Statistical Reasoning for Everyday Life (5th Edition)
5th Edition
ISBN: 9780134679259
Author: Bennett
Publisher: PEARSON
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Chapter 2.4, Problem 18E
To determine
Find the price of a pound of coffee in 2015.
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You have been hired as an intern to run analyses on the data and report the results back to Sarah; the five questions that Sarah needs you to address are given below.
Does there appear to be a positive or negative relationship between price and screen size? Use a scatter plot to examine the relationship.
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.
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).
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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.)
Chapter 2 Solutions
Statistical Reasoning for Everyday Life (5th Edition)
Ch. 2.1 - Qualitative versus Quantitative. What is the...Ch. 2.1 - Discrete versus Continuous. Distinguish between...Ch. 2.1 - Measurement Levels. What do we mean by data at the...Ch. 2.1 - Interval versus Ratio. Explain why temperatures on...Ch. 2.1 - Does It Make Sense? For Exercises 58, determine...Ch. 2.1 - Does It Make Sense? For Exercises 58, determine...Ch. 2.1 - Does It Make Sense? For Exercises 58, determine...Ch. 2.1 - Does It Make Sense? For Exercises 58, determine...Ch. 2.1 - Does It Make Sense? For Exercises 58, determine...Ch. 2.1 - Does It Make Sense? For Exercises 58, determine...
Ch. 2.1 - Does It Make Sense? For Exercises 58, determine...Ch. 2.1 - Does It Make Sense? For Exercises 58, determine...Ch. 2.1 - Does It Make Sense? For Exercises 58, determine...Ch. 2.1 - Does It Make Sense? For Exercises 58, determine...Ch. 2.1 - Does It Make Sense? For Exercises 58, determine...Ch. 2.1 - Does It Make Sense? For Exercises 58, determine...Ch. 2.1 - Qualitative versus Quantitative Data. In Exercises...Ch. 2.1 - Qualitative versus Quantitative Data. In Exercises...Ch. 2.1 - Discrete or Continuous. In Exercises 1928, state...Ch. 2.1 - Discrete or Continuous. In Exercises 1928, state...Ch. 2.1 - Discrete or Continuous. In Exercises 1928, state...Ch. 2.1 - Discrete or Continuous. In Exercises 1928, state...Ch. 2.1 - Discrete or Continuous. In Exercises 1928, state...Ch. 2.1 - Discrete or Continuous. In Exercises 1928, state...Ch. 2.1 - Discrete or Continuous. In Exercises 1928, state...Ch. 2.1 - Discrete or Continuous. In Exercises 1928, state...Ch. 2.1 - Discrete or Continuous. In Exercises 1928, state...Ch. 2.1 - Discrete or Continuous. In Exercises 1928, state...Ch. 2.1 - Levels of Measurement. For the data described in...Ch. 2.1 - Levels of Measurement. For the data described in...Ch. 2.1 - Levels of Measurement. For the data described in...Ch. 2.1 - Levels of Measurement. For the data described in...Ch. 2.1 - Levels of Measurement. For the data described in...Ch. 2.1 - Levels of Measurement. For the data described in...Ch. 2.1 - Levels of Measurement. For the data described in...Ch. 2.1 - Levels of Measurement. For the data described in...Ch. 2.1 - Levels of Measurement. For the data described in...Ch. 2.1 - Levels of Measurement. For the data described in...Ch. 2.1 - Levels of Measurement. For the data described in...Ch. 2.1 - Levels of Measurement. For the data described in...Ch. 2.1 - Meaningful Ratios? In Exercises 4148, determine...Ch. 2.1 - Meaningful Ratios? In Exercises 4148, determine...Ch. 2.1 - Meaningful Ratios? In Exercises 4148, determine...Ch. 2.1 - Meaningful Ratios? In Exercises 4148, determine...Ch. 2.1 - Meaningful Ratios? In Exercises 4148, determine...Ch. 