Introductory Statistics (2nd Edition)
2nd Edition
ISBN: 9780321978271
Author: Robert Gould, Colleen N. Ryan
Publisher: PEARSON
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Chapter 3, Problem 61SE
Sleep Time of Animals Data at this text's website show the average amount of time animals sleep per day (in hours). The number listed for humans is 8 hours. You may either make a box-plot with technology using the data at this text's website or make a sketch of the boxplot from the
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29% of all college students major in STEM (Science, Technology, Engineering, and Math). If 46 college students are randomly selected, find the probability thata. Exactly 11 of them major in STEM. b. At most 12 of them major in STEM. c. At least 11 of them major in STEM. d. Between 11 and 15 (including 11 and 15) of them major in STEM.
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Problem1
We consider a two-period binomial model with the following properties: each period lastsone (1) year and the current stock price is S0 = 4. On each period, the stock price doubleswhen it moves up and is reduced by half when it moves down. The annual interest rateon the money market is 25%. (This model is the same as in Prob. 1 of HW#2).We consider four options on this market: A European call option with maturity T = 2 years and strike price K = 5; A European put option with maturity T = 2 years and strike price K = 5; An American call option with maturity T = 2 years and strike price K = 5; An American put option with maturity T = 2 years and strike price K = 5.(a) Find the price at time 0 of both European options.(b) Find the price at time 0 of both American options. Compare your results with (a)and comment.(c) For each of the American options, describe the optimal exercising strategy.
Problem 1.We consider a two-period binomial model with the following properties: each period lastsone (1) year and the current stock price is S0 = 4. On each period, the stock price doubleswhen it moves up and is reduced by half when it moves down. The annual interest rateon the money market is 25%.
We consider four options on this market: A European call option with maturity T = 2 years and strike price K = 5; A European put option with maturity T = 2 years and strike price K = 5; An American call option with maturity T = 2 years and strike price K = 5; An American put option with maturity T = 2 years and strike price K = 5.(a) Find the price at time 0 of both European options.(b) Find the price at time 0 of both American options. Compare your results with (a)and comment.(c) For each of the American options, describe the optimal exercising strategy.(d) We assume that you sell the American put to a market participant A for the pricefound in (b). Explain how you act on the market…
Chapter 3 Solutions
Introductory Statistics (2nd Edition)
Ch. 3 - Earnings A sociologist says, “Typically, men in...Ch. 3 - Houses A real estate agent claims that all things...Ch. 3 - Age of CEOs (Example) the histogram shows the ages...Ch. 3 - Televisions The histogram shows the number of...Ch. 3 - Billionaires According to Forbes.com, the numbers...Ch. 3 - Billionaires According to Forbes.com, the numbers...Ch. 3 - Paid Vacation Days (Example 2) This list...Ch. 3 - Children of First Ladies This list represents the...Ch. 3 - Ages of Presidents at Inauguration At their...Ch. 3 - Ages of Chief Justices at Installation At their...
Ch. 3 - Weight Loss (Example 3) The table shows Minitab...Ch. 3 - Education of Father and Mother The table shows...Ch. 3 - Surfing College students and surfers Rex Robinson...Ch. 3 - Eating Out College student Jacqueline Loya asked a...Ch. 3 - Real state price (Example) look at the two...Ch. 3 - Dice The histogram contain data with a range of 1...Ch. 3 - Birth Weights (Example 5) The mean birth weigh for...Ch. 3 - Birth Length The mean birth length for U.S....Ch. 3 - Children’s Ages (Example 6) Mrs. Johnson’s...Ch. 3 - Pay Rate in Different Currencies The pay rates for...Ch. 3 - Olympics In the most recent summer Olympics, do...Ch. 3 - Weights Suppose you have a data set with the...Ch. 3 - Brain Size The brain size (in hundreds of...Ch. 3 - Happiness A survey on StatCrunch asked people to...Ch. 3 - Drinkers The number of alcoholic drinks per week...Ch. 3 - Prob. 26SECh. 3 - Violent Crime: West (Example 7) In 2011, the mean...Ch. 3 - Violent Crime: East In 2011, the mean rate of...Ch. 3 - Property Crime (Example 8) In 2011, the mean...Ch. 3 - Property Crime In 2011, the mean property crime...Ch. 3 - Heights and z-Scores The dotplot shows heights of...Ch. 3 - Heights Refer to the dotplot in the previous...Ch. 3 - Unusual IQs (Example 9) Wechsler IQ tests have a...Ch. 3 - Lengths of Pregnancy Distributions of gestation...Ch. 3 - Low-Birth-Weight Babies (Example 10) Babies born...Ch. 3 - Birth Lengths Babies born after 40 weeks gestation...Ch. 3 - Women's Heights Assume that women's heights have a...Ch. 3 - SATs The quantitative portion of the SAT exam has...Ch. 3 - Name two measures of the center of a distribution,...Ch. 3 - Name two measures of the variation of a...Ch. 3 - Pixar Animated Movies (Example 11) The ten...Ch. 3 - DreamWorks Animated Movies The ten top-grossing...Ch. 3 - Pixar Animated Movies Again (Example 12) Find the...Ch. 3 - Dreamworks