Introduction To Statistics And Data Analysis
6th Edition
ISBN: 9781337794503
Author: PECK
Publisher: Cengage
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Chapter 11, Problem 88CR
Wayne Gretzky was one of ice hockey’s most prolific scorers when he played for the Edmonton Oilers. During his last season with the Oilers, Gretzky played in 41 games and missed 17 games due to injury. The article “The Great Gretzky” (Chance [1991]: 16–21) looked at the number of goals scored by the Oilers in games with and without Gretzky, as shown in the accompanying table. If we view the 41 games with Gretzky as a random sample of all Oiler games in which Gretzky played and the 17 games without Gretzky as a random sample of all Oiler games in which Gretzky did not play, is there evidence that the
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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 11 Solutions
Introduction To Statistics And Data Analysis
Ch. 11.1 - Consider two populations for which 1 = 30, 1 = 2,...Ch. 11.1 - An individual can take either a scenic route to...Ch. 11.1 - Many people now tum to the Internet to get...Ch. 11.1 - Use the information in the previous exercise to...Ch. 11.1 - The article Plugged In, but Tuned Out (USA TODAY,...Ch. 11.1 - The National Sleep Foundation surveyed...Ch. 11.1 - The report referenced in the previous exercise...Ch. 11.1 - The paper If Its Hard to Read, Its Hard to Do...Ch. 11.1 - The paper Facebook Use and Academic Performance...Ch. 11.1 - Use the information in the previous exercise to...
Ch. 11.1 - Prob. 11ECh. 11.1 - The paper Mood Food: Chocolate and Depressive...Ch. 11.1 - The authors of the paper Influence of Biofeedback...Ch. 11.1 - Example 11.1 looked at a study comparing students...Ch. 11.1 - Internet addiction has been described as excessive...Ch. 11.1 - The paper Does the Color of the Mug Influence the...Ch. 11.1 - A newspaper story headline reads Gender Plays Part...Ch. 11.1 - The authors of the paper The Empowering (Super)...Ch. 11.1 - Fumonisins are environmental toxins produced by a...Ch. 11.1 - A researcher at the Medical College of Virginia...Ch. 11.1 - Do certain behaviors result in a severe drain on...Ch. 11.2 - Suppose that you were interested in investigating...Ch. 11.2 - Many runners believe that listening to music while...Ch. 11.2 - The study described in the previous exercise also...Ch. 11.2 - In Exercise 11.23, a hypothesis test leads to the...Ch. 11.2 - The article Puppy Love? Its Real, Study Says (USA...Ch. 11.2 - The authors of the paper Concordance of...Ch. 11.2 - The paper referenced in the previous exercise also...Ch. 11.2 - The paper Driving Performance While Using a Mobile...Ch. 11.2 - The paper referenced in the previous exercise also...Ch. 11.2 - Use the information given in the previous exercise...Ch. 11.2 - To determine if chocolate milk was as effective as...Ch. 11.2 - The humorous paper Will Humans Swim Faster or...Ch. 11.2 - The study described in the paper Marketing Actions...Ch. 11.2 - Head movement evaluations are important because...Ch. 11.2 - The paper Less Air Pollution Leads to Rapid...Ch. 11.2 - The paper The Truth About Lying in Online Dating...Ch. 11.2 - The paper Quantitative Assessment of Glenohumeral...Ch. 11.2 - Two proposed computer mouse designs were compared...Ch. 11.2 - The authors of the paper Ultrasound Techniques...Ch. 11.3 - Some people seem to believe that you can fix...Ch. 11.3 - The report titled Digital Democracy Survey (2016,...Ch. 11.3 - After the 2010 earthquake in Haiti, many...Ch. 11.3 - The article Most Women Oppose Having to Register...Ch. 11.3 - The article referenced in the previous exercise...Ch. 11.3 - The report Audience Insights: Communicating to...Ch. 11.3 - According to the U.S. Census Bureau, the...Ch. 11.3 - The article Fish Oil Staves Off Schizophrenia (USA...Ch. 11.3 - The