2.1 - Meaningful Ratios? In Exercises 4148, determine...Ch. 2.1 - Meaningful Ratios? In Exercises 4148, determine...Ch. 2.1 - Meaningful Ratios? In Exercises 4148, determine...Ch. 2.1 - Complete Classification. In Exercises 4956,...Ch. 2.1 - Complete Classification. In Exercises 4956,...Ch. 2.1 - Complete Classification. In Exercises 4956,...Ch. 2.1 - Complete Classification. In Exercises 4956,...Ch. 2.1 - Prob. 53ECh. 2.1 - Complete Classification. In Exercises 4956,...Ch. 2.1 - Prob. 55ECh. 2.1 - Complete Classification. In Exercises 4956,...Ch. 2.2 - Error Type. Distinguish between random errors and...Ch. 2.2 - Absolute and Relative. Distinguish between the...Ch. 2.2 - Accuracy and Precision. Distinguish between...Ch. 2.2 - Honest Numbers. Why can it be misleading to give...Ch. 2.2 - Does It Make Sense? For Exercises 58, determine...Ch. 2.2 - Does It Make Sense? For Exercises 58, determine...Ch. 2.2 - Does It Make Sense? For Exercises 58, determine...Ch. 2.2 - Does It Make Sense? For Exercises 58, determine...Ch. 2.2 - IRS. An IRS agent reviews tax returns to identify...Ch. 2.2 - Safe Air Travel. Before taking off, a pilot is...Ch. 2.2 - Technical Specifications. A smartphone battery is...Ch. 2.2 - Crime Statistics. Former New York City Police...Ch. 2.2 - Sources of Errors. For each measurement described...Ch. 2.2 - Sources of Errors. For each measurement described...Ch. 2.2 - Sources of Errors. For each measurement described...Ch. 2.2 - Sources of Errors. For each measurement described...Ch. 2.2 - Sources of Errors. For each measurement described...Ch. 2.2 - Sources of Errors. For each measurement described...Ch. 2.2 - Sources of Errors. For each measurement described...Ch. 2.2 - Sources of Errors. For each measurement described...Ch. 2.2 - Absolute and Relative Errors. In Exercises 2124,...Ch. 2.2 - Absolute and Relative Errors. In Exercises 2124,...Ch. 2.2 - Absolute and Relative Errors. In Exercises 2124,...Ch. 2.2 - Absolute and Relative Errors. In Exercises 2124,...Ch. 2.2 - Minimizing Errors. Twenty-five people, including...Ch. 2.2 - Minimizing Errors. When a model 22F car battery is...Ch. 2.2 - Accuracy and Precision in Corvette Weight. A new...Ch. 2.2 - Accuracy and Precision in Height. Assume that your...Ch. 2.2 - Accuracy and Precision in Weight. Suppose your...Ch. 2.2 - Prob. 30ECh. 2.2 - Believable Facts? Exercises 3138 give statements...Ch. 2.2 - Believable Facts? Exercises 3138 give statements...Ch. 2.2 - Prob. 33ECh. 2.2 - Believable Facts? Exercises 3138 give statements...Ch. 2.2 - Prob. 35ECh. 2.2 - Believable Facts? Exercises 3138 give statements...Ch. 2.2 - Believable Facts? Exercises 3138 give statements...Ch. 2.2 - Believable Facts? Exercises 3138 give statements...Ch. 2.3 - Statistical Literacy and Critical Thinking...Ch. 2.3 - Percentage Difference. Distinguish between...Ch. 2.3 - Of versus More Than. Explain the difference...Ch. 2.3 - Percentage Points. Explain the difference between...Ch. 2.3 - Does It Make Sense? For Exercises 58, determine...Ch. 2.3 - Does It Make Sense? For Exercises 58, determine...Ch. 2.3 - Does It Make Sense? For Exercises 58, determine...Ch. 2.3 - Does It Make Sense? For Exercises 58, determine...Ch. 2.3 - Concepts and Applications Fractions, Decimals,...Ch. 2.3 - Fractions, Decimals, Percentages. Express the...Ch. 2.3 - Percentage Practice. A study was conducted of...Ch. 2.3 - Percentage Practice. A study was conducted to...Ch. 2.3 - Percentage of Media commonly report survey...Ch. 2.3 - Percentage. A New York Times editorial criticized...Ch. 2.3 - Relative Change. Exercises 1522 each provide two...Ch. 2.3 - Relative