Business Level - I

Business Mathamatics & Statistics (BL 2)

Pilot Paper

Instruction to candidates
1) Time Allowed 2 Hours
2) Total 100 marks
3) 50 Questions. All Questions are compulsory
4) Select the most suitable answer

1. It is given that ∑f =23, ∑fx = 79 and ∑fx2= 1,161 for a frequency distribution.
The mean and standard deviation would be respectively:
A. 3.4 and 38.7
B. 14.7 and 6.22
C. 3.4 and 6.22
D. 6.22 and 3.4

2. Baker’s Ltd is supposed to sell 1,000 units each at Rs 100 with a variable cost of 40,000
and a fixed cost of 40,000, thus making a profit of Rs. 20,000. However, the sales price is
increased by 2%, sales volume fell by 10%, the variable cost per unit increased by 5% and
fixed costs increased by 2%.

The change in profit is given by:

A. 30%
B. 34%
C. 37%
D. 38%

3. Out of 200 students in a school 80 are studying Accountancy and 60 are studying
Combined Mathematics. 20 students are studying both these subjects. If one of these
students is appointed as the Head Prefect of the school, the probability that the student is
studying only one of the two subjects is calculated as;

A. (80/200) + (60/200) + (20/200)

B. (80/200) + (60/200) – (20/200)
C. (80/200) + (60/200) – (40/200)
D. (80/200) x (60/200) / (20/200)

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4. An investment of Rs. 89,286 has been made to buy a one year treasury bill with a face
value of Rs. 100,000. Exactly half a year later the treasury bill is priced at Rs. 94,787.

In relation to this investment, the following statements have been made;

(i) The annual effective interest rate of the investment is 10.71%

[(100,000 – 89,286)/100,000].
(ii) His amortised interest income for the first half year is Rs. 5,501
[94,787 - 89,286].
(iii) Market interest rates for similar investments have increased after six months
from the date of the initial investment.

Which of the above statements are correct?

A. (i) and (ii) only

B. (ii) and (iii) only
C. All of (i), (ii) and (iii)
D. None of (i), (ii) and (iii)

5. Salaries of junior accountants is known be normally distributed with a mean salary of Rs

90,000 with a standard deviation of Rs 6000.

Which of the below statements is incorrect?

A. The salaries of junior accountants will be in the range of 84,000 and 96,000
B. In the long run, the mean of a large group of sample means, with equal sample
size is Rs 90,000.
C. If the sample size is 36, the variability of sample means is expressed by a
standard deviation of Rs 1000.
D. The median of the distribution is much lower than the mean value.

6. An electric sweeper was sold at a price of Rs. 72,150, inclusive of Value Added tax (VAT)
at 11%, with a profit margin of 25%. The profit of the electric sweeper is:

A. Rs. 16,250.00
B. Rs. 18,037.50
C. Rs. 13,000.00
D. Rs. 14,430.00

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7. A company has been given three investment options as follows:

(i) 5% (per six month period) compounded every six months

(ii) 2.5% (per three month period) compounded every three months
(iii) 10.05% (per annum) compounded annually

The most profitable investment is

(iv) (i) only

(v) (ii) only
(vi) (iii) only
(vii) Both (i) and (iii) which are equally good

8. Consider the equation y = -4x2 + 3x -2.

(i) The graph of the equation is shaped like a ditch

(ii) The graph of the equation has a maximum point
(iii) d2y/dx2 < 0
(iv) d2y/dx2 > 0

Which of the above is/are incorrect?

A. (ii) and (iii) only

B. (ii) and (iv) only
C. (iii) and (iv) only
D. (iv) only

9. With regard to the cost, revenue and profit functions, which of the following statements
are correct:

A. Total cost is typically the product of variable cost and fixed cost.
B. Marginal cost is the average of the total cost.
C. At profit maximisation point, revenue is maximised and cost is minimised.
D. Marginal revenue graph is formed by plotting the gradients of the total
revenue function.

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10. A representative sample of 100 students is to be chosen from a population of 10,000
university students to evaluate the satisfaction on university facilities.

Which one of the following gives a simple random sample of the 100 students?

