PROBABILITY & STATS FOR ENGINEERING &SCI
9th Edition
ISBN: 9781285099804
Author: DEVORE
Publisher: CENGAGE L
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Chapter 10.2, Problem 19E
To determine
Find a value for SSE, such that,
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One hundred students were surveyed about their preference between dogs and cats. The following two-way table displays data for the sample of students who responded to the survey.
Preference
Male
Female
TOTAL
Prefers dogs
\[36\]
\[20\]
\[56\]
Prefers cats
\[10\]
\[26\]
\[36\]
No preference
\[2\]
\[6\]
\[8\]
TOTAL
\[48\]
\[52\]
\[100\]
problem 1
Find the probability that a randomly selected student prefers dogs.Enter your answer as a fraction or decimal.
\[P\left(\text{prefers dogs}\right)=\]
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Preference
Male
Female
TOTAL
Prefers dogs
\[\blueD{36}\]
\[\blueD{20}\]
\[\blueE{56}\]
Prefers cats
\[10\]
\[26\]
\[36\]
No preference
\[2\]
\[6\]
\[8\]
TOTAL
\[48\]
\[52\]
\[100\]
There were \[\blueE{56}\] students in the sample who preferred dogs out of \[100\] total students.
Business discuss
You have been hired as an intern to run analyses on the data and report the results back to Sarah; the five questions that Sarah needs you to address are given below.
Does there appear to be a positive or negative relationship between price and screen size? Use a scatter plot to examine the relationship.
Determine and interpret the correlation coefficient between the two variables. In your interpretation, discuss the direction of the relationship (positive, negative, or zero relationship). Also discuss the strength of the relationship.
Estimate the relationship between screen size and price using a simple linear regression model and interpret the estimated coefficients. (In your interpretation, tell the dollar amount by which price will change for each unit of increase in screen size).
Include the manufacturer dummy variable (Samsung=1, 0 otherwise) and estimate the relationship between screen size, price and manufacturer dummy as a multiple linear regression model.
Interpret the…
Chapter 10 Solutions
PROBABILITY & STATS FOR ENGINEERING &SCI
Ch. 10.1 - In an experiment to compare the tensile strengths...Ch. 10.1 - Suppose that the compression-strength observations...Ch. 10.1 - The lumen output was determined for each of I = 3...Ch. 10.1 - It is common practice in many countries to destroy...Ch. 10.1 - Consider the following summary data on the modulus...Ch. 10.1 - The article Origin of Precambrian Iron Formations...Ch. 10.1 - An experiment was carried out to compare...Ch. 10.1 - A study of the properties of metal plate-connected...Ch. 10.1 - Six samples of each of four types of cereal grain...Ch. 10.1 - In single-factor ANOVA with I treatments and J...
Ch. 10.2 - An experiment to compare the spreading rates of...Ch. 10.2 - In Exercise 11, suppose x3. = 427.5. Now which...Ch. 10.2 - Prob. 13ECh. 10.2 - Use Tukeys procedure on the data in Example 10.3...Ch. 10.2 - Exercise 10.7 described an experiment in which 26...Ch. 10.2 - Reconsider the axial stiffness data given in...Ch. 10.2 - Prob. 17ECh. 10.2 - Consider the accompanying data on plant growth...Ch. 10.2 - Prob. 19ECh. 10.2 - Refer to Exercise 19 and suppose x1 = 10, x2 = 15,...Ch. 10.2 - The article The Effect of Enzyme Inducing Agents...Ch. 10.3 - The following data refers to yield of tomatoes...Ch. 10.3 - Apply the modified Tukeys method to the data in...Ch. 10.3 - The accompanying summary data on skeletal-muscle...Ch. 10.3 - Lipids provide much of the dietary energy in the...Ch. 10.3 - Samples of six different brands of diet/imitation...Ch. 10.3 - Although tea is the worlds most widely consumed...Ch. 10.3 - For a single-factor ANOVA with sample sizes Ji(i =...Ch. 10.3 - When sample sizes are equal (Ji = J). the...Ch. 10.3 - Reconsider Example 10.8 involving an investigation...Ch. 10.3 - When sample sizes are not equal, the non...Ch. 10.3 - In an experiment to compare the quality of four...Ch. 10.3 - Prob. 33ECh. 10.3 - Simplify E(MSTr) for the random effects model when...Ch. 10 - An experiment was carried out to compare flow...Ch. 10 - Cortisol is a hormone that plays an important role...Ch. 10 - Numerous factors contribute to the smooth running...Ch. 10 - An article in the British scientific journal...Ch. 10 - Prob. 39SECh. 10 - Prob. 40SECh. 10 - Prob. 41SECh. 10 - The critical flicker frequency (cff) is the...Ch. 10 - Prob. 43SECh. 10 - Four types of mortarsordinary cement mortar (OCM)....Ch. 10 - Prob. 45SECh. 10 - Prob. 46SE
