Loose Leaf for Statistical Techniques in Business and Economics
17th Edition
ISBN: 9781260152647
Author: Douglas A. Lind
Publisher: McGraw-Hill Education
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Chapter 20, Problem 1SR
To determine
Prove that the expected payoff for the act of purchasing Rim Homes stock is $1,760.
Expert Solution & Answer
Answer to Problem 1SR
The expected payoff for the act of purchasing Rim Homes stock is $1,760.
Explanation of Solution
From the Table 20-1, the bull market and bear stock for the Rim homes are 2,200 and 1,100, respectively. The corresponding probabilities are 0.60 and 0.40.
The expected payoff for the act of purchasing Rim Homes stock is calculated as follows:
| Payoff value | Probability | Expected value | |
| Bull market | 2,200 | 0.60 | |
| Bear market | 1,100 | 0.40 | |
Then, the expected payoff for the act of purchasing Rim Homes stock is obtained by adding the
Thus, the expected payoff for the act of purchasing Rim Homes stock is $1,760.
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3. A bag of Skittles contains five colors: red, orange, green, yellow, and purple. The
probabilities of choosing each color are shown in the chart below. What is the probability
of choosing first a red, then a purple, and then a green Skittle, replacing the candies in
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Color
Probability
Red
0.2299
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0.1908
Orange
0.2168
Yellow
0.1889
Purple
0.1736
Name:
Quiz A 5.3-5.4
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Male
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90
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136
Healthy
20
13
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31
41
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8
8
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120
98
218
Use the following scenario for questions 1 & 2.
One question on the Census at School survey
asks students if they would prefer to be happy,
healthy, rich, or famous. Students may only
choose one of these responses. The two-way
table summarizes the responses of 218 high
school students from the United States by
sex.
Preferred
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1. Define event F as a female student and event R as rich.
a. Find
b. Find or
c. Find and
2. Define event F as a female student and event R as rich.
a. Find
b. Find
c. Using your results from a and b, are these events (female student and rich)
independent?
Use the following scenario for questions 3 & 4.
At the end of a 5k race, runners are
offered a donut or a banana. The
event planner examined each
runner's race bib and noted whether
Age
Less than 30 years old
At least 30 years old
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Banana
52
54
106
5
72
77
Total
57
126…
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Chapter 20 Solutions
Loose Leaf for Statistical Techniques in Business and Economics
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