Quantitative Methods 1
Assignment 3: Inference & Hypothesis Testing
This assignment has three questions, and is due by 5.00pm on Friday May
29. It is to be submitted electronically as a .pdf file using the assignment tool on
the subjects LMS page. Marks depend on your tutor being able to understand
your statements and arguments, so marks may be deducted for poor presentation
or unclear language. Use nothing smaller than 12 point font. If you wish
to write your assignment by hand and scan the file into a .pdf format, you may,
though any illegible content will not be marked. Note that you can only submit
one file, and cannot submit a file larger than around 10 megabytes.
You may work in groups of up to 4 students from the same allocated
tutorial. Groups should nominate one student to submit the assignment for
the whole group, with each students name and student number included in the
document. This assignment has a total of 25 marks available and may contribute
up to 10% of your final mark in this subject.
Question 1: Simulating From The Sampling Distribution
and Interval Estimates (12 Marks)
A disease simulator can be found at the following link:
The simulator models the spread of a disease across a population over
the course of 100 days. We will be using this application to simulate an
outbreak of Ebola in a high density region. According to research Ebola
has a transmission rate of 15% and is fatal for 60% those infected. Assume
that those infected with the Ebola virus will be contagious for 25 days. Set
these to be the parameter values under the details tab of he application.
Also set the population density to be High.
Run the simulation 30 times and record the proportions of people that die
from each outbreak. (1 Mark).
Compute a histogram of the proportion of deaths that result from each
Ebola outbreak and the four quantities that correspond to the histograms
shape characteristics. If you were able to observe an infinite number of
samples (i.e. run the simulation an infinite number of times), what shape
would you expect your histogram of the proportion of deaths to look like?
Why? (4 Marks)
Some news agencies have reported that Ebola kills 90% of those infected.
Evaluate this claim using your data set and confidence intervals. Provide
your reasoning and state your conclusion. 2 Marks)
Now suppose the combination of a new treatment protocol and heightened
vigilance in the population has reduced the transmission rate to only
5%. Using the simulation application and a hypothesis testing framework,
determine whether this reduction in the transmission rate will reduce the
proportion of people dying from Ebola outbreaks. Make sure to outline
all your steps and to provide your reasoning behind each step (5 Marks)
Question 2: Hypothesis Testing (8 Marks)
Joey Walnut is a champion competitive eater known for his unique cupcake
eating technique. Speaking at a press conference in the lead-up to
the coming competitive eating season, Joey claims that his cupcake eating
technique will allow him to consume an average of 50 cupcakes in 5
Frame Joeys claim in the language of statistics and specify the way in
which you would go about testing Joeys claim as well as the data you
would require to perform the test. (3 Marks)
Suppose that immediately after Joeys claim, his manager steps in and
asserts that Joey would be able to consume more than 50 cupcakes in 5
minutes on average. How would this change your test? (2 Marks)
Following Joeys press conference, his arch rival Wakeru Sobayashi decides
to hold a press conference of his own in which he claims to have developed
his own cupcake eating technique that will beat Joeys average by 3 cupcakes.
Frame Sobayashis claim in the language of statistics and specify
the way in which you would go about testing Sobayashis claim as well as
the data you would require to perform the test. (3 Marks)
Question 3: Bias and Consistency (5 Marks)
You are a junior analyst at a wealth management fund responsible for
evaluating the riskiness of various stocks and portfolios. One day, your
boss sends you a data set of weekly returns on number of different stocks
and asks you to compute a measure of variability for each stock using the
(xi ? x)
Where a stock return would be given by xi
What would be the consequence of this approach? Make sure to provide
your reasoning. (3 Marks)
Suggest an alternative approach that might yield a more desirable result.
Make sure to provide your reasoning. (2 Marks)