Statistics for Business & Economics, Revised (with XLSTAT Education Edition Printed Access Card)
13th Edition
ISBN: 9781337094160
Author: David R. Anderson, Dennis J. Sweeney, Thomas A. Williams, Jeffrey D. Camm, James J. Cochran
Publisher: Cengage Learning
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Chapter 11.1, Problem 11E
At the end of 2008, the variance in the semiannual yields of overseas government bond was σ2 = .70. A group of bond investors met at that time to discuss future trends in overseas bond yields. Some expected the variability in overseas bond yields to increase and others took the opposite view. The following table shows the semiannual yields for 12 overseas countries as of March 6, 2009 (Barron’s, March 9, 2009).
- a. Compute the
mean , variance, and standard deviation of the overseas bond yields as of March 6, 2009. - b. Develop hypotheses to test whether the sample data indicate that the variance in bond yields has changed from that at the end of 2008.
- c. Use α = .05 to conduct the hypothesis test formulated in part (b). What is your conclusion?
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We consider the one-period model studied in class as an example. Namely, we assumethat the current stock price is S0 = 10. At time T, the stock has either moved up toSt = 12 (with probability p = 0.6) or down towards St = 8 (with probability 1−p = 0.4).We consider a call option on this stock with maturity T and strike price K = 10. Theinterest rate on the money market is zero.As in class, we assume that you, as a customer, are willing to buy the call option on100 shares of stock for $120. The investor, who sold you the option, can adopt one of thefollowing strategies: Strategy 1: (seen in class) Buy 50 shares of stock and borrow $380. Strategy 2: Buy 55 shares of stock and borrow $430. Strategy 3: Buy 60 shares of stock and borrow $480. Strategy 4: Buy 40 shares of stock and borrow $280.(a) For each of strategies 2-4, describe the value of the investor’s portfolio at time 0,and at time T for each possible movement of the stock.(b) For each of strategies 2-4, does the investor have…
Negate the following compound statement using De Morgans's laws.
Chapter 11 Solutions
Statistics for Business & Economics, Revised (with XLSTAT Education Edition Printed Access Card)
Ch. 11.1 - Find the following chi-square distribution values...Ch. 11.1 - A sample of 20 items provides a sample standard...Ch. 11.1 - A sample of 16 items provides a sample standard...Ch. 11.1 - The variance in drug weights is critical in the...Ch. 11.1 - John Calipari, head basketball coach for the 2012...Ch. 11.1 - Americans spend nearly 7 billion on Halloween...Ch. 11.1 - To analyze the risk, or volatility, associated...Ch. 11.1 - Consider a day when the Dow Jones industrial...Ch. 11.1 - An automotive part must be machined to close...Ch. 11.1 - Consumer Reports uses a 100-point customer...
Ch. 11.1 - At the end of 2008, the variance in the semiannual...Ch. 11.1 - A Fortune study found that the variance in the...Ch. 11.2 - Find the following F distribution values from...Ch. 11.2 - A sample of 16 items from population 1 has a...Ch. 11.2 - Consider the following hypothesis test....Ch. 11.2 - Investors commonly use the standard deviation of...Ch. 11.2 - Most individuals are aware of the fact that the...Ch. 11.2 - Data were collected on the top 1000 financial...Ch. 11.2 - The variance in a production process is an...Ch. 11.2 - On the basis of data provided by a Romac salary...Ch. 11.2 - Many smartphones, especially those of the...Ch. 11.2 - A research hypothesis is that the variance of...Ch. 11 - Because of staffing decisions, managers of the...Ch. 11 - Initial public offerings (IPOs) of stocks are on...Ch. 11 - The estimated daily living costs for an executive...Ch. 11 - Part variability is critical in the manufacturing...Ch. 11 - The filling variance for boxes of cereal is...Ch. 11 - City Trucking, Inc., claims consistent delivery...Ch. 11 - A sample of 9 days over the past six months showed...Ch. 11 - A sample standard deviation for the number of...Ch. 11 - Is there any difference in the variability in golf...Ch. 11 - The grade point averages of 352 students who...Ch. 11 - The accounting department analyzes the variance of...Ch. 11 - Two new assembly methods are tested and the...
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- Negate the following compound statement using De Morgans's laws.arrow_forwardQuestion 6: Negate the following compound statements, using De Morgan's laws. A) If Alberta was under water entirely then there should be no fossil of mammals.arrow_forwardNegate the following compound statement using De Morgans's laws.arrow_forward
- Characterize (with proof) all connected graphs that contain no even cycles in terms oftheir blocks.arrow_forwardLet G be a connected graph that does not have P4 or C3 as an induced subgraph (i.e.,G is P4, C3 free). Prove that G is a complete bipartite grapharrow_forwardProve sufficiency of the condition for a graph to be bipartite that is, prove that if G hasno odd cycles then G is bipartite as follows:Assume that the statement is false and that G is an edge minimal counterexample. That is, Gsatisfies the conditions and is not bipartite but G − e is bipartite for any edge e. (Note thatthis is essentially induction, just using different terminology.) What does minimality say aboutconnectivity of G? Can G − e be disconnected? Explain why if there is an edge between twovertices in the same part of a bipartition of G − e then there is an odd cyclearrow_forward
- Let G be a connected graph that does not have P4 or C4 as an induced subgraph (i.e.,G is P4, C4 free). Prove that G has a vertex adjacent to all othersarrow_forwardWe consider a one-period market with the following properties: the current stock priceis S0 = 4. At time T = 1 year, the stock has either moved up to S1 = 8 (with probability0.7) or down towards S1 = 2 (with probability 0.3). We consider a call option on thisstock with maturity T = 1 and strike price K = 5. The interest rate on the money marketis 25% yearly.(a) Find the replicating portfolio (φ, ψ) corresponding to this call option.(b) Find the risk-neutral (no-arbitrage) price of this call option.(c) We now consider a put option with maturity T = 1 and strike price K = 3 onthe same market. Find the risk-neutral price of this put option. Reminder: A putoption gives you the right to sell the stock for the strike price K.1(d) An investor with initial capital X0 = 0 wants to invest on this market. He buysα shares of the stock (or sells them if α is negative) and buys β call options (orsells them is β is negative). He invests the cash balance on the money market (orborrows if the amount is…arrow_forwardDetermine if the two statements are equivalent using a truth tablearrow_forward
- Question 4: Determine if pair of statements A and B are equivalent or not, using truth table. A. (~qp)^~q в. р л~9arrow_forwardDetermine if the two statements are equalivalent using a truth tablearrow_forwardQuestion 3: p and q represent the following simple statements. p: Calgary is the capital of Alberta. A) Determine the value of each simple statement p and q. B) Then, without truth table, determine the va q: Alberta is a province of Canada. for each following compound statement below. pvq р^~q ~рл~q ~q→ p ~P~q Pq b~ (d~ ← b~) d~ (b~ v d) 0 4arrow_forward
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