Assignment 1. Problem1. a) Investopedia.com Says : “A volatile stock would have a high standard deviation. In mutual funds, the standard deviation tells us how much the return on the fund is deviating from the expected normal returns”. Is this statement appropriate ? b) In practice, we say when there are outliers, we can’t use variance as the only tool to measure the variation of the data. Why? If so, what else do we need ? Explain your choice. Problem 2. You are given a sample with size=20. Unfortunately, you can’t observe each values of the data. But you do know the sample , 10 = x and sum of squares , 4000 20 1 2 = ∑ = i i x a) Calculate the variance b) Calculate the coefficient of variation. c) For any samples with sample size =n , prove 2 2 2 1 2 2 2 1 ... x n x x x x n n ≥ + + + + − Problem 3. A cab was involved in a hit and run accident at night. There are two cab companies that operate in the city, a Blue Cab company and a Green Cab company. It is known that 85 cabs in the city are green and 15 are blue. A
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