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Arholiadau Diwedd Semester 1 2017/18 End of Semester 1 Examinations 2017/18

 

Cod y Modiwl a Theitl

Module Code and Title

ASB 4601

 

Amser a ganiateir: 2h

Time allowed: 2h

 

Cyfarwyddiadau / Instructions:

 

 

 

 

 

Answer THREE OF THE FIVE Questions

 

 

 

 

Trowch y dudalen drosodd pan ddywedir wrthych / Please turn over when instructed

 

 

 

 

 

 

Question 1: THEORY (50 Marks)

I. There are numerous ways in which sampling can be conducted for research. Describe three approaches to sampling and identify the strengths and weaknesses of each. (25 marks)

 

ANSWER (Purchase full paper to get all the solutions)

(I). 

1. Simple Random Sampling: In this type of sampling, each member of the population is chosen at random with each having an equal chance of being selected in the sample. The advantage of this sampling method is that it is simple and requires minimal knowledge of subgroups in the population. A major downside of this sampling technique is that some minority subgroups in the population may not be represented in the study.

 

2. Clustered Sampling: In clustered sampling, subgroups (clusters) in the population are randomly selected to be included in the study. Further sampling can then be done on the selected subgroups. The advantage of this sampling technique is that it reduces cost of taking samples from distant geographical regions. One of its disadvantages is high risk of bias when the selected subgroups are not representative of the population.

 

3. Stratified Sampling: In this method, the population is first divided into subgroups (or strata) such that members in a subgroup share similar characteristics before further sampling can then be done in each stratum. A major advantage of this sampling method is that it ensures that the sample is representative of each subgroup. A disadvantage of this sampling technique is that it requires knowledge of subgroups in the population. In addition, it may be costly to get samples from distant subgroups when we have a highly geographically dispersed population.

 

 

II. What is the difference between causality and correlation (25 marks)

 

Question 2: (50 Marks)

When we want to find a value representing the central location for a dataset we have more than one options and respective statistics to use, with the mean, the median and the mode being the most popular ones, but all these three come with some distinct advantages and disadvantages.

I. Discuss and highlight at least one of the advantages and one of the disadvantages of the mean, the median and the mode

(15 marks)

 

II. Give a numerical examples of a dataset with at least 20 data points so as to illustrate the main disadvantage of the mean (10 marks)

 

III. Give a numerical examples of a dataset with at least 20 data points so as to illustrate the main disadvantage of the mode (10 marks)

 

IV. Draw two boxplots so as to compare the datasets you created in (ii) and (iii) (10 marks)

If data are normally distributed how close you expect the mean, the median and the mode to be and why?

(5 marks)

 

Question 3: (50 Marks)

PharmaCo sells Medical Imaging Devices. It has just signed a contract to sell in 02-Apr-2018 a batch of these expensive devices to various customers around the world. The following table shows the orders from seven customers. The selling prices are fixed and in local currencies at the exchange rate prevailing at the time of the delivery – that is on 02-Apr-2018. Of course there is uncertainty in the exchange rates, and in order to cope with this uncertainty estimates of the mean and the standard deviation of these have been provided by the Bank of America for all but one (EUR) of the currencies. The report that came with these estimates stated that these rates are normally distributed and independent in between them.

 

Worldwide Orders			Exchange Rate (to $)
Customer	Quantity	Selling Price	Mean	Standard Deviation
UK	10	£ 57,500	$ 1.4/£	$ 0.041/£
France	2	65,000 €	$1.1/Euro	$0.03/Euro
Japan 1	5	Y 8,400,000	$0.009/Y	$0.00045/Y
Japan 2	3	Y 9,000,000	$0.009/Y	$0.00045/Y
Canada	4	CAD 98,500	$0.824YY/CAD	$0.0342/CAD
South Africa	2	R 4,100,000	$.0.0211/R	$.0.00083/R
USA	1	$100,000

 

 

I. Find the distribution and report the mean and the standard deviation of the total revenue in $ (10 marks)

 

 

II. a) What is the probability that this revenue will exceed $ 2,300,000?

(5 marks)

 

b) What is the probability that this revenue will be less than $ 2,100,000?

(5 marks)

 

III. HSBC offers to pay a sure sum of $2,170,000 (payment to be made on the 02 – Apr -2018) in return for the revenue in local currencies form the sales. What do you think, is this a good offer for PharmaCo or not? The CEO of PharmaCo is very risk-averse: do you think he/she will accept the offer? (10 marks)

 

IV. Why HSBC is making this offer and what is the probability that the bank will incur a loss? What other options does the bank has if they decide not to convert all/some of the currencies in $ on 02 – Apr -2018? (10 marks)

 

V. For the exchange rate of EUR/USD let’s assume that estimates were not available. Describe a process for producing such estimates.

 

Question 4
 

The following data are the Years_of_Experience of the brokers in an investment firm, and the Annual_Return_Rates they achieve for whatever funds they control.
 

  

Experience (in years)	5	10	15	15	20	25	30	28	29	33	34	35	7
Annual_Return_Rates (%)	2	3	3	4	5	6	9	7	8	10	10	11	1

I. Plot the Annual_Return_Rates against Years_of_Experience and fit a straight regression model to the data. (20%)

II. Plot the residuals from the model against Years_of_Experience. What does this say about the fitted model? (20%)

III. What percentage of variation in Annual_Return_Rates is explained by the regression relationship? (20%)

IV. if we are about to hire a new trader with 33 years of experience, what would be the expected Annual_Return_Rates for him/her? (20%)

V. Why the later result is not exactly 10 as prescribed from the real data (20%)

Question 5

The following Stata output refers to a regression for the determinants of the return on assets for a sample of 100 banks in a particular year. The variable definitions are as follows:
roa = percentage return on assets
lasset = natural logarithm of asset value (in £ billions)

I. (60%) Interpret the following results from the Stata output:list = 1 if the bank is stock market-listed, 0 otherwise.
 

i) Coefficients on lasset and list, and their t-statistics and p-values. (10%)

ii) R-squared (10%)

iii) Root MSE (= standard error of the regression). (10%)

iv) The F-statistic(10%)

v) The Adj R-squared (10%)

vi) Why did we use as a variable 'lasset' and not just 'asset'?

II. What is the expected return on assets for a isted bank with an asset value of £40 billion? (40%)
(10 marks)

 

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Last updated: May 27, 2021 01:36 PM

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