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- Does there appear to be a positive or negative relationship between price and screen size? Use a scatter plot to examine the relationship. How to take snapshots: if you use a MacBook, press Command+ Shift+4 to take snapshots. If you are using Windows, use the Snipping Tool to take snapshots. Question 1: Determine and interpret the correlation coefficient between the two variables. In your interpretation, discuss the direction of the relationship (positive, negative, or zero relationship). Also discuss the strength of the relationship. Value of correlation coefficient: Direction of the relationship (positive, negative, or zero relationship): Strength of the relationship (strong/moderate/weak): Question 2: Estimate the relationship between screen size and price using a simple linear regression model and interpret the estimated coefficients. In your interpretation, tell the dollar amount by which price will change for each unit of increase in screen size. (The answer for the…arrow_forwardIn this problem, we consider a Brownian motion (W+) t≥0. We consider a stock model (St)t>0 given (under the measure P) by d.St 0.03 St dt + 0.2 St dwt, with So 2. We assume that the interest rate is r = 0.06. The purpose of this problem is to price an option on this stock (which we name cubic put). This option is European-type, with maturity 3 months (i.e. T = 0.25 years), and payoff given by F = (8-5)+ (a) Write the Stochastic Differential Equation satisfied by (St) under the risk-neutral measure Q. (You don't need to prove it, simply give the answer.) (b) Give the price of a regular European put on (St) with maturity 3 months and strike K = 2. (c) Let X = S. Find the Stochastic Differential Equation satisfied by the process (Xt) under the measure Q. (d) Find an explicit expression for X₁ = S3 under measure Q. (e) Using the results above, find the price of the cubic put option mentioned above. (f) Is the price in (e) the same as in question (b)? (Explain why.)arrow_forwardProblem 4. Margrabe formula and the Greeks (20 pts) In the homework, we determined the Margrabe formula for the price of an option allowing you to swap an x-stock for a y-stock at time T. For stocks with initial values xo, yo, common volatility σ and correlation p, the formula was given by Fo=yo (d+)-x0Þ(d_), where In (±² Ꭲ d+ õ√T and σ = σ√√√2(1 - p). дго (a) We want to determine a "Greek" for ỡ on the option: find a formula for θα (b) Is дго θα positive or negative? (c) We consider a situation in which the correlation p between the two stocks increases: what can you say about the price Fo? (d) Assume that yo< xo and p = 1. What is the price of the option?arrow_forward
- We consider a 4-dimensional stock price model given (under P) by dẴ₁ = µ· Xt dt + йt · ΣdŴt where (W) is an n-dimensional Brownian motion, π = (0.02, 0.01, -0.02, 0.05), 0.2 0 0 0 0.3 0.4 0 0 Σ= -0.1 -4a За 0 0.2 0.4 -0.1 0.2) and a E R. We assume that ☑0 = (1, 1, 1, 1) and that the interest rate on the market is r = 0.02. (a) Give a condition on a that would make stock #3 be the one with largest volatility. (b) Find the diversification coefficient for this portfolio as a function of a. (c) Determine the maximum diversification coefficient d that you could reach by varying the value of a? 2arrow_forwardQuestion 1. Your manager asks you to explain why the Black-Scholes model may be inappro- priate for pricing options in practice. Give one reason that would substantiate this claim? Question 2. We consider stock #1 and stock #2 in the model of Problem 2. Your manager asks you to pick only one of them to invest in based on the model provided. Which one do you choose and why ? Question 3. Let (St) to be an asset modeled by the Black-Scholes SDE. Let Ft be the price at time t of a European put with maturity T and strike price K. Then, the discounted option price process (ert Ft) t20 is a martingale. True or False? (Explain your answer.) Question 4. You are considering pricing an American put option using a Black-Scholes model for the underlying stock. An explicit formula for the price doesn't exist. In just a few words (no more than 2 sentences), explain how you would proceed to price it. Question 5. We model a short rate with a Ho-Lee model drt = ln(1+t) dt +2dWt. Then the interest rate…arrow_forwardIn this problem, we consider a Brownian motion (W+) t≥0. We consider a stock model (St)t>0 given (under the measure P) by d.St 0.03 St dt + 0.2 St dwt, with So 2. We assume that the interest rate is r = 0.06. The purpose of this problem is to price an option on this stock (which we name cubic put). This option is European-type, with maturity 3 months (i.e. T = 0.25 years), and payoff given by F = (8-5)+ (a) Write the Stochastic Differential Equation satisfied by (St) under the risk-neutral measure Q. (You don't need to prove it, simply give the answer.) (b) Give the price of a regular European put on (St) with maturity 3 months and strike K = 2. (c) Let X = S. Find the Stochastic Differential Equation satisfied by the process (Xt) under the measure Q. (d) Find an explicit expression for X₁ = S3 under measure Q. (e) Using the results above, find the price of the cubic put option mentioned above. (f) Is the price in (e) the same as in question (b)? (Explain why.)arrow_forward
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