EBK UNDERSTANDING BASIC STATISTICS
8th Edition
ISBN: 8220106798706
Author: BRASE
Publisher: Cengage Learning US
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Chapter 3.1, Problem 16P
Critical Thinking: Data Transformation Using Addition In this problem, we explore the effect on the
(a) Compute the mode, median, and mean.
(b) Add 5 to each of the data values. Compute the mode, median, and mean, (c) Compare the results of parts (a) and (b). In general, how do you think the mode, median, and mean are affected when the same constant is added to each data value in a set?
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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.)
Problem 4. Margrabe formula and the Greeks (20 pts)
In the homework, we determined the Margrabe formula for the price of an option allowing you to
swap an x-stock for a y-stock at time T. For stocks with initial values xo, yo, common volatility
σ and correlation p, the formula was given by
Fo=yo (d+)-x0Þ(d_),
where
In (±²
Ꭲ
d+
õ√T
and
σ = σ√√√2(1 - p).
дго
(a) We want to determine a "Greek" for ỡ on the option: find a formula for
θα
(b) Is
дго
θα
positive or negative?
(c) We consider a situation in which the correlation p between the two stocks increases: what
can you say about the price Fo?
(d) Assume that yo< xo and p = 1. What is the price of the option?
Chapter 3 Solutions
EBK UNDERSTANDING BASIC STATISTICS
Ch. 3.1 - Statistical Literacy Consider the mode, median,...Ch. 3.1 - Statistical Literacy What symbol is used for the...Ch. 3.1 - Statistical Literacy Look at the formula for the...Ch. 3.1 - Statistical Literacy In order to find the median...Ch. 3.1 - Basic Computation: Mean, Median, Mode Find the...Ch. 3.1 - Basic Computation: Mean, Median, Mode Find the...Ch. 3.1 - Basic Computations Mean, Median, Mode Find the...Ch. 3.1 - Critical Thinking Consider a data set with at...Ch. 3.1 - Critical Thinking Consider a data set with at...Ch. 3.1 - Critical Thinking If a data set has an even number...
Ch. 3.1 - Critical Thinking When a distribution is...Ch. 3.1 - Critical Thinking Consider the following types of...Ch. 3.1 - Critical Thinking Consider the numbers 23455 (a)...Ch. 3.1 - Critical Thinking Consider two data sets. Set...Ch. 3.1 - Interpretation A Job-performance evaluation form...Ch. 3.1 - Critical Thinking: Data Transformation Using...Ch. 3.1 - Critical Thinking: Data Transformation Using...Ch. 3.1 - Critical Thinking Consider a data set of 15...Ch. 3.1 - Environmental Studies: Death Valley How hot does...Ch. 3.1 - Ecology: Wolf Packs How large is a wolf pack? The...Ch. 3.1 - Medical: Injuries The Grand Canyon and the...Ch. 3.1 - Football: Age of Professional Players How old are...Ch. 3.1 - Leisure: Maui Vacation How expensive is Maui? It...Ch. 3.1 - Basic Computation: Weighted Average Find the...Ch. 3.1 - Basic Computation: Weighted Average Find the...Ch. 3.1 - Grades: Weighted Average In your biology class,...Ch. 3.1 - Merit Pay Scale: Weighted Average At General...Ch. 3.1 - EPA: Wetlands Where does all the water go?...Ch. 3.1 - Expand Your knowledge: Harmonic Mean When data...Ch. 3.1 - Expand Your Knowledge: Geometric Mean When data...Ch. 3.2 - Statistical Literacy Which averagemean, median, or...Ch. 3.2 - Statistical Literacy What is the relationship...Ch. 3.2 - Statistical Literacy When computing the standard...Ch. 3.2 - Statistical Literary What symbol is used for the...Ch. 3.2 - Basic Computation: Range, Standard Deviation...Ch. 3.2 - Basic Computation: Range, Standard Deviation...Ch. 3.2 - Critical Thinking Fora given data set in which not...Ch. 3.2 - Critical Thinking Consider two data sets with...Ch. 3.2 - Critical Thinking Each of the following data sets...Ch. 3.2 - Critical Thinking: Data Transformation Using...Ch. 3.2 - Critical Thinking: Data Transformation Using...Ch. 3.2 - Critical Thinking: Outliers One indicator of an...Ch. 3.2 - Basic Computation: Variance, Standard Deviation...Ch. 3.2 - Basic Computation: Coefficient of Variation,...Ch. 3.2 - Basic Computation: Coefficient of Variation....Ch. 3.2 - Investing: Stocks and Bonds Do bonds reduce the...Ch. 3.2 - Space Shuttle: Epoxy Kevlar epoxy it a material...Ch. 3.2 - Archaeology: Ireland The Hill of Tara in Ireland...Ch. 3.2 - Wildlife: Mallard Ducks and Canada Geese For...Ch. 3.2 - Investing: Socially Responsible Mutual Funds Pax...Ch. 3.2 - Medical: Physician Visits In some reports, the...Ch. 3.2 - Grouped Data: Anthropology What was the age...Ch. 3.2 - Grouped Data: Shoplifting What is the age...Ch. 3.2 - Grouped Data: Hours of Sleep per Day Alexander...Ch. 3.2 - Grouped Data: Business Administration What are the...Ch. 3.2 - Expand Your knowledge: Moving Averages You do not...Ch. 3.2 - Prob. 27PCh. 3.2 - Expand Your knowledge: Stratified Sampling and...Ch. 3.2 - Expand Your knowledge: Stratified Sