Assume that the probability of a security breach is 1 percent.The chance of your computer system being damaged duringsuch an attack is 5 percent. If the system is damaged, theaverage estimated damage will be $ 50 million. What is theexpected loss in dollars?In the above question, an insurance agent is willing to insureyour facility for an annual fee of $35,000.00. Should thecompany accept the offer based on the cost benefit analysis?

P(security breach) = 1% = 1/100 = 0.01 P(system damage by attack) = 5% = 5/100 = 0.05 Average…

Answered: Assume that the probability of a…

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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"Heinz Plays Catch-up After Under-Filling Ketchup Containers" is the headline of an article that appeared on CNN.com.† The article stated that Heinz had agreed to put an extra 1% of ketchup into each ketchup container sold in California for a 1-year period. Suppose that you want to make sure that Heinz is in fact fulfilling its end of the agreement. You plan to take a sample of 20 oz bottles shipped to California, measure the amount of ketchup in each bottle, and then use the resulting data to estimate the mean amount of ketchup in each bottle. A small pilot study showed that the amount of ketchup in 20 oz bottles varied from 19.8 to 20.6 oz. How many bottles should be included in the sample if you want to estimate the true mean amount of ketchup to within 0.1 oz with 95% confidence? (Round your answer up to the nearest whole number.)
While reviewing the sample of audit fees, a senior accountant for the firm notes that the fee charged by the firm's accountants depends on the complexity of the return. A comparison of actual charges therefore might not provide the information needed to set next year's fees. To better understand the fee structure, the senior accountant requests a new sample that measures the time the accountants spent on the audit. Last year, the average hours charged per client audit was 3.27 hours. A new sample of 15 audit times shows the following times in hours. Complete parts a and b below. 2.9 3.8 4.3 3.9 4.2 4.7 3.7 3.3 2.5 3.6 4.5 4.2 4.7 3.1 3.3 a) Assume the conditions necessary for inference are met. Find a 90% confidence interval for the mean audit time. The 90% confidence interval to estimate the mean audit time is from to. (Round to two decimal places as needed.)
John Kittle, an independent insurance agent, uses a five-year moving average to forecast the number of claims made in a single year for one of the large insurance companies he sells for. He has just discovered that a clerk in his employ incorrectly entered the number of claims made four years ago as 1,400 when it should have been 1,200.a. What adjustment should Mr. Kittle make in next year’s forecast to take into account the corrected value of the number of claims four years ago?b. Suppose that Mr. Kittle used simple exponential smoothing with a = .2instead of moving averages to determine his forecast. What adjustment is now required in next year’s forecast? (Note that you do not need to know the value of the forecast for next year in order to solve this problem.)
Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock. Consider the case of Celestial Crane Cosmetics Inc. (CCC): Five years of realized returns for CCC are given in the following table. Remember: 1. While CCC was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for CCC for 2014 to 2018 are: 2014 2015 2016 2017 2018 Stock return 18.75% 12.75% 22.50% 31.50% 9.75% Given the preceding data, the average realized return on CCC’s stock is . The preceding data series represents of CCC’s historical returns. Based on this conclusion, the standard deviation of CCC’s historical returns is . If investors expect the…
FARO Technologies, whose products include portable 3D measurement equipment, recently had 26 million shares outstanding trading at $45 a share. Suppose the company announces its intention to raise $290 million by selling new shares. How large a loss in dollar terms will existing FARO shareholders experience on the announcement date, based on studies that show losses are 30% of the size of the new issue? Note: Enter your answer in millions without a sign. What percentage of the value of FARO’s existing equity prior to the announcement is this expected loss? Note: Round your answer to 1 decimal place. At what price should FARO expect its existing shares to sell immediately after the announcement? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Suppose that you just bought a painting for $1million. You plan to sell it exactly one year fromnow. You don’t know what the exact price will bewhen you sell. Nevertheless, you believe thatthere’s a 65% chance that you can sell it for$1.2million, and a 35% chance that you can sell itfor only $900,000. What is your expected gain orloss for this investment?
If a fictional treatment costs a total of $45,000 at today’s value and increases a person’s quality of life from 0.5 to 0.6 for the remainder of the person’s life from age 70 onward, and the person’s expected life span increases from 73 to 75, what is the total gain in QALYs (Quality-adjusted Life Years), and what is the ICER (Incremental Cost-effectiveness Ratio)?
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Suppose you are producing an outdoor festival. You estimate that you will make $100000 if it does not rain and make $50000 if it does rain. The weather bureau predicts that the chance of rain is 35% for the day of the concert. What are your expected earnings for the festival?
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A paper included analysis of data from a national sample of 1,000 Americans. One question on the survey is given below. "You owe $3,000 on your credit card. You pay a minimum payment of $30 each month. At an Annual Percentage Rate of 12% (or 1% per month), how many years would it take to eliminate your credit card debt if you made no additional charges?" Answer options for this question were: (a) less than 5 years; (b) between 5 and 10 years; (c) between 10 and 15 years; (d) never—you will continue to be in debt; (e) don't know; and (f) prefer not to answer. The paper also reported that 37.1% of those in the sample chose one of the wrong answers (a, b, or c) as their response to this question. Is it reasonable to conclude that more than one-third of adult Americans would select a wrong answer to this question? Use ? = 0.05. (Round your test statistic to two decimal places and your P-value to four decimal places.) State the appropriate null and alternative hypotheses. H0: p =…

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