Animated Movies Find the median and...Ch. 3 - Prob. 45SECh. 3 - Drinks The number of alcoholic drinks per week is...Ch. 3 - Outliers a. In your own words, describe to someone...Ch. 3 - Center and Variation When you are comparing two...Ch. 3 - An Error A dieter recorded the number of calories...Ch. 3 - Baseball Strike In 1994, Major League Baseball...Ch. 3 - Heads The graphs show the circumferences of heads...Ch. 3 - House Prices The graphs show the house prices (in...Ch. 3 - Shoes (Example 14) The histograms show the number...Ch. 3 - Tax Rate A StatCrunch survey asked people what...Ch. 3 - Regional Population Density The figure shows the...Ch. 3 - Property Crime Rates The boxplot shows the...Ch. 3 - City Temperatures The boxplot shows temperatures...Ch. 3 - Brain Size The boxplots show the brain size (in...Ch. 3 - Matching Boxplots and Histograms a. Report the...Ch. 3 - Matching Boxplots and Histograms Match each of the...Ch. 3 - Sleep Time of Animals Data at this text's website...Ch. 3 - BA Percentage The data show the percentage of...Ch. 3 - Tall Buildings The dotplot shows the distribution...Ch. 3 - Passing the Bar Exam The dotplot shows the...Ch. 3 - Exam Scores The five-number summary for a...Ch. 3 - Exam Scores The five-number summary for a...Ch. 3 - Death Row: South (Example 15) The table shows the...Ch. 3 - Death Row: West The table shows the numbers of...Ch. 3 - Head Circumference (Example 16) Following are head...Ch. 3 - Heights of Sons and Dads The data at this text’s...Ch. 3 - Final Exam Grades The data that follow are final...Ch. 3 - Speeding Tickets College students Diane Glover and...Ch. 3 - Heights The following graph shows the heights for...Ch. 3 - Marathon Times The following histogram of marathon...Ch. 3 - Soda Consumption A StatCrunch survey asked people...Ch. 3 - Holiday Spending A StatCrunch survey asked people...Ch. 3 - a. State an approximate value for the mean height...Ch. 3 - Ideal Family In 2012, the General Social Survey...Ch. 3 - For exercises 3.85 through 3.88, construct two...Ch. 3 - For exercises 3.85 through 3.88, construct two...Ch. 3 - For exercises 3.85 through 3.88, construct two...Ch. 3 - 3.79-3.82 construct two sets of numbers with at...Ch. 3 - Population Density Data were recorded for each of...Ch. 3 - Population Increase Data were recorded for each of...Ch. 3 - Prob. 85CRECh. 3 - Eating Out, Again College student Jacqueline Loya...Ch. 3 - Study Hours A group of 50 statistics students, 25...Ch. 3 - Driving Accidents College student Sandy Hudson...Ch. 3 - Exam Scores An exam has a mean of 70 and a...Ch. 3 - Boys’ Heights Three-year-old boys in the United...Ch. 3 - SAT and ACT Scores Quantitative SAT scores have a...Ch. 3 - Children’s Heights Mrs. Diaz has two children: a...Ch. 3 - Students’ Ages Here are the ages of some students...Ch. 3 - House Prices The figure, which is from data taken...
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- What is the standard scores associated to the left of z is 0.1446arrow_forwardNote: The purpose of this problem below is to use computational techniques (Excelspreadsheet, Matlab, R, Python, etc.) and code the dynamic programming ideas seen inclass. Please provide the numerical answer to the questions as well as a sample of yourwork (spreadsheet, code file, etc.).We consider an N-period binomial model with the following properties: N = 60, thecurrent stock price is S0 = 1000; on each period, the stock price increases by 0.5% whenit moves up and decreases by 0.3% when it moves down. The annual interest rate on themoney market is 5%. (Notice that this model is a CRR model, which means that thebinomial tree is recombining.)(a) Find the price at time t0 = 0 of a (European) call option with strike price K = 1040and maturity T = 1 year.(b) Find the price at time t0 = 0 of a (European) put option with strike price K = 1040and maturity T = 1 year.(c) We consider now, that you are at time t5 (i.e. after 5 periods, which represents 1month later). Assume that the stock…arrow_forwardshow work in paperarrow_forward
- show all work (...or what you entered into your calculator...)arrow_forwardanswerarrow_forwardQuestion 2 The data below provides the battery life of thirty eight (38) motorcycle batteries. 100 83 83 105 110 81 114 99 101 105 78 115 74 96 106 89 94 81 106 91 93 86 79 103 94 108 113 100 117 120 77 93 93 85 76 89 78 88 680 a. Test the hypothesis that mean battery life is greater than 90. Use the 1% level of significance. b. Determine if the mean battery life is different from 80. Use the 10% level of significance. Show all steps for the hypothesis test c. Would your conlcusion in part (b) change at the 5% level of significance? | d. Confirm test results in part (b) using JASP. Note: All JASP input files and output tables should be providedarrow_forward
- Suppose that 80% of athletes at a certain college graduate. You randomly select eight athletes. What’s the chance that at most 7 of them graduate?arrow_forwardSuppose that you flip a fair coin four times. What’s the chance of getting at least one head?arrow_forwardSuppose that the chance that an elementary student eats hot lunch is 30 percent. What’s the chance that, among 20 randomly selected students, between 6 and 8 students eat hot lunch (inclusive)?arrow_forward
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