Write short note on the following: 1) Standard Deviation Concepts, Properties and Applications 2) Regression and Correlation Analysis

s Concepts, Assumptions, Properties and Applications Reference Book: - Business Statistics by N D Vohra

1. Probability distribution of returns of two securities X and Y are as shown below: Return (%) Probabi lity 7 0.05 8 0.10 9 0.20 10 0.30 11 0.20 12 0.10 13 0.05

Stock X

Stock Y

Return (%) Probabi lity

9 0.30

10 0.40

11 0.30

Determine expected returns and standard deviation of returns.

2. Compute the arithmetic average if the change in the prices of securities in a certain stock exchange is as follows: Ans: - 0.723 Change (%) 10 12 08 10 06 08 04 06 02 04 00 02 3. Number of Securities 54 30 50 71 119 346 Change (%) - 2 00 -4 -2 -6 -4 -8 -6 -10 -8 -Number of Securities 149 100 74 31 51 --

A pharmaceutical firm would like to establish the relationship between the annual profit and the annual expenditure on research and development (R & D).Given below is the data on R & D Expenditure and Annual Profit. Compute Mean and variance for X and Y. Obtain the appropriate

regression equation. Calculate the Standard Error of estimate and Coefficient of Determination and interpret these numbers. Hence determine coefficient of correlation between X and Y. Year R & D Expdr. (Rs. Crore) (X) Annual Profit (Rs. Crore) (X) 2000 05 31 2001 11 40 2002 04 30 2003 05 34 2004 03 25 2005 02 20 Total