Problem 6: Betty and Bob buy one share of stock for $100. They speculate that one year from now the price and associated probability of the one share of stock will be as per the following table. Price 50 75 100 125 150 Probability 0.10 0.10 0.20 0.40 0.20 Find the “Expected” Net Profit or Loss in one year. Your final answer should be correct to 2 places after the decimal point. Be sure to indicate profit or loss. _________________________
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
Problem 6: Betty and Bob buy one share of stock for $100. They speculate that one year from now the price and associated
|
Price |
50 |
75 |
100 |
125 |
150 |
|
Probability |
0.10 |
0.10 |
0.20 |
0.40 |
0.20 |
Find the “Expected” Net Profit or Loss in one year. Your final answer should be correct to 2 places after the decimal point.
Be sure to indicate profit or loss. _________________________
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