Intro Stats
4th Edition
ISBN: 9780321826275
Author: Richard D. De Veaux
Publisher: PEARSON
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Chapter 21, Problem 20E
Wind speed, part II In Exercise 18, we saw summary statistics for wind speeds at two sites near each other, both being considered as locations for an electricity-generating wind turbine. The data, recorded every 6 hours for a year, showed each of the sites had a mean wind speed high enough to qualify, but how can we tell which site is best? Here are some displays:
- a) The boxplots show outliers for each site, yet the histogram shows none. Discuss why.
- b) Which of the summaries would you use to select between these sites? Why?
- c) Using the information you have, discuss the assumptions and conditions for paired t inference for these data. (Hint: Think hard about the independence assumption in particular.)
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Would you please help with these questions? I don't understand when to choose a bar chart and pie chart, and question 3 , thank you
Question 2. An American option on a stock has payoff given by F = f(St) when it is exercised
at time t. We know that the function f is convex. A person claims that because of convexity,
it is optimal to exercise at expiration T. Do you agree with them?
Question 4. We consider a CRR model with So == 5 and up and down factors u = 1.03 and
d = 0.96. We consider the interest rate r = 4% (over one period). Is this a suitable CRR
model? (Explain your answer.)
Chapter 21 Solutions
Intro Stats
Ch. 21.4 - Think about each of the situations described...Ch. 21.4 - Prob. 2JCCh. 21.4 - Are parents equally strict with boys and girls? In...Ch. 21.4 - Prob. 4JCCh. 21.4 - Prob. 5JCCh. 21 - SECTION 18.1 1. Which method? Which of the...Ch. 21 - Prob. 2ECh. 21 - SECTION 18.2 3. Cars and trucks We have data on...Ch. 21 - Prob. 4ECh. 21 - Prob. 5E
Ch. 21 - Prob. 6ECh. 21 - Blocking cars and trucks Thinking about the data...Ch. 21 - Prob. 8ECh. 21 - Prob. 9ECh. 21 - Prob. 10ECh. 21 - Prob. 11ECh. 21 - Freshman 15? Many people believe that students...Ch. 21 - Prob. 13ECh. 21 - Prob. 14ECh. 21 - Prob. 15ECh. 21 - Friday the 13th, accidents The researchers in...Ch. 21 - Prob. 17ECh. 21 - Prob. 18ECh. 21 - Prob. 19ECh. 21 - Wind speed, part II In Exercise 18, we saw summary...Ch. 21 - Prob. 21ECh. 21 - Prob. 22ECh. 21 - 23. Temperatures The following table gives the...Ch. 21 - Prob. 24ECh. 21 - Prob. 25ECh. 21 - Brain waves An experiment was performed to see...Ch. 21 - Prob. 27ECh. 21 - Prob. 28ECh. 21 - Prob. 29ECh. 21 - Prob. 30ECh. 21 - Stopping distance A tire manufacturer tested the...Ch. 21 - Stopping distance 60 For another test of the tires...Ch. 21 - Prob. 33ECh. 21 - Prob. 34ECh. 21 - Prob. 35ECh. 21 - Prob. 36ECh. 21 - Prob. 37ECh. 21 - 38. Marathon start-up years 2010 When we...Ch. 21 - BST Many dairy cows now receive injections of BST,...Ch. 21 - BST II In the experiment about hormone injections...
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- Question 3. We want to price a put option with strike price K and expiration T. Two financial advisors estimate the parameters with two different statistical methods: they obtain the same return rate μ, the same volatility σ, but the first advisor has interest r₁ and the second advisor has interest rate r2 (r1>r2). They both use a CRR model with the same number of periods to price the option. Which advisor will get the larger price? (Explain your answer.)arrow_forwardQuestion 5. We consider a put option with strike price K and expiration T. This option is priced using a 1-period CRR model. We consider r > 0, and σ > 0 very large. What is the approximate price of the option? In other words, what is the limit of the price of the option as σ∞. (Briefly justify your answer.)arrow_forwardQuestion 6. You collect daily data for the stock of a company Z over the past 4 months (i.e. 80 days) and calculate the log-returns (yk)/(-1. You want to build a CRR model for the evolution of the stock. The expected value and standard deviation of the log-returns are y = 0.06 and Sy 0.1. The money market interest rate is r = 0.04. Determine the risk-neutral probability of the model.arrow_forward
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- In this problem, we consider a 2-period stock market model with evolution given in Fig. 1 below. Each period corresponds to one year (At = 1). The yearly interest rate is r = 1/3 = 33%. This model is a CRR model. 25 15 9 10 6 4 time Figure 1: Stock evolution for Problem 1. (a) Find the values of up and down factors u and d, and the risk-neutral probability q. (b) We consider a European put with strike price K the price of this option at time 0. == 16 and expiration T = 2 years. Find (c) Provide the number of shares of stock that the replicating portfolio contains at each pos- sible position. (d) You find this option available on the market for $2. What do you do? (Short answer.) (e) We consider an American put with strike price K = 16 and expiration T = 2 years. Find the price of this option at time 0 and describe the optimal exercising strategy. (f) We consider an American call with strike price K ○ = 16 and expiration T = 2 years. Find the price of this option at time 0 and describe…arrow_forward2.2, 13.2-13.3) question: 5 point(s) possible ubmit test The accompanying table contains the data for the amounts (in oz) in cans of a certain soda. The cans are labeled to indicate that the contents are 20 oz of soda. Use the sign test and 0.05 significance level to test the claim that cans of this soda are filled so that the median amount is 20 oz. If the median is not 20 oz, are consumers being cheated? Click the icon to view the data. What are the null and alternative hypotheses? OA. Ho: Medi More Info H₁: Medi OC. Ho: Medi H₁: Medi Volume (in ounces) 20.3 20.1 20.4 Find the test stat 20.1 20.5 20.1 20.1 19.9 20.1 Test statistic = 20.2 20.3 20.3 20.1 20.4 20.5 Find the P-value 19.7 20.2 20.4 20.1 20.2 20.2 P-value= (R 19.9 20.1 20.5 20.4 20.1 20.4 Determine the p 20.1 20.3 20.4 20.2 20.3 20.4 Since the P-valu 19.9 20.2 19.9 Print Done 20 oz 20 oz 20 oz 20 oz ce that the consumers are being cheated.arrow_forwardT Teenage obesity (O), and weekly fast-food meals (F), among some selected Mississippi teenagers are: Name Obesity (lbs) # of Fast-foods per week Josh 185 10 Karl 172 8 Terry 168 9 Kamie Andy 204 154 12 6 (a) Compute the variance of Obesity, s²o, and the variance of fast-food meals, s², of this data. [Must show full work]. (b) Compute the Correlation Coefficient between O and F. [Must show full work]. (c) Find the Coefficient of Determination between O and F. [Must show full work]. (d) Obtain the Regression equation of this data. [Must show full work]. (e) Interpret your answers in (b), (c), and (d). (Full explanations required). Edit View Insert Format Tools Tablearrow_forward
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