 0
29 +4 16 19 +11 121 +44
24 -1 1 10 +2 4 -2
31 +6 36 7 -1 1 -6
32 +7 49 5 -3 9 -21
35 +10 100 8 0 0 0
Ʃx = 270 Ʃdx = 20 Ʃdx2 = 326 Ʃy = 80 Ʃdy = 0 Ʃdy2 = 170 Ʃdxdy = 55

1. Regression equation of X on Y
x – X́ = bxy (Y – Ý )

∑x 270
(a) X́ = = = 27
N 10

∑y 80
(b) Ý = = = 8
N 10

−∑ dx X ∑dy
55−(20 x 0) 55−(20 x 0) 55
(c) ∑ dxdy N = = = 170−¿ ¿ = =
❑ 2 10 10 170
Σ dy −¿ ¿ ¿
0.324

( d) X – X́ = bxy (Y – Ý )
X – 27 = bxy (Y - Ý )
X – 27 = 0.324 (Y – 8)
X – 27 = 0.324 Y - 2.592
X = 0.324 Y + 24.408 …….. (1)

2. Regression equation of Y on X
Y –Ý = byx ( X − X́ )

∑x 270
(a) X́ = = = 27
N 10
 ∑y 80
(b) Ý = = = 8
N 10

−∑ dx X ∑dy 55−(20 x 0) 55−0

55
(c) byx = ∑ dxdy N = 10 = 400 =
2
326− 326−40
❑ Σ dx −¿ ¿ ¿ 326−¿ ¿¿ 10
55
= = 0.192
286

( d) Y – Ý = byx (X – X́ )
Y–8 = 0.192 (X – 27)
Y–8 = 0.192 X – 5.184
Y = 0.192X - 5.184+8
Y = 0.192 X + 2.816 …….. (2)

3. Estimation of minimum temperature when maximum temperature is 40.

Y = 0.192X + 2.816
= (0.192 x 40) + 2.816
Y = 7.68 + 2.816 = 10.496
∴ Min. temp = 10.5
4. Estimation of Maximum temperature when minimum temperature is 12.
X = 0.324Y + 24.408
= (0.324 x 12) + 24.408
X = 3.888 + 24.408 = 28.296
∴ Min. temp =28.3

34. Calculation of quantity index numbers:-

Commodity P0 P1 q0 q1 q1 p0 q0 p0 q1 p1 q0 p1
P 7 8 7 9 63 49 72 56
Q 4 6 10 12 48 40 72 60
R 6 8 15 20 120 90 160 120
S 5 7 5 3 15 25 21 35
246 204 325 271

Σ q 1 p0 246
(i) Laspeyre’s quantity index q01 (P) = x 100 = x 100 = 120.58
Σ q 0 p0 204
Σq 1 p1 325
(ii) Paasche’s quantity index q01 (L) = x 100 = x 100 = 119.92
Σ q 0 p1 271
Σ q1 p0 Σ q1 p 1
+
(iii) Bowley & Dorbish quantity index q01 (BD) = Σ q0 p0 Σ q0 p1 x 100
2
 246 325
+ 1.205+ 1.199
= 204 271 x 100 = x 100 =
2
2
120.2
Σ q 1 p0 Σ q 1 p1 246 325
(iv) Fisher’s quantity index q01 (F)
√ +
Σ q 0 p0 Σ q0 p1
x 100 =
√ +
204 271
x 100

=√ 1.205 x 1.199 x 100 = 120.19

Σ q 1 p0 Σ q 1 p1
(v) Marshall Edge worth’s quantity index q01 (ME) = + x 100
Σ q 0 p0 Σ q 0 p1
245 325 570
= + x 100 = x 100 = 120
204 271 475

35. (a) Different methods of measurement of trend in the study of time series analysis
are
(1) Method of free hand curve
(2) Method of Semi – average
(3) Method of moving average
(4) Method of least squares.
(b) Merits and Demerits of moving average method –
Merits of moving average method are –
(i) Simple and objective
(ii) Cyclical variations are reduced
(iii) Helps in measuring seasonal cyclical and irregular variations.
Demerits of moving average method are –
1. There are no trend values for some years in the beginning and at the end.
2. Not helpful in forecasting as it does not establish relationship between the
values of X and Y
3. Biased in case of non linear trend
4. Selection of the period is difficult.