report Young People Living on the Edge...Ch. 11.3 - The report Raising Kids and Running a Household:...Ch. 11.3 - The Bureau of Labor Statistics...Ch. 11.3 - The Bureau of Labor Statistics report referenced...Ch. 11.3 - The report The New Food Fights: U.S. Public...Ch. 11.3 - A survey of high school students is described in...Ch. 11.3 - The article Spray Flu Vaccine May Work Better Than...Ch. 11.3 - The following quote is from the article Canadians...Ch. 11.3 - A Harris Poll press release dated November 1,...Ch. 11.3 - Women diagnosed with breast cancer whose tumors...Ch. 11.3 - Gallup surveyed adult Americans about their...Ch. 11.4 - The paper The Psychological Consequences of Money...Ch. 11.4 - An experiment to determine if an online...Ch. 11.4 - The paper Ready or Not? Criteria for Marriage...Ch. 11.5 - Use the information given in the previous exercise...Ch. 11.5 - Prob. 66ECh. 11.5 - Prob. 68ECh. 11.5 - Prob. 70ECh. 11.6 - The article Rapid Evolutionary Response to a...Ch. 11.6 - Prob. 72ECh. 11.6 - Prob. 74ECh. 11.6 - Prob. 75ECh. 11.6 - As part of a study described in the report I Cant...Ch. 11.6 - Prob. 78ECh. 11 - A deficiency of the trace element selenium in the...Ch. 11 - Prob. 80CRCh. 11 - In a study of a proposed treatment for diabetes...Ch. 11 - When a surgeon repairs injuries, sutures (stitched...Ch. 11 - Prob. 83CRCh. 11 - In a study of memory recall, eight students from a...Ch. 11 - As part of a study to determine the effects of...Ch. 11 - The article Truth and DARE: Tracking Drug...Ch. 11 - The article Softball Sliding Injuries (American...Ch. 11 - Wayne Gretzky was one of ice hockeys most prolific...Ch. 11 - Heres one to sink your teeth into: The authors of...Ch. 11 - Dentists make many people nervous. To see whether...Ch. 11 - Both surface soil and subsoil specimens were taken...
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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
- answerarrow_forwardQuestion 2 The data below provides the battery life of thirty eight (38) motorcycle batteries. 100 83 83 105 110 81 114 99 101 105 78 115 74 96 106 89 94 81 106 91 93 86 79 103 94 108 113 100 117 120 77 93 93 85 76 89 78 88 680 a. Test the hypothesis that mean battery life is greater than 90. Use the 1% level of significance. b. Determine if the mean battery life is different from 80. Use the 10% level of significance. Show all steps for the hypothesis test c. Would your conlcusion in part (b) change at the 5% level of significance? | d. Confirm test results in part (b) using JASP. Note: All JASP input files and output tables should be providedarrow_forwardSuppose that 80% of athletes at a certain college graduate. You randomly select eight athletes. What’s the chance that at most 7 of them graduate?arrow_forward
- Suppose that you flip a fair coin four times. What’s the chance of getting at least one head?arrow_forwardSuppose that the chance that an elementary student eats hot lunch is 30 percent. What’s the chance that, among 20 randomly selected students, between 6 and 8 students eat hot lunch (inclusive)?arrow_forwardBob’s commuting times to work are varied. He makes it to work on time 80 percent of the time. On 12 randomly selected trips to work, what’s the chance that Bob makes it on time at least 10 times?arrow_forward
- Your chance of winning a small prize in a scratch-off ticket is 10 percent. You buy five tickets. What’s the chance you will win at least one prize?arrow_forwardSuppose that 60 percent of families own a pet. You randomly sample four families. What is the chance that two or three of them own a pet?arrow_forwardIf 40 percent of university students purchase their textbooks online, in a random sample of five students, what’s the chance that exactly one of them purchased their textbooks online?arrow_forward
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