
Intro Stats, Books a la Carte Edition (5th Edition)
5th Edition
ISBN: 9780134210285
Author: Richard D. De Veaux, Paul Velleman, David E. Bock
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 41E
a.
To determine
Find the difficulties that encounter in trying to make a display of the data.
b.
To determine
Find the way of the creators of the bar chart in Exercise 35 to solve the problem.
Expert Solution & Answer

Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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…
In 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.)
Problem 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?
Chapter 2 Solutions
Intro Stats, Books a la Carte Edition (5th Edition)
Ch. 2.3 - You may be surprised to find that you already have...Ch. 2.3 - You may be surprised to find that you already have...Ch. 2.3 - You may be surprised to find that you already have...Ch. 2.3 - Prob. 4JCCh. 2.3 - Prob. 5JCCh. 2.5 - The U.S. Census Bureau reports the median family...Ch. 2.5 - Prob. 7JCCh. 2.5 - Prob. 8JCCh. 2 - SECTION 2.1 1. Automobile fatalities The table...Ch. 2 - Nonoccupant fatalities The frequencies of traffic...
Ch. 2 - Prob. 3ECh. 2 - Movie ratings The Motion Picture Association of...Ch. 2 - Prob. 5ECh. 2 - Marriage in decline Changing attitudes about...Ch. 2 - Traffic fatalities 2013 Here are two histograms...Ch. 2 - Prob. 8ECh. 2 - Prob. 9ECh. 2 - Prob. 10ECh. 2 - E-mails A university teacher saved every e-mail...Ch. 2 - Adoptions The U.S. Census Bureau keeps track of...Ch. 2 - Biceps revisited Describe the shape of the...Ch. 2 - E-mails II For the distribution of e-mails sent by...Ch. 2 - Life expectancy Here are the life expectancies at...Ch. 2 - Prob. 16ECh. 2 - Life expectancy II For the 146 life expectancies...Ch. 2 - Adoptions II For the number of adoptions in...Ch. 2 - How big is your bicep II? For the bicep...Ch. 2 - Shoe sizes II For the shoe sizes in Exercise 16,...Ch. 2 - SECTION 2.5 21. Life expectancy III For the 190...Ch. 2 - Prob. 22ECh. 2 - How big is your bicep III? For the bicep...Ch. 2 - Prob. 24ECh. 2 - Thinking about shape Would you expect...Ch. 2 - More shapes Would you expect distributions of...Ch. 2 - Movie genres again Here is a bar chart summarizing...Ch. 2 - Prob. 36ECh. 2 - Prob. 37ECh. 2 - Prob. 38ECh. 2 - Prob. 39ECh. 2 - Prob. 40ECh. 2 - Prob. 41ECh. 2 - Prob. 42ECh. 2 - Prob. 43ECh. 2 - Modalities A survey of athletic trainers asked...Ch. 2 - Cereals The histogram shows the carbohydrate...Ch. 2 - Run times One of the authors collected the times...Ch. 2 - Heart attack stays The histogram shows the lengths...Ch. 2 - Bird species 2013 The Cornell Lab of Ornithology...Ch. 2 - Super Bowl points 2016 How many points do football...Ch. 2 - Prob. 50ECh. 2 - Test scores, large class Test scores from a large...Ch. 2 - Prob. 52ECh. 2 - Mistake A clerk entering salary data into a...Ch. 2 - Sick days During contract negotiations, a company...Ch. 2 - Prob. 55ECh. 2 - Tornadoes 2015 Here are the annual numbers of...Ch. 2 - Prob. 57ECh. 2 - Tornadoes 2015 II Using the data from Exercise 56,...Ch. 2 - Pizza prices The histogram shows the distribution...Ch. 2 - Neck size The histogram shows the neck sizes (in...Ch. 2 - Pizza prices again Look again at the histogram of...Ch. 2 - Neck sizes again Look again at the histogram of...Ch. 2 - Movie lengths 2010 The histogram shows the running...Ch. 2 - Golf drives 2015 The display shows the average...Ch. 2 - Prob. 65ECh. 2 - Golf drives II 2015 Exercise 64 looked at...Ch. 2 - Prob. 67ECh. 2 - Cold weather A meteorologist preparing a talk...Ch. 2 - Gasoline 2014 In January 2014, 16 gas stations in...Ch. 2 - The great one During his 20 seasons in the NHL,...Ch. 2 - Prob. 71ECh. 2 - Prob. 72ECh. 2 - Prob. 73ECh. 2 - Prob. 74ECh. 2 - Prob. 75ECh. 2 - Prob. 76ECh. 2 - Acid rain Two researchers measured the pH (a scale...Ch. 2 - Marijuana 2015 In 2015 the Council of Europe...Ch. 2 - Prob. 79ECh. 2 - Prob. 80ECh. 2 - Prob. 81ECh. 2 - ZIP codes revisited Here are some summary...Ch. 2 - Prob. 83ECh. 2 - Prob. 84ECh. 2 - Prob. 85E
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, statistics and related others by exploring similar questions and additional content below.Similar questions
- 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
- The managing director of a consulting group has the accompanying monthly data on total overhead costs and professional labor hours to bill to clients. Complete parts a through c. Question content area bottom Part 1 a. Develop a simple linear regression model between billable hours and overhead costs. Overhead Costsequals=212495.2212495.2plus+left parenthesis 42.4857 right parenthesis42.485742.4857times×Billable Hours (Round the constant to one decimal place as needed. Round the coefficient to four decimal places as needed. Do not include the $ symbol in your answers.) Part 2 b. Interpret the coefficients of your regression model. Specifically, what does the fixed component of the model mean to the consulting firm? Interpret the fixed term, b 0b0, if appropriate. Choose the correct answer below. A. The value of b 0b0 is the predicted billable hours for an overhead cost of 0 dollars. B. It is not appropriate to interpret b 0b0, because its value…arrow_forwardUsing the accompanying Home Market Value data and associated regression line, Market ValueMarket Valueequals=$28,416+$37.066×Square Feet, compute the errors associated with each observation using the formula e Subscript ieiequals=Upper Y Subscript iYiminus−ModifyingAbove Upper Y with caret Subscript iYi and construct a frequency distribution and histogram. LOADING... Click the icon to view the Home Market Value data. Question content area bottom Part 1 Construct a frequency distribution of the errors, e Subscript iei. (Type whole numbers.) Error Frequency minus−15 comma 00015,000less than< e Subscript iei less than or equals≤minus−10 comma 00010,000 0 minus−10 comma 00010,000less than< e Subscript iei less than or equals≤minus−50005000 5 minus−50005000less than< e Subscript iei less than or equals≤0 21 0less than< e Subscript iei less than or equals≤50005000 9…arrow_forwardThe managing director of a consulting group has the accompanying monthly data on total overhead costs and professional labor hours to bill to clients. Complete parts a through c Overhead Costs Billable Hours345000 3000385000 4000410000 5000462000 6000530000 7000545000 8000arrow_forward
- Using the accompanying Home Market Value data and associated regression line, Market ValueMarket Valueequals=$28,416plus+$37.066×Square Feet, compute the errors associated with each observation using the formula e Subscript ieiequals=Upper Y Subscript iYiminus−ModifyingAbove Upper Y with caret Subscript iYi and construct a frequency distribution and histogram. Square Feet Market Value1813 911001916 1043001842 934001814 909001836 1020002030 1085001731 877001852 960001793 893001665 884001852 1009001619 967001690 876002370 1139002373 1131001666 875002122 1161001619 946001729 863001667 871001522 833001484 798001589 814001600 871001484 825001483 787001522 877001703 942001485 820001468 881001519 882001518 885001483 765001522 844001668 909001587 810001782 912001483 812001519 1007001522 872001684 966001581 86200arrow_forwarda. Find the value of A.b. Find pX(x) and py(y).c. Find pX|y(x|y) and py|X(y|x)d. Are x and y independent? Why or why not?arrow_forwardThe PDF of an amplitude X of a Gaussian signal x(t) is given by:arrow_forward
- The PDF of a random variable X is given by the equation in the picture.arrow_forwardFor a binary asymmetric channel with Py|X(0|1) = 0.1 and Py|X(1|0) = 0.2; PX(0) = 0.4 isthe probability of a bit of “0” being transmitted. X is the transmitted digit, and Y is the received digit.a. Find the values of Py(0) and Py(1).b. What is the probability that only 0s will be received for a sequence of 10 digits transmitted?c. What is the probability that 8 1s and 2 0s will be received for the same sequence of 10 digits?d. What is the probability that at least 5 0s will be received for the same sequence of 10 digits?arrow_forwardV2 360 Step down + I₁ = I2 10KVA 120V 10KVA 1₂ = 360-120 or 2nd Ratio's V₂ m 120 Ratio= 360 √2 H I2 I, + I2 120arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Holt Mcdougal Larson Pre-algebra: Student Edition...AlgebraISBN:9780547587776Author:HOLT MCDOUGALPublisher:HOLT MCDOUGALGlencoe Algebra 1, Student Edition, 9780079039897...AlgebraISBN:9780079039897Author:CarterPublisher:McGraw HillFunctions and Change: A Modeling Approach to Coll...AlgebraISBN:9781337111348Author:Bruce Crauder, Benny Evans, Alan NoellPublisher:Cengage Learning
- Algebra: Structure And Method, Book 1AlgebraISBN:9780395977224Author:Richard G. Brown, Mary P. Dolciani, Robert H. Sorgenfrey, William L. ColePublisher:McDougal Littell

