EBK PROBABILITY & STATISTICS FOR ENGINE
EBK PROBABILITY & STATISTICS FOR ENGINE
16th Edition
ISBN: 9780321997401
Author: AKRITAS
Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)
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Chapter 1.2, Problem 4E

a.

To determine

Find the population involved in the study.

b.

To determine

Describe the sample in the experiment.

c.

To determine

Identify the characteristic of interest.

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Calculating probability for the Standard Normal Curve 1. Assume the mean is zero, the standard deviation is one, and it is associated with the distribution of z values. Each problem is worth 2 points, 1 point for drawing out the curve and shading the area requested and 1 point for the answer. a. What is the P(z > 0)? b. What is the P(z < 1.0)? C. What is the P(z <-1.0)?
Starting with the finished version of Example 6.2, attached, change the decision criterion to "maximize expected utility," using an exponential utility function with risk tolerance $5,000,000. Display certainty equivalents on the tree. a.  Keep doubling the risk tolerance until the company's best strategy is the same as with the EMV criterion—continue with development and then market if successful. The risk tolerance must reach $ 160,000,000 before the risk averse company acts the same as the EMV-maximizing company. b.  With a risk tolerance of $320,000,000, the company views the optimal strategy as equivalent to receiving a sure $____________ , even though the EMV from the original strategy (with no risk tolerance) is $ 59,200.
Starting with the finished version of Example 6.2, attached, change the decision criterion to "maximize expected utility," using an exponential utility function with risk tolerance $5,000,000. Display certainty equivalents on the tree. a.  Keep doubling the risk tolerance until the company's best strategy is the same as with the EMV criterion—continue with development and then market if successful. The risk tolerance must reach $ ____________ before the risk averse company acts the same as the EMV-maximizing company. b.  With a risk tolerance of $320,000,000, the company views the optimal strategy as equivalent to receiving a sure $____________ , even though the EMV from the original strategy (with no risk tolerance) is $ ___________ .
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