Change. Exercises 1522 each provide two...Ch. 2.3 - Relative Change. Exercises 1522 each provide two...Ch. 2.3 - Relative Change. Exercises 1522 each provide two...Ch. 2.3 - Relative Change. Exercises 1522 each provide two...Ch. 2.3 - Relative Change. Exercises 1522 each provide two...Ch. 2.3 - Relative Change. Exercises 1522 each provide two...Ch. 2.3 - Relative Change. Exercises 1522 each provide two...Ch. 2.3 - Surveys. Some important analyses of survey results...Ch. 2.3 - Surveys. Some important analyses of survey results...Ch. 2.3 - Surveys. Some important analyses of survey results...Ch. 2.3 - Surveys. Some important analyses of survey results...Ch. 2.3 - Of versus More Than. Fill in the blanks in...Ch. 2.3 - Of versus More Than. Fill in the blanks in...Ch. 2.3 - Of versus More Than. Fill in the blanks in...Ch. 2.3 - Of versus More Than. Fill in the blanks in...Ch. 2.3 - Margin of Error. A Gallup poll of 1012 American...Ch. 2.3 - Margin of Error. A Pew Research Center survey of...Ch. 2.3 - Percentages of Percentages. Exercises 3336...Ch. 2.3 - Percentages of Percentages. Exercises 3336...Ch. 2.3 - Percentages of Percentages. Exercises 3336...Ch. 2.3 - Percentages of Percentages. Exercises 3336...Ch. 2.3 - TV Share. A recent Super Bowl football game had a...Ch. 2.3 - Misleading Percentage. In a Gallup poll of 1236...Ch. 2.4 - Index Number. What is an index number? Briefly...Ch. 2.4 - CPI. What is the Consumer Price Index (CPI)? How...Ch. 2.4 - Inflation. In making price comparisons, why is it...Ch. 2.4 - CPI Change. If the CPI increases, must wages also...Ch. 2.4 - Does It Make Sense? For Exercises 58, determine...Ch. 2.4 - Does It Make Sense? For Exercises 58, determine...Ch. 2.4 - Does It Make Sense? For Exercises 58, determine...Ch. 2.4 - Does It Make Sense? For Exercises 58, determine...Ch. 2.4 - Consumer Price Index. In Exercises 916, use the...Ch. 2.4 - Consumer Price Index. In Exercises 916, use the...Ch. 2.4 - Consumer Price Index. In Exercises 916, use the...Ch. 2.4 - Consumer Price Index. In Exercises 916, use the...Ch. 2.4 - Prob. 13ECh. 2.4 - Consumer Price Index. In Exercises 916, use the...Ch. 2.4 - Consumer Price Index. In Exercises 916, use the...Ch. 2.4 - Consumer Price Index. In Exercises 916, use the...Ch. 2.4 - Coffee Index. In Exercises 1720, use the following...Ch. 2.4 - Prob. 18ECh. 2.4 - Prob. 19ECh. 2.4 - Coffee Index. In Exercises 1720, use the following...Ch. 2.4 - Pizza Cost and Subway Fare. The pizza connection...Ch. 2.4 - Pizza Cost and Subway Fare. The pizza connection...Ch. 2.4 - Pizza Cost and Subway Fare. The pizza connection...Ch. 2.4 - Pizza Cost and Subway Fare. The pizza connection...Ch. 2.4 - Prob. 25ECh. 2.4 - Prob. 26ECh. 2.4 - Prob. 27ECh. 2.4 - Housing Price Index. Realtors use an index to...Ch. 2.4 - Prob. 29ECh. 2.4 - Housing Price Index. Realtors use an index to...Ch. 2.4 - Prob. 31ECh. 2.4 - Housing Price Index. Realtors use an index to...Ch. 2 - Germs. In a Wakefield Research survey, 1003...Ch. 2 - Health Care Spending. Total spending on health...Ch. 2 - Prob. 3CRECh. 2 - Minimum Wage. The following table lists the...Ch. 2 - Braking reaction times of 36 randomly selected...Ch. 2 - What is the level of measurement of the values...Ch. 2 - Prob. 3CQCh. 2 - A researcher measures the braking reaction time of...Ch. 2 - Braking reaction times of 36 randomly selected...Ch. 2 - Recorded survey results include the states in...Ch. 2 - Prob. 7CQCh. 2 - Prob. 8CQCh. 2 - Prob. 9CQCh. 2 - Prob. 10CQCh. 2 - Politics Who Benefited Most from Lower Tax Rates?...Ch. 2 - Prob. 1.2FCh. 2 - Prob. 1.3F
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