1. A recent survey of banks revealed the following distribution for the interest ratebeing charged on a home loan (based on a 30-year mortgage with a 10% downpayment).Interest Rate7.0%7.5%8.0%8.5%> 8.5%Probability0.120.230.240.350.06If a bank is selected at random from this distribution, what is the chance that theinterest rate charged on a home loan will exceed 8.0%?

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Answered: 1. A recent survey of banks revealed…

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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Suppose that you are offered the following "deal." You roll a six sided die. If you roll a 6, you win $17. If you roll a 3, 4 or 5, you win $4. Otherwise, you pay $8.a. Complete the PDF Table. List the X values, where X is the profit, from smallest to largest. Round to 4 decimal places where appropriate. Probability Distribution Table X P(X) d. Based on the expected value, should you play this game? No, this is a gambling game and it is always a bad idea to gamble. No, since the expected value is negative, you would be very likely to come home with less money if you played many games. Yes, since the expected value is 0, you would be very likely to come very close to breaking even if you played many games, so you might as well have fun at no cost. Yes, since the expected value is positive, you would be very likely to come home with more money if you played many games. Yes, because you can win $17.00 which is greater than the $8.00 that you can lose.
PrOvide an approprlate Pesponsé. A lab orders a shipment of 100 rats a week, 52 weeks a year, from a rat supplier for experiments that the lab conducts. Prices for each weekly shipment of rats follow the distribution below: Price Probability How much should the lab budget for next year's rat orders assuming this distribution does not change. (Hint: find the expected price.) O $1238.00 $10.00 $12.50 $15.00 0.35 0.4 0.25 O $643.50 O $3,346,200.00 O $12.38 A Moving to another question will save this response. « < Question 14 of 19 5:30 PM rch 3/25/2021 PgUp FIL PgDn End F10 DII PrtScn Home 17 & W E G H K D
“Passive investors outperform active investors during recession”. Discuss the statement citingexamples.A stockbroker calls you and suggests that you invest in the Ambrick Company. After analyzingthe firm’s annual report and other material, you believe that the distribution of rates of return is asfollows: Possible Rate of Return Probability -0.60 0.05 -0.3 0.20 -0.10 0.10 0.20 0.30 0.40 0.20 0.80 0.15 Compute the expected return [E(Ri)] on Ambrick stock
(Note: Choices given in the dropdown list are rounded.) SciTool is now bidding for another contract. From historical data, there's a 15% chance that there are no other firms bidding for the contract. We also know if there are competitors, their bidding prices follow the following distribution. Competitor's bid price probability between $1.1M and $2.6M $1.9M 0.25 0.30 0.3 0.05 Suppose SciTool bids $1.05M. What is the winning probability of SciTool? [Select] If SciTool wins, they get a payoff of (bid price - $0.5M), while if they lose, they incur a payoff of -0.2M. What is their expected payoff? [Select )
2. Statistical measures of stand-alone risk Remember, the expected value of a probability distribution is a statistical measure of the average (mean) value expected to occur during a possible circumstances. To compute an asset's expected return under a range of possible circumstances (or states of nature), multiply the anticipated return expected to result during each state of nature by its probability of occurrence. Consider the following case: Ethan owns a two-stock portfolio that invests in Happy Dog Soap Company (HDS) and Black Sheep Broadcasting (BSB). Three- quarters of Ethan's portfolio value consists of HDS's shares, and the balance consists of BSB's shares. Each stock's expected return for the next year will depend on forecasted market conditions. The expected returns from the stocks in different market conditions are detailed in the following table: Market Condition Probability of Occurrence Happy Dog Soap Black Sheep Broadcasting Strong 0.50 50% 70% Normal 0.25 30% 40% Weak…
Amount of claim (to nearest $20,000) Probability $0 0.70 $20,000 0.17 $40,000 0.06 $60,000 0.04 $80,000 0.02 $100,000 0.01 A. Calculate the expected value? B. How much should the company charge as an average premium so that it breaks even on its claim costs? C. How much should the company charge to make a profit of $50 per policy?
You buy a stock that has an annual expected return of 20% and a standard deviation of 25%. Last year, investors in the stock lost 32.5% of their money and the year before they gained 40%. What is the probability that the outcome on this stock will be better than -32.5%, but less than +40% this year? a 18.75% b. 52.50% c. 78.82% d. 22.97% e. 77.03%
(This is a introduction to statistics course) From past records, a department store finds that 70% of the people who enter the store will make a purchase on Black Friday. Suppose that 3 customers are randomly selected at the store, answer the following questions: 1) What is the chance that exactly one out of three customers make a purchase? Give your answer (%) rounded to one decimal place. (For example, if your answer is 0.5125 (51.25%), then it will be 51.3% after being rounded to one decimal place.) 2) Explain clearly.
An analyst developed the following probability distribution for the rate of return for a common stock. Scenario Probability Rate of Return 1 0.25 -15% 2 0.35 5% 3 0.40 10% a. Calculate the expected rate of return. (Round intermediate calculations to at least 4 decimal places.) b. Calculate the variance and the standard deviation of this probability distribution. (Round your final answer to 2 decimal places.)
A lab orders a shipment of 199 rats a week, 52 weeks a year, from a rat supplier for experiments that the lab conducts. Prices for each weekly shipment of rats follow the distribution below: Price $10.00 $12.50 $15.00 Probability 0.4 0.25 0.35 How much should the lab budget for next year's rat orders assuming this distribution does not change. (Hint: How much should they EXPECT to pay?)
Below are data on economic condition, probability, and expected return on stock and bond funds in a year. Scenario Probability Stock Fund (%) Bond Fund (%) Severe recession 0.05 -37 -10 Mild recession 0.25 -11 10 Normal growth 0.40 14 7 Boom 0.30 30 2 Calculate expected return and standard deviation of each fund. Calculate covariance and correlation coefficient between stock fund and bond fund. Your portfolio is composed of 85% in bond fund and 15% in stock fund. Using Excel, calculate expected return and standard deviation of your portfolio based on Equations in the attached images. Discuss important implications with respect to portfolio theory as you evaluate all numbers in part a, b, and c above.

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