Mathematical Statistics with Applications
7th Edition
ISBN: 9780495110811
Author: Dennis Wackerly, William Mendenhall, Richard L. Scheaffer
Publisher: Cengage Learning
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Textbook Question
Chapter 2.6, Problem 40E
A brand of automobile comes in five different styles, with four types of engines, with two types of transmissions, and in eight colors.
- a How many autos would a dealer have to stock if he included one for each style–engine–transmission combination?
- b How many would a distribution center have to carry if all colors of ears were stocked for each combination in part (a)?
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We consider the one-period model studied in class as an example. Namely, we assumethat the current stock price is S0 = 10. At time T, the stock has either moved up toSt = 12 (with probability p = 0.6) or down towards St = 8 (with probability 1−p = 0.4).We consider a call option on this stock with maturity T and strike price K = 10. Theinterest rate on the money market is zero.As in class, we assume that you, as a customer, are willing to buy the call option on100 shares of stock for $120. The investor, who sold you the option, can adopt one of thefollowing strategies: Strategy 1: (seen in class) Buy 50 shares of stock and borrow $380. Strategy 2: Buy 55 shares of stock and borrow $430. Strategy 3: Buy 60 shares of stock and borrow $480. Strategy 4: Buy 40 shares of stock and borrow $280.(a) For each of strategies 2-4, describe the value of the investor’s portfolio at time 0,and at time T for each possible movement of the stock.(b) For each of strategies 2-4, does the investor have…
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Chapter 2 Solutions
Mathematical Statistics with Applications
Ch. 2.3 - Suppose a family contains two children of...Ch. 2.3 - Suppose that A and B are two events. Write...Ch. 2.3 - Prob. 3ECh. 2.3 - Prob. 4ECh. 2.3 - Refer to Exercise 2.4. Use the identities...Ch. 2.3 - Suppose two dice are tossed and the numbers on the...Ch. 2.3 - A group of five applicants for a pair of identical...Ch. 2.3 - From a survey of 60 students attending a...Ch. 2.4 - The proportions of blood phenotypes. A, B, AB, and...Ch. 2.4 - The proportions of blood phenotypes. A, B, AB, and...
Ch. 2.4 - A sample space consists of five simple events. E1,...Ch. 2.4 - A vehicle arriving at an intersection can turn...Ch. 2.4 - Americans can be quite suspicious, especially when...Ch. 2.4 - A survey classified a large number of adults...Ch. 2.4 - An oil prospecting firm hits oil or gas on 10% of...Ch. 2.4 - Prob. 16ECh. 2.4 - Hydraulic landing assemblies coming from an...Ch. 2.4 - Suppose two balanced coins are tossed and the...Ch. 2.4 - A business office orders paper supplies from one...Ch. 2.4 - The following game was played on a popular...Ch. 2.4 - If A and B are events, use the result derived in...Ch. 2.4 - If A and B are events and B A, use the result...Ch. 2.4 - Prob. 23ECh. 2.4 - Use the result in Exercise 2.22 and the Axioms in...Ch. 2.5 - A single car is randomly selected from among all...Ch. 2.5 - According to Websters New Collegiate Dictionary, a...Ch. 2.5 - In Exercise 2.12 we considered a situation where...Ch. 2.5 - Four equally qualified people apply for two...Ch. 2.5 - Two additional jurors are needed to complete a...Ch. 2.5 - Three imported wines are to be ranked from lowest...Ch. 2.5 - A boxcar contains six complex electronic systems....Ch. 2.5 - A retailer