STATISTICAL TECHNIQUES FOR BUSINESS AND
17th Edition
ISBN: 9781307261158
Author: Lind
Publisher: MCG/CREATE
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Chapter 1, Problem 1SR
a.
To determine
Explain whether the given situation is an example of descriptive or
a.
Expert Solution
Answer to Problem 1SR
The given situation is an example of inferential statistics.
Explanation of Solution
Descriptive statistics are a set of statistical tools that are used to organize, summarize, and present data in a comprehensible manner.
Inferential statistics:
Inferential statistics are a set of statistical tools that are used to estimate the properties of a population, based on the characteristics of a sample from that population.
In this case, a sample of 1,960 individuals is sampled to try the newly developed chicken dinner, so that a conclusion can be formed about the population of consumers.
Thus, the given situation is an example of inferential statistics.
b.
To determine
Identify what can be reported regarding the acceptance of the new chicken dinner.
b.
Expert Solution
Explanation of Solution
It is given that 1,176 out of the 1,960 sampled individuals expressed the wish to purchase the new chicken dinner, if marketed. In other words, these 1,176 individuals accepted it.
The percentage of individuals, who accepted it, is calculated bellow:
Thus, it can be reported that 60% of the sampled individuals accepted the new chicken dinner. Thus, about 60% of all their consumers are likely to accept it, if marketed.
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Problem 3. Pricing a multi-stock option the Margrabe formula
The purpose of this problem is to price a swap option in a 2-stock model, similarly as
what we did in the example in the lectures. We consider a two-dimensional Brownian
motion given by W₁ = (W(¹), W(2)) on a probability space (Q, F,P). Two stock prices
are modeled by the following equations:
dX
=
dY₁ =
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rdt+0₁dW!)
(²)),
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with Xo
xo and Yo =yo. This corresponds to the multi-stock model studied in class,
but with notation (X+, Y₁) instead of (S(1), S(2)). Given the model above, the measure
P is already the risk-neutral measure (Both stocks have rate of return r). We write
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Problem 1. Multi-stock model
We consider a 2-stock model similar to the one studied in class. Namely, we consider
=
S(1)
S(2)
=
S(¹) exp (σ1B(1) + (M1 - 0/1 )
S(²) exp (02B(2) + (H₂-
M2
where (B(¹) ) +20 and (B(2) ) +≥o are two Brownian motions, with
t≥0
Cov (B(¹), B(2)) = p min{t, s}.
"
The purpose of this problem is to prove that there indeed exists a 2-dimensional Brownian
motion (W+)+20 (W(1), W(2))+20 such that
=
S(1)
S(2)
=
=
S(¹) exp (011W(¹) + (μ₁ - 01/1) t)
롱)
S(²) exp (021W (1) + 022W(2) + (112 - 03/01/12) t).
where σ11, 21, 22 are constants to be determined (as functions of σ1, σ2, p).
Hint: The constants will follow the formulas developed in the lectures.
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functions of (B(1), B(²)).
as
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dimensional standard Brownian motion (i.e. show that each component is normal,
with mean 0, variance t, and that their…
The scores of 8 students on the midterm exam and final exam were as follows.
Student
Midterm
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Anderson
98
89
Bailey
88
74
Cruz
87
97
DeSana
85
79
Erickson
85
94
Francis
83
71
Gray
74
98
Harris
70
91
Find the value of the (Spearman's) rank correlation coefficient test statistic that would be used to test the claim of no correlation between midterm score and final exam score. Round your answer to 3 places after the decimal point, if necessary.
Test statistic: rs =
Chapter 1 Solutions
STATISTICAL TECHNIQUES FOR BUSINESS AND
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