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Vegetable and Mountain States Potato

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STATISTICS FOR BUSINESS
LIST OF READING MATERIALS
Title
1. Job Applications
2. Managing Risk
3. Cutcraft Cutlery Corporation
4. Compensation for Faculty Members
5. Airline Satisfaction Survey
6. The Avocado
7. The Mountain States Potato Company
8. Edgartown Fisheries
9. Monitor Systems
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JOB APPLICATIONS
A business graduate very much wants to get a job in any one of the top 10 accounting firms.
Applying to any of these companies requires a lot of effort and paperwork and is therefore costly.
She estimates the cost of applying to each of the 10 companies and the probability of getting a job offer there. These data are tabulated below. The tabulation is in the decreasing order of cost.
1. If the graduate applies to …show more content…

The risk-averse investor would likely prefer investment C, and the risk-seeking individual would opt for investment A.
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A group of local investor decided to use this strategy in comparing the price earnings (P/E) ratios for two different groups of investments: The Banking Industry and the Health Care
Industry. Data were collected from the Corporate Scoreboard contained in the March 2,
1994, edition of Business Week. The Scoreboard contained P/E ratios for 55 U.S. banks and
49 companies under the Health Care category (including subcategories of drug distribution, drugs and research, health care services, ad medical products). To reduce the effect of any outliers, it was decided to eliminate the smallest and the largest ratio from each of the two groups. The resulting relative frequency distributions can be considered probability distributions describing the P/E ratios for each of the two industry types.
Banking Industry
P/E Ratio: 7 8 9 10 11 12 13 14 16 18
Frequency: 2 2 12 16 8 5 3 2 1 2
HEALTH CARE INDUSTRY
P/E Ratio: 10 11 12 13 14 15 16 17 18 19 20 21
Frequency: 1 1 1 5 3 3 4 4 1 2 3 2
P/E Ratio: 22 23 24 25 27 29 30 31 34 37 43
Frequency: 1 2 2 1 2 2 2 1 2 1 1
Source: Corporate Scoreboard, Business Week, March 7, 1994, pp.111-118.
QUESTIONS
1. Construct a probability distribution for each of the industry

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