4) Suppose John is risk neutral and faces an uncertain outcome in which he loses $ 1000 $1000 with probability p and $0with probability (1-p) (1-p), and John knows the value of p. John is offered insurance. John's value of this insurance is\40, i.e. his maximum willingness to pay for the insurance is $40. What is the value of p with 0

If John buys the insurance, he will pay a premium (or cost) of $40 and will receive the payment of…

Answered: 4) Suppose John is risk neutral and…

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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My book has these questions and I wanted to know what ia the best way to solve this. We are currently doing probability distribution and combinations.
3. Suppose the probability that any given person will believe a talc about the transgressions of a famous actrcss is 0.8. What is the probability that (a) the sixth person to hear this tale is the fourth one to bclieve it? (b) the third person to hear this tale is the first onc to bclicve it?
A survey is conducted on 700 Californians older than 30 years of age. The study wants to obtain inference on the relationship between years of education and yearly income in dollars. The response variable is income in dollars and the explanatory variable is years of education. A simple linear regression model is fit, and the output from R is below: Im(formula = Income ~ Education, data = CA) Coefficients: Estimate Std. Error t value Pr(>|t|) (Intercept) 25200.25 1488.94 16.93 3.08e-10 *** Education 2905.35 112.61 25.80 1.49e-12 *** Residual standard error: 32400 on 698 degrees of freedom Multiple R-squared: 0.7602
25. A survey showed that 82% of adults need corection (eyeglasses, contacts, surgery, etc.) for their eyesight IF 21 adults are randomly selected, find the probabity that no more than 1 of them need corection for their eyesight. Is 1 a significanty low number of adults requining eyesight correction? The probability that no more than 1 of the 21 adults require eyesight corection is? (Round to three decimal places as needed)
Consider the St. Petersburg Paradox problem first discussed by Daniel Bernoulli in 1738. The game consists of tossing a coin. The player gets a payoff of 2^n where n is the number of times the coin is tossed to get the first head. So, if the sequence of tosses yields TTTH, you get a payoff of 2^4; this payoff occurs with probability 1/2^4. What the expected value of playing this game?
An irregular six faced die is thrown and the expectation that in 10 throws it will give five even numbers is twice the expectation that it will give four even numbers. How many times in 10,000 sets of 10 throws would you expect to give no even number ?
A broker has a bonus scheme to encourage profitable trading. Under the rules of the scheme, any trader who drops below his daily target more than three times in a two-week period (10 working days) will forfeit his bonus at the end of the period. If the probability that an employee will be below target on any one day is 0.15, how many bonuses will be lost by 100 traders in a 50-week year? (Assumptions of independence are valid here). а. 50 b. 10 С. 125 d. 100
Suppose the probability of raining during summer (a 100 days covering June to August) is 2%. It means that every summer, there will be exactly 2 days (2% x 100) with rain. a) True b) False
31. Suppose the probability that a particular student will get a first division in the annual examination is Suppose he appeared in 10 class 10 tests and obtained first division in 4 of them. What is the probability now that the student will get a first division in the annual examination ?
State Jenson's inequality on expectation.
Assume that we flip a coin until a 2nd head is seen. Let X be the number of flips up until and including the flip that has the 2nd head. What is the pmf and expectation of X?

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