Essay on Assignment 1

Words: 1315
Pages: 6

Chapter 1.
6. Many drug safety research studies are sponsored by pharmaceutical companies that would financially benefit if the results of the study are favorable. Is this an example of a potential confounding factor?

If the sample to test is selected to favor the results of the drug company, it would be categorized as a confounding factor, but if instead the drug company is sponsoring a serious study where the sample is selected randomly and divided in treatment and control groups, the experiment will be fairly analyzed and the results will be closed to reality.

13. Below are some data from 2005 for on-the-job deaths in dangerous jobs. Which job seems the most dangerous? Which seems the least dangerous? Explain.

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The investment A is less risky than investment B.
Actual Return B: 5 + (30*1.16) = 5 + 34.8= 39.8 million

b) How could you answer to part a) change if you knew returns followed a skewed distribution instead of a normal distribution?
It will show a better understanding of the expected return. As an investor I will prefer the investment that shows a negative tail that has a higher risk and higher return, but other factors might change my decision. So Investment B would be my choice.

22. You are trying to get an important new customer to buy a product that you produce. Their decision to buy the product from you will depend primarily on the speed with which you can produce the product once they have placed an order. Currently, it takes you 70 hours on average to produce the product with a standard deviation of 8 hours. From historical data, you have determined that actual production times follow a normal distribution. a) What percent of the time can you produce the product within 80 hours?
(80-70)/8= 1.25
Close to 1.25 in the table is 1.23 that it is 89%, so roughly the 89% of the time the product will be produce in 80 hours.

b) You want to promise that 95% of the time you will be deliver the product in under _86____hours.
X= 70 + (8x2)= 86 hours c) Assuming the standard deviation stays the same, how much do you have to reduce your average production time so that 95% of the time you can deliver the product in under 75 hours?