A. Randomly selecting 100 students only from the business faculty and
engineering faculty, being the largest faculties.
B. Randomly selecting 100 students from all faculties proportionate to the
number of students in each faculty.
C. Assigning numbers to all the students (from 1 to 10,000) and selecting 100
random numbers by drawing lots or with the aid of computer software.
D. Assigning numbers to all the students (from 1 to 10,000) and selecting every
200th students (i.e. 200th, 400th, 600th ........... ).

11. ABC company has recorded the following total costs over the last five months, varying
with the level of output. The following have been calculated:

∑X = 100, ∑Y= 400, ∑XY = 8,104, ∑X2 = 2,040 and ∑Y2 = 32,278

What would be the pair of values for ‘a’ and ‘b’ for the regression of Y upon X: Y = a + bX

A. a = 2.6, b = 28
B. a = 28, b = 2.6
C. a = 2.4, b = 27
D. b = 2.4, a = 27

12. An item was sold at Maximum Retail Price (MRP) of Rs 12,000 inclusive of Value Added
Tax (VAT) at 12% and a profit mark-up of 25%. The VAT rate has been increased from
12% to 15% but no increase is permitted in MRP.

The new profit mark-up is:

A. 10.00%
B. 20.65%
C. 21.74%
D. 21.25%

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13. An item was sold in a retail shop for Rs. 2,520, with a discount of 10% from the retail price.
The retail shop purchases the item from the manufacturer at a 25% discount on the retail
price. The manufacturer keeps a profit margin of 20% and is liable for Value Added Tax at
12%.

The cost of this item to the manufacturer is:

A. Rs. 1,200
B. Rs. 1,380
C. Rs. 1,500
D. Rs. 1,840

14. The arithmetic mean of 50 items was 100. At the time of calculation two items 180 and 90
were wrongly taken as 100 and 10.
Which of the following would be the correct value of the mean?

A. 103.2
B. 101.9
C. 96.8
D. 100.8

15. Barn and Co. plans to invest a sum today that will grow to Rs.10,000 in 5 years' time.

The amount that needs to be invested if the annual interest is 10% to the nearest Rs. is:

A. Rs. 7,143
B. Rs. 7,320
C. Rs. 6,209
D. Rs. 6,105

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16. A firm has a fixed cost of Rs. 150,000 per week in producing exercises books. The unit
variable cost of production is given as X + 3X2. The demand function of an exercise book
is P = 80 – X. Where, X is the quantity manufactured/sold and P is the price per unit.

Which of the following would be the profit function per week from exercise books?
A. -2X2 – 3X3 + 80X – 150,000
B. 2X2 + 3X3 – 80X – 150,000
C. -2X2 – 3X3 + 80X – 150,000
D. 2X2 + 3X3 – 80X + 150,000

17. The following statistics are available with regard to sales quantity (Y) and the advertising
expense (in Rs 1000) (X) for five consecutive months.

Year Advertising Expense Sales Quantity

(in 1000 Rs.) (X) (Y)
1 5 25
2 4 24
3 7 30
4 6 28
5 3 17

∑XY = 650 ∑X2 = 135 ∑Y2 = 3,174

Which of the following shows the nature of correlation between sales quantity and
advertising expense?

A. 0.9544 negative correlation

B. 0.9544 positive correlation
C. 0.1364 positive correlation
D. 0.1364 negative correlation

18. A retailer sells a product keeping a profit margin of 25%. The manufacturer has increased
the price of the product by 10% with effect from next month. The retailer decided not to
increase his price to customers.

Which of the following is the new mark-up of the retailer?

A. 12.00%
B. 13.64%
C. 18.50%
D. 21.21%

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19. The mean weight of 10 large eggs is 90g, 15 medium eggs is 76g and the mean weight of
all 50 eggs is 70g. The mean weight of the small eggs to the nearest whole number would
be:

A. 58g
B. 59g
C. 60g
D. 62g

20. A clothing brand currently sells its hand bags at Rs. 8,500 each and has decided to increase
the price by 10%. It is expected that this price increase to reduce its present monthly sales
volume by 5% to 25,840 bags.