sells only two styles of stereo...Ch. 2.5 - The Bureau of the Census reports that the median...Ch. 2.5 - Patients arriving at a hospital outpatient clinic...Ch. 2.6 - An airline has six flights from New York to...Ch. 2.6 - Prob. 36ECh. 2.6 - A businesswoman in Philadelphia is preparing an...Ch. 2.6 - An upscale restaurant offers a special fixe prix...Ch. 2.6 - An experiment consists of tossing a pair of dice....Ch. 2.6 - A brand of automobile comes in five different...Ch. 2.6 - Prob. 41ECh. 2.6 - Prob. 42ECh. 2.6 - A fleet of nine taxis is to be dispatched to three...Ch. 2.6 - Refer to Exercise 2.43. Assume that taxis are...Ch. 2.6 - Prob. 45ECh. 2.6 - Ten teams are playing in a basketball tournament....Ch. 2.6 - Refer to Exercise 2.46. If 2n teams are to be...Ch. 2.6 - Prob. 48ECh. 2.6 - Students attending the University of Florida can...Ch. 2.6 - Prob. 50ECh. 2.6 - A local fraternity is conducting a raffle where 50...Ch. 2.6 - An experimenter wishes to investigate the effect...Ch. 2.6 - Five firms, F1, F2,, F5, each offer bids on three...Ch. 2.6 - A group of three undergraduate and five graduate...Ch. 2.6 - A study is to be conducted in a hospital to...Ch. 2.6 - A student prepares for an exam by studying a list...Ch. 2.6 - Two cards are drawn from a standard 52-card...Ch. 2.6 - Five cards are dealt from a standard 52-card deck....Ch. 2.6 - Prob. 59ECh. 2.6 - Refer to Example 2.7. Suppose that we record the...Ch. 2.6 - Prob. 61ECh. 2.6 - A manufacturer has nine distinct motors in stock,...Ch. 2.6 - The eight-member Human Relations Advisory Board of...Ch. 2.6 - A balanced die is tossed six times, and the number...Ch. 2.6 - Prob. 65ECh. 2.6 - Refer to Example 2.10. What is the probability...Ch. 2.6 - Refer to Example 2.13. Suppose that the number of...Ch. 2.6 - Show that, for any integer n 1, a (nn)=1....Ch. 2.6 - Prob. 69ECh. 2.6 - Prob. 70ECh. 2.7 - If two events, A and B, are such that P(A) = .5,...Ch. 2.7 - For a certain population of employees, the...Ch. 2.7 - Gregor Mendel was a monk who, in 1865, suggested a...Ch. 2.7 - One hundred adults were interviewed in a telephone...Ch. 2.7 - Prob. 75ECh. 2.7 - A survey of consumers in a particular community...Ch. 2.7 - A study of the posttreatment behavior of a large...Ch. 2.7 - In the definition of the independence of two...Ch. 2.7 - Suppose that A and B are mutually exclusive...Ch. 2.7 - Suppose that A B and that P(A) 0 and P(B) 0....Ch. 2.7 - If P(A) 0, P(B) 0, and P(A) P(A|B), show that...Ch. 2.7 - Suppose that A B and that P(A) 0 and P(B) 0....Ch. 2.7 - If A and B are mutually exclusive events and P(B) ...Ch. 2.8 - If A1, A2, and A3 are three events and...Ch. 2.8 - Prob. 85ECh. 2.8 - Suppose that A and B are two events such that P(A)...Ch. 2.8 - Suppose that A and B are two events such that P(A)...Ch. 2.8 - Suppose that A and B are two events such that P(A)...Ch. 2.8 - Prob. 89ECh. 2.8 - Suppose that there is a 1 in 50 chance of injury...Ch. 2.8 - Can A an B be mutually exclusive if P(A) = .4 and...Ch. 2.8 - Prob. 92ECh. 2.8 - In a game, a participant is given three attempts...Ch. 2.8 - A smoke detector system uses two devices, A and B....Ch. 2.8 - Prob. 95ECh. 2.8 - If A and B are independent events with P(A) = .5...Ch. 2.8 - Consider the following portion of an electric...Ch. 2.8 - With relays operating as in Exercise 2.97, compare...Ch. 2.8 - Suppose that A and B are independent events such...Ch. 2.8 - Show that Theorem 2.6, the additive law of...Ch. 2.8 - Articles coming through an inspection