Draw the transition probability graph and construct the transition probability matrix of thefollowing problems.3. (Cyert and Associates, 1963) Bank1 offers loans which are either paid when due or are delayed. If thepayment on a loan is delayed more than 4 quarters (1 year), Bank con siders the loan a bad debt and writesit off. The following table provides a sample of Bankl's past experience with loansLoan amount Quarters late Payment history$2000 paid, $3000 delayed by an extra quarter, $3000 delayed by 2extra quarters, and the rest delayed 3 extra quarters.$4000 paid, $12,000 delayed by an extra quarter, $6000 delayed by2 extra quarters, and the rest delayed by 3 extra quarters.$7500 paid, $15,000 delayed by an extra quarter, and the restdelayed by 2 extra quarters.$42,000 paid and the rest delayed by an extra quarter.$50,000 paid.$10,000$25,0001$50,00023.SS0,000$100,0004

We have to construct probability transitions matrix

Answered: Draw the transition probability graph…

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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Which of the following are reasons why a process would be considered stochastic? 1. we lack of data on the variable of interest/generating process 2. we lack quantitative understanding of the generating process 3. the generating process itself is random 4. the process can be modelled with certainty 5. the generating process changes over time
An actuary is analyzing the lapse experience of his company's whole life product. The tabulated results are as follows: Age group % of whole life policyholders probability of lapsing 8 % < 20 5 % 20 – 29 13 % 5 % 30 – 39 21 % 4 % 40 – 49 29 % 4 % 50 – 59 17 % 3 % 60 + 12 % 2 % Since the age group 40-49 is the most profitable, what is the probability that a lapsed policy will belong to this cohort?
A researcher studying public opinion of proposed Social Security changes obtains a simple random sample of 25 adult Americans and asks them whether or not support the proposed changes . To say that the distribution of the sample proportion of adults who respond yes, is approximately normal , how many more adult Americans does the researcher need to sample in the following cases? (a) 15% of all adult Americans support the changes (b) 20% of all adult Americans support the changes
For Part B. Options are Excellent, Good, Fair for each blank.
To maximize the probability that customers purchase products during a visit to a website, a company that provides marketing services and website management experiments with different offers and website design to understand customer Web behavior. Possible actions by the website include offering the customer an instant discount, offering the customer free shipping, or doing nothing. A recent experiment found that customers make purchases 6% of the time when offered the instant discount, 4% when offered free shipping, and 3% when no special offer was given. Suppose 30% of the customers are offered the discount and an additional 40% are offered free shipping. Complete parts a through c. a) Construct a probability tree for this experiment. Complete the probability tree below. Discount .30 -Free Shipping .40 Nothing - Purchase No Purchase Purchase No Purchase Purchase No Purchase (Type integers or decimals.) 0.6 -Discount and Purchase 0.94 Discount and No Purchase - Shipping and Purchase -…
Consider the case of two financial assets and three market conditions (states). The tablebelow gives the respective probability for each market condition and the return of each assetin each one of them. Market Conditions State Recession Normal Expansion Probability of state 30% 40% 30% Return of asset A -30% 20% 55% Return of asset B -10% 70% 0% a. Derive the expected returns and the standard deviation of returns for the two assetsabove.
Suppose that the price of a share of a particular stock listed on the New York Stock Exchange is currently $39. The following probability distribution shows how the price per share is expected to change over a three-month period: Stock Price Change Probability -2 0.05 -2 0.10 0 0.25 1 0.20 2 0.20 3 0.10 4 0.10 a. Construct a spreadsheet simulation model that computes the value of the stock price in 3 months by simulating the price change 100 times. b. For a current price of $39 per share, what is the average stock price per share 3 months from now based on your simulation?
zample 3: Alexis is selling girl scout cookies. She has kept track of the number of boxes of cookies at her customers have purchased over the last 2 years. She wants to use this data to help edict how many boxes of cookies a new customer might purchase. The table below summarizes exis' data, with the number of boxes that a customer might purchase along with the rresponding probability that they will purchase that number of boxes based on her previous les. Use this information to answer the following questions. Outcomes: 2 3 4 5 6 7 8 X = x Probability: P(X = x¡) 0.21 0.16 0.32 0.11 0.08 0.05 0.04 0.02 0.01 a) Construct a probability histogram of the data in the table above and comment on the shape. ) What is the probability that a randomly selected customer will purchase 3 boxes of cookies? What is the probability that a randomly selected customer will purchase at least 4 boxes of cookies? What is the probability that a randomly selected customer will purchase anywhere from 2 to 5…

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