Problems

1. Use the data in the file Stock.xlsx to generate descriptive statistics for Intel and GE stock.

2. Use your answer to Problem 1 to compare the monthly returns on Intel and GE stock.

3. City Power & Light produces voltage-regulating equipment in New York and ships the equipment to Chicago. A voltage regulator is considered acceptable if it can hold a voltage of 25–75 volts. The voltage held by each unit is measured in New York before each unit is shipped. The voltage is measured again when the unit arrives in Chicago. A sample of voltage measurements from each city is given in the file Powercity.xlsx.

   • Using descriptive statistics, comment on what you have learned about the voltage held by units before and after shipment.

   • What percentage of units are acceptable before and after shipping?

   • Do you have any suggestions about how to improve the quality of City Power & Light’s regulators?

   • Ten percent of all New York regulators have a voltage exceeding what value?

   • Five percent of all New York regulators have a voltage less than or equal to what value?

4. In the file Decadeincome.xlsx, you are given a sample of family incomes (in thousands of 1980 dollars) for a set of families sampled in 1980 and 1990. Assume that these families are representative of the whole United States. Republicans claim that the country was better off in 1990 than in 1980 because average income increased. Do you agree?

5. Use descriptive statistics to compare the annual returns on stocks, T-Bills, and corporate bonds. Use the data contained in the file Historicalinvest.xlsx.

6. In 1970 and 1971, eligibility for the Vietnam draft was determined on the basis of a draft lottery number. The number was determined by birth date. A total of 366 balls, one for each possible birth date, were placed in a container and shaken. The first ball selected was given the number 1 in the lottery, and so on. Men whose birthdays corresponded to the lowest numbers were drafted first. The file Draftlottery.xlsx contains the actual results of the 1970 and 1971 drawings. For example, in the 1970 drawing, January 1 received the number 305. Use descriptive statistics to demonstrate that the 1970 draft lottery was not random and the 1971 lottery was random (Hint: Use the AVERAGE and MEDIAN functions to compute the mean and median lottery number for each month.)

7. The file Jordan.xlsx gives the starting salaries (hypothetical) of all 1984 geography graduates from the University of North Carolina (UNC). What is your best estimate of a “typical” starting salary for a geography major? In reality, the major at UNC having the highest average starting salary in 1984 was actually geography. This was because Michael Jordan was a geography major!

8. Use the LARGE or SMALL function to sort the annual stock returns in the file Historicalinvest.xlsx. What advantage does this method of sorting have over clicking the Sort button?

9. Compare the mean, median, and trimmed mean (trimming 10 percent of the data) of the annual returns on stocks, T-Bills, and corporate bonds given in the file Historicalinvest.xlsx.

10. Use the geometric mean to estimate the mean annual return on stocks, bonds, and T-Bills in the file Historicalinvest.xlsx.

11. The file Dow.xlsx contains monthly returns on the 30 Dow stocks during the last 20 years. Use this data to determine the three stocks with largest mean monthly returns.

12. Using the Dow.xlsx data again, determine the three stocks with the most risk or variability.

13. Using the Dow.xlsx data again, determine the three stocks with the highest skew.

14. Using the Dow.xlsx data again, how do the trimmed mean returns (trim off 10 percent of the returns) differ from the overall mean returns?