line are...Ch. 2.8 - Diseases I and II are prevalent among people in a...Ch. 2.8 - Refer to Exercise 2.50. Hours after the rigging of...Ch. 2.8 - If A and B are two events, prove that...Ch. 2.8 - If the probability of injury on each individual...Ch. 2.8 - If A and B are equally likely events and we...Ch. 2.8 - Prob. 107ECh. 2.8 - If A, B, and C are three events, use two...Ch. 2.8 - Prob. 109ECh. 2.9 - Of the items produced daily by a factory, 40% come...Ch. 2.9 - Prob. 111ECh. 2.9 - Three radar sets, operating independently, are set...Ch. 2.9 - Consider one of the radar sets of Exercise 2.112....Ch. 2.9 - A lie detector will show a positive reading...Ch. 2.9 - Prob. 115ECh. 2.9 - A communications network has a built-in safeguard...Ch. 2.9 - A slate auto-inspection station has two inspection...Ch. 2.9 - Prob. 118ECh. 2.9 - Suppose that two balanced dice are tossed...Ch. 2.9 - Suppose that two defective refrigerators have been...Ch. 2.9 - Prob. 121ECh. 2.10 - Applet Exercise Use the applet Bayes Rule as a...Ch. 2.10 - Prob. 123ECh. 2.10 - A population of voters contains 40% Republicans...Ch. 2.10 - A diagnostic test for a disease is such that it...Ch. 2.10 - Prob. 126ECh. 2.10 - Prob. 127ECh. 2.10 - Use Theorem 2.8, the law of total probability, to...Ch. 2.10 - Males and females are observed to react...Ch. 2.10 - A study of Georgia residents suggests that those...Ch. 2.10 - Prob. 131ECh. 2.10 - A plane is missing and is presumed to have equal...Ch. 2.10 - A student answers a multiple-choice examination...Ch. 2.10 - Two methods, A and B, are available for teaching a...Ch. 2.10 - Of the travelers arriving at a small airport, 60%...Ch. 2.10 - Prob. 136ECh. 2.10 - Five identical bowls are labeled 1, 2, 3, 4, and...Ch. 2.10 - Prob. 138ECh. 2.11 - Refer to Exercise 2.112. Let the random variable Y...Ch. 2.11 - Refer to Exercise 2.120. Let the random variable Y...Ch. 2.11 - Refer again to Exercise 2.120. Let the random...Ch. 2.11 - A spinner can land in any of four positions, A, B,...Ch. 2 - Show that Theorem 2.7 holds for conditional...Ch. 2 - Let S contain four sample points, E1, E2, E3, and...Ch. 2 - Prob. 145SECh. 2 - Prob. 146SECh. 2 - Prob. 147SECh. 2 - A bin contains three components from supplier A,...Ch. 2 - A large group of people is to be checked for two...Ch. 2 - 2.149 A large group of people is to be checked for...Ch. 2 - Prob. 151SECh. 2 - Prob. 152SECh. 2 - Prob. 153SECh. 2 - a A drawer contains n = 5 different and...Ch. 2 - A group of men possesses the three characteristics...Ch. 2 - The accompanying table lists accidental deaths by...Ch. 2 - Prob. 157SECh. 2 - A bowl contains w white balls and b black balls....Ch. 2 - Prob. 159SECh. 2 - A machine for producing a new experimental...Ch. 2 - Prob. 161SECh. 2 - Prob. 162SECh. 2 - Relays used in the construction of electric...Ch. 2 - Prob. 164SECh. 2 - Refer to Exercise 2.163 and consider circuit B. If...Ch. 2 - Prob. 166SECh. 2 - Prob. 167SECh. 2 - As in Exercises 2.166 and 2.167, eight tires of...Ch. 2 - Three beer drinkers (say I, II, and III) are to...Ch. 2 - Prob. 170SECh. 2 - Prob. 171SECh. 2 - Prob. 172SECh. 2 - Prob. 173SECh. 2 - Prob. 174SECh. 2 - Prob. 175SECh. 2 - Prob. 176SECh. 2 - Refer to Exercise 2.90(b) where a friend claimed...Ch. 2 - Suppose that the probability of exposure to the...Ch. 2 - Two gamblers bet 1 each on the successive tosses...Ch. 2 - Prob. 180SECh. 2 - Suppose that n indistinguishable balls are to be...
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