Intro Stats, Books a la carte Plus NEW MyLab Statistics with Pearson eText -- Access Card Package (5th Edition)
Intro Stats, Books a la carte Plus NEW MyLab Statistics with Pearson eText -- Access Card Package (5th Edition)
5th Edition
ISBN: 9780134210247
Author: Richard D. De Veaux, Paul Velleman, David E. Bock
Publisher: PEARSON
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Chapter 12, Problem 21E
To determine

Find the probability that a person is from United States given that he logs on to Facebook every day and to check whether the probability that he is from United States increased or decreased with the additional information.

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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:ˆ A European call option with maturity T = 2 years and strike price K = 5;ˆ A European put option with maturity T = 2 years and strike price K = 5;ˆ An American call option with maturity T = 2 years and strike price K = 5;ˆ 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…
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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…

Chapter 12 Solutions

Intro Stats, Books a la carte Plus NEW MyLab Statistics with Pearson eText -- Access Card Package (5th Edition)

Ch. 12 - Prob. 6ECh. 12 - Cell phones and surveys A 2015 study conducted by...Ch. 12 - Cell phones and surveys II The survey by the...Ch. 12 - Pet ownership Suppose that 25% of people have a...Ch. 12 - Cooking and shopping Forty-five percent of...Ch. 12 - Sports What is the probability that a person likes...Ch. 12 - Sports again From Exercise 11, if someone doesnt...Ch. 12 - Late to the train A student figures that he has a...Ch. 12 - Field goals A nervous kicker usually makes 70% of...Ch. 12 - Titanic On the Titanic, the probability of...Ch. 12 - Prob. 16ECh. 12 - Facebook Facebook reports that 70% of its users...Ch. 12 - Prob. 18ECh. 12 - Prob. 19ECh. 12 - Prob. 20ECh. 12 - Prob. 21ECh. 12 - Online banking last time Given the probabilities...Ch. 12 - Sample spaces For each of the following, list the...Ch. 12 - Sample spaces II For each of the following, list...Ch. 12 - Prob. 25ECh. 12 - Rain The weather reporter on TV makes predictions...Ch. 12 - Winter Comment on the following quotation: What I...Ch. 12 - Snow After an unusually dry autumn, a radio...Ch. 12 - Auto insurance Insurance companies collect annual...Ch. 12 - Prob. 30ECh. 12 - Prob. 31ECh. 12 - Prob. 32ECh. 12 - Electronics Suppose that 46% of families living in...Ch. 12 - Homes Funding for many schools comes from taxes...Ch. 12 - Prob. 35ECh. 12 - Lefties Although its hard to be definitive in...Ch. 12 - Prob. 37ECh. 12 - Prob. 38ECh. 12 - Car repairs A consumer organization estimates that...Ch. 12 - Stats projects In a large Introductory statistics...Ch. 12 - More repairs Consider again the auto repair rates...Ch. 12 - Another project You are assigned to be part of a...Ch. 12 - Prob. 43ECh. 12 - Final project You used the Multiplication Rule to...Ch. 12 - Prob. 45ECh. 12 - Polling, part II According to Pew Research, the...Ch. 12 - Prob. 47ECh. 12 - Blood The American Red Cross says that about 45%...Ch. 12 - Prob. 49ECh. 12 - Disjoint or independent? In Exercise 48, you...Ch. 12 - Prob. 51ECh. 12 - The train To get to work, a commuter must cross...Ch. 12 - Prob. 53ECh. 12 - Pepsi For a sales promotion, the manufacturer...Ch. 12 - 9/11? On September 11, 2002, the first anniversary...Ch. 12 - Prob. 56ECh. 12 - Prob. 57ECh. 12 - Prob. 58ECh. 12 - Health The probabilities that an adult American...Ch. 12 - Immigration The table shows the political...Ch. 12 - Prob. 61ECh. 12 - Birth order, take 2 Look again at the data about...Ch. 12 - Batteries A junk box in your room contains a dozen...Ch. 12 - Prob. 64ECh. 12 - Eligibility A university requires its biology...Ch. 12 - Benefits Fifty-six percent of all American workers...Ch. 12 - Unsafe food Early in 2010, Consumer Reports...Ch. 12 - Prob. 68ECh. 12 - Prob. 69ECh. 12 - Politics Given the table of probabilities from...Ch. 12 - Gender A poll conducted by Gallup classified...Ch. 12 - Cars A random survey of autos parked in student...Ch. 12 - Prob. 73ECh. 12 - Prob. 74ECh. 12 - Late luggage Remember Leah (Exercise 73)? Suppose...Ch. 12 - Prob. 76ECh. 12 - Prob. 77ECh. 12 - Prob. 78ECh. 12 - Prob. 79ECh. 12 - Prob. 80ECh. 12 - Drunks Police often set up sobriety...Ch. 12 - No-shows An airline offers discounted...Ch. 12 - Prob. 83ECh. 12 - Parts A company manufacturing electronic...Ch. 12 - HIV testing In July 2005, the journal Annals of...Ch. 12 - Polygraphs Lie detectors are controversial...
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