Introduction To Statistics And Data Analysis
6th Edition
ISBN: 9781337794503
Author: PECK
Publisher: Cengage
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Chapter 1, Problem 38CR
Many adolescent boys aspire to be professional athletes. The paper “Why Adolescent Boys Dream of Becoming Professional Athletes” (Psychological Reports [1999]:1075–1085) examined some of the reasons. Each boy in a sample of teenage boys was asked the following question: “Previous studies have shown that more teenage boys say that they are considering becoming professional athletes than any other occupation. In your opinion, why do these boys want to become professional athletes?” The resulting data are shown in the following table:
Construct a bar chart to display these data.
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Problem1
We consider a two-period binomial model with the following properties: each period lastsone (1) year and the current stock price is S0 = 4. On each period, the stock price doubleswhen it moves up and is reduced by half when it moves down. The annual interest rateon the money market is 25%. (This model is the same as in Prob. 1 of HW#2).We consider four options on this market: A European call option with maturity T = 2 years and strike price K = 5; A European put option with maturity T = 2 years and strike price K = 5; An American call option with maturity T = 2 years and strike price K = 5; An American put option with maturity T = 2 years and strike price K = 5.(a) Find the price at time 0 of both European options.(b) Find the price at time 0 of both American options. Compare your results with (a)and comment.(c) For each of the American options, describe the optimal exercising strategy.
Problem 1.We consider a two-period binomial model with the following properties: each period lastsone (1) year and the current stock price is S0 = 4. On each period, the stock price doubleswhen it moves up and is reduced by half when it moves down. The annual interest rateon the money market is 25%.
We consider four options on this market: A European call option with maturity T = 2 years and strike price K = 5; A European put option with maturity T = 2 years and strike price K = 5; An American call option with maturity T = 2 years and strike price K = 5; An American put option with maturity T = 2 years and strike price K = 5.(a) Find the price at time 0 of both European options.(b) Find the price at time 0 of both American options. Compare your results with (a)and comment.(c) For each of the American options, describe the optimal exercising strategy.(d) We assume that you sell the American put to a market participant A for the pricefound in (b). Explain how you act on the market…
What is the standard scores associated to the left of z is 0.1446
Chapter 1 Solutions
Introduction To Statistics And Data Analysis
Ch. 1.3 - Give brief definitions of the terms descriptive...Ch. 1.3 - Give brief definitions of the terms population and...Ch. 1.3 - The following conclusion from a study appeared in...Ch. 1.3 - Based on a study of 2 121 children between the...Ch. 1.3 - The student senate at a university with 15,000...Ch. 1.3 - The National Retail Federation used data from a...Ch. 1.3 - The supervisors of a rural county are interested...Ch. 1.3 - A consumer group conducts crash tests of new model...Ch. 1.3 - A building contractor has a chance to buy an odd...Ch. 1.3 - The article Brain Shunt Tested to Treat Alzheimers...
Ch. 1.3 - In a study of whether taking a garlic supplement...Ch. 1.4 - Classify each of the following variables as either...Ch. 1.4 - Classify each of the following variables as either...Ch. 1.4 - For the following numerical variables, state...Ch. 1.4 - For the following numerical variables, state...Ch. 1.4 - For each of the following situations, give a set...Ch. 1.4 - In a survey of 100 people who had recently...Ch. 1.4 - The Gallup report More Americans Say Real Estate...Ch. 1.4 - An article in the New Times San Luis Obispo...Ch. 1.4 - Box Office Mojo (boxofficemojo.com) tracks movie...Ch. 1.4 - The report With Their Whole Lives Ahead of Them...Ch. 1.4 - The following display is a graph similar to one...Ch. 1.4 - The accompanying table gives the total number...Ch. 1.4 - Heal the Bay is an environmental organization that...Ch. 1.4 - The report referenced in the previous exercise...Ch. 1.4 - The U.S. Department of Health and Human Services...Ch. 1.4 - Example 1.5 gave the accompanying data on violent...Ch. 1.4 - The article Fliers Trapped on Tarmac Push for...Ch. 1.4 - The report Trends m Community Colleges...Ch. 1.4 - The article Where College Students Buy Textbooks...Ch. 1.4 - Prob. 31ECh. 1.4 - In the United States, movies are rated by the...Ch. 1 - The report Testing the Waters 2009 (nrdc.org)...Ch. 1 - The U.S. Department of Education reported that 14%...Ch. 1 - The Computer Assisted Assessment Center at the...Ch. 1 - The article Just How Safe Is That Jet? (USA TODAY,...Ch. 1 - Each year, U.S. News and World Report publishes a...Ch. 1 - Many adolescent boys aspire to be professional...
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- Note: The purpose of this problem below is to use computational techniques (Excelspreadsheet, Matlab, R, Python, etc.) and code the dynamic programming ideas seen inclass. Please provide the numerical answer to the questions as well as a sample of yourwork (spreadsheet, code file, etc.).We consider an N-period binomial model with the following properties: N = 60, thecurrent stock price is S0 = 1000; on each period, the stock price increases by 0.5% whenit moves up and decreases by 0.3% when it moves down. The annual interest rate on themoney market is 5%. (Notice that this model is a CRR model, which means that thebinomial tree is recombining.)(a) Find the price at time t0 = 0 of a (European) call option with strike price K = 1040and maturity T = 1 year.(b) Find the price at time t0 = 0 of a (European) put option with strike price K = 1040and maturity T = 1 year.(c) We consider now, that you are at time t5 (i.e. after 5 periods, which represents 1month later). Assume that the stock…arrow_forwardshow work in paperarrow_forwardshow all work (...or what you entered into your calculator...)arrow_forward
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