Holt Mcdougal Larson Pre-algebra: Student Edition...
Algebra
ISBN:9780547587776
Author:HOLT MCDOUGAL
Publisher:HOLT MCDOUGAL

Glencoe Algebra 1, Student Edition, 9780079039897...
Algebra
ISBN:9780079039897
Author:Carter
Publisher:McGraw Hill

Functions and Change: A Modeling Approach to Coll...
Algebra
ISBN:9781337111348
Author:Bruce Crauder, Benny Evans, Alan Noell
Publisher:Cengage Learning

Algebra: Structure And Method, Book 1
Algebra
ISBN:9780395977224
Author:Richard G. Brown, Mary P. Dolciani, Robert H. Sorgenfrey, William L. Cole
Publisher:McDougal Littell
How to make Frequency Distribution Table / Tally Marks and Frequency Distribution Table; Author: Reenu Math;https://www.youtube.com/watch?v=i_A6RiE8tLE;License: Standard YouTube License, CC-BY
Frequency distribution table in statistics; Author: Math and Science;https://www.youtube.com/watch?v=T7KYO76DoOE;License: Standard YouTube License, CC-BY
Frequency Distribution Table for Grouped/Continuous data | Math Dot Com; Author: Maths dotcom;https://www.youtube.com/watch?v=ErnccbXQOPY;License: Standard Youtube License