Essay on Assignment 1

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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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Table 2.14. An excerpt from the file ordersizes.xls

Order # | Amount ($) | 1 | 311 | 2 | 282 | 3 | 812 | 4 | 74 | 5 | 49 | 6 | 588 | 7 | 836 | 8 | 94 | 9 | 680 | 10 | 155 |

This is a histogram were the tail goes to the right, it means the average is larger than the median.
The average is $368.63 higher than the median $289.5
The histogram has one spike that shows that high concentration of data values is below this point. This histogram might be representing a seasonal product, which customers are ordering high volume of product until they run out and order one more time. Also it might be showing the histogram of a car brand were less expensive cars are sold frequently, but in average the middle range cars are bringing to the company more capital and high luxury cars are sold more expensive and less frequently.

Chapter 3.

15. Investment A has an expected return of $25 million and investment B has an expected return of $5 million. Market risk analysts believe the standard deviation of the return A is $10 million, and for B is $30 million (negative returns are possible here). a) If you assume returns follow a normal distribution, which investment would give a better chance of getting at least $40 million return?

For Investment A: (40 – 25)/ 10= 1.5 standard units= close to 94% to get the 40 million in return
For Investment B: (40 – 5)/ 30= 1.16 standard units= close to 88% to get the 40 million in

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