Which of the following reflects the demand equation of the hand bags?

A. P = 25,500 – 0.625x
B. P = 52,020 – 1.6x
C. P = 27,200 – 0.625x
D. P = 25,840 – 0.625x

21. A company has developed the following relationship between production capacity (C) and
machine time in hours (t) of a new machine introduced by the company.

C = - 3.2t2 + 2368t + 7

Which of the following is the optimal capacity of the machine?

A. 340 units
B. 370 units
C. 440 units
D. 460 units

22. A company has estimated the following with regard to the cost and production volume of
one of its products.

• Direct material cost per unit: Rs. 120 ± 5%

• Direct labour and other costs per unit: Rs. 100 ± 6%
• Daily production: 1000 units (to the nearest hundred units)

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 The maximum absolute error of the total daily production cost is:

A. Rs. 22,340
B. Rs. 23,600
C. Rs. 11,600
D. Rs. 11,000

23. A machinery which was bought just now by a company needs to be replaced in another
15 years, which costs Rs. 6 million. The company wishes to set up a sinking fund with 15
equal annual installments starting one year from now (at year 1). The fund earns 12%
interest per annum.

The amount to be invested each year in order to have Rs. 6 million at the end of 15 years,
to the nearest rupee is:

A. Rs. 143,701
B. Rs. 160,945
C. Rs. 185,227
D. Rs. 400,000

24. The trend of Sales is given by Y = 2,500 + 80X, where Y is the number of items sold and X
represents the period number. If the 10th period has a seasonal factor of 65%, assuming a
multiplicative forecasting model, then the sales forecast for the 10th period is:

A. 2,145 units
B. 2,565 units
C. 3,020 units
D. 3,352 units

25. A business plans to increase is facilities that will cost Rs. 1 million in another 5 years’ time.
They decided to invest in a sinking fund, where the fund will earn interest at 10% per
annum in 5 equal payments starting now.

What is the amount that has to be invested at each payment?

A. Rs. 147,923
B. Rs. 148,907
C. Rs. 150,045
D. Rs. 149,246

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26. The following functions have been estimated using the past information of a product.
Total cost = 1,800,000 + 120Q,
Price = 600 – 0.002Q,
where Q represents the quantity.

The profit function for the above product is:

A. 600 – 120.002Q – 1,800,000

B. 720Q – 0.002Q2 + 1,800,000
C. 480Q – 0.002Q2 – 1,800,000
D. 600 + 119.992Q – 1,800,000

27. The profit function (P) is given by the following equation, where (P) is the profit and (q)
is the quantity per week.

P = -6.5q2 + 32.5q + 30

What is the quantity in order to have maximum profit per week?

A. 2.5 units
B. 2.9 units
C. 3.5 units
D. 4.6 units

28. The life span of a certain brand batteries is normally distributed with a mean of 5,000
hours and a variance of 1,600 hours. The battery is considered to be poor quality if the life
span is less than 4200 hours
What is the probability of a battery to be poor quality?
A. 47.72%
B. 2.28%
C. 52.28%
D. 97.72%

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29. A person invested in a sinking fund starting now, paying equal monthly instalments to
accumulate a total sum of Rs. 1 million in 5 years’ time. The fund earns an annual interest
of 12%.

The monthly instalment to the nearest rupee is:

A. Rs. 9,174
B. Rs. 12,123
C. Rs. 12,244
D. Rs. 16,172

30. What is the present value of Rs. 6,000 in perpetuity at a discount rate of 12%?

A. Rs. 60,000
B. Rs. 5,280
C. Rs. 6,720
D. Rs. 50,000

31. What is the present value of a perpetuity of Rs. 9,750 per year given an interest rate of
8%, assuming that the first cash flow occurs today?

A. Rs. 123,600
B. Rs. 60,564
C. Rs. 121,875
D. Rs. 922,875

32. If cost = 6,500 – 40P and revenue = 800P – 30P2, where P = price per unit, how would you
express profit per unit (in terms of price)?

A. 760P – 30P2 – 6,500

B. 840P – 30P2 + 6,500
C. 30P2 – 840P + 6,500
D. 840P – 30P2 – 6,500

33. If demand D = 160 – 8P, how is price (P) expressed in terms of D?

A. P = 20 – D
B. P = 20 – D/8
C. P = 20 + D/8
D. P = D/168

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34. If the price of a product P = 200 – D/1.5 where D = demand of the product, how is the
demand of the product expressed in terms of P, the price?

A. D = 300 + 1.5P
B. D = 300 – P
C. D = 1.5P – 300
D. D = 300 – 1.5P

35. Solution to 2(2x- 4) = 13, is:

A. x = 4.25
B. x = 5.25
C. x = 4.5
D. x = 5.5

36. In a class of 30 students, Average Mathematics mark for the first 10 ranked students was
86. Average mark of the last 10 ranked students was 48. If the total marks for the entire
class students was 1960, the average for the middle rank students must be:

A. 62
B. 70
C. 66
D. 60

37. A normal distribution has a mean value of 72 and a standard deviation of 18.2.

The probability of a value being 56 or less is:

A. 0.19
B. 0.35
C. 0.50
D. 0.85

38. Simple Random Sampling is:

A. Every member of one sub group of the population is selected

B. Every nth member of the population is selected
C. Members of different strata are selected randomly
D. Members are selected with an equal chance of being selected

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39. The weights of apples in an orchard are normally distributed. The mean weight is 200 g
and the standard deviation is 40 g.

What is the probability that an apple weighing more than 220 g?

A. 0.1915
B. 0.3085
C. 0.6915
D. 0.9686

40. T-shirt’s produced in a production line are known to contain damages: 2% with severe
damages, 4% with moderate damages and 8% with a minor damage.

The probability that a randomly-chosen T-shirt will have a moderate damage or a minor
damage is:

A. 0.32
B. 0.12
C. 0.10
D. 0.04

41. The sales forecasting model based on the last 12 months, is given by y = 321.26 – 2.34x,
where y is the number of items sold and x represents the month. If the 13th month has a
seasonal factor of –20.5, assuming an additive forecasting model, then the sales forecast
for that month, to the nearest whole unit, is:

A. 270 units
B. 300 units
C. 324 units
D. 347 units

42. A regression equation y = a + bx is used to forecast the value of y for a given value of x.

Which of the following is not suitable for prediction?

A. Predicting another sample in the same range of x values

B. Predicting for values of x outside the range of those in the sample used to
calculate the equation
C. For variables with decimal or fractional data values.
D. For samples with negative Correlation coefficient values

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43. The variance of the following set of data is: 3, 4, 5, 7, 8, 9.

A. 2.40
B. 2.16
C. 6.67
D. 4.67

44. Which of these options is true where data is positively skewed?

A. The least representative average is the median

B. The mode will overestimate the average
C. The mean will tend to overestimate the average
D. The mean, mode and median will produce equally representative results

45. Solution to the inequality 4(x - 3) < 2x + 2 is:

A. x<7
B. x<–1
C. x < 2.5
D. x>–1

46. In a positively skewed distribution:

A. The mean is the same as the median

B. The mean is smaller than the median
C. The mean lies between the median and the mode
D. The mean is larger than the median

47. In a prediction model given by y = a + bx, and the value of y is Rs. 605 and x is 26, then
the value of the gradient, to two decimal places if the intercept is Rs. 270 is:

A. –10.48
B. –12.88
C. 10.48
D. 12.88

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48. Which of the following is a characteristic of systematic sampling?

A. The sample chosen might be sometimes biased

B. All the members have an equal chance of being selected
C. Prior knowledge of each item in the population is required
D. Pre-defined groups are required

49. In a factory, 55% of the workers are male and 65% are in the production department.

The probability that a worker chosen at random is either female or in the production
department is:

A. 0.85
B. 0.81
C. 0.84
D. 0.83

50. A mathematics teacher teaches Algebra, Arithmetic and Trigonometry topics. She does
one topic per week. She does Arithmetic as often as she does the algebra, but she does the
Trigonometry twice as often as she does the Arithmetic.

The probability that in any one week she does the algebra is:

A. 0.17
B. 0.20
C. 0.25
D. 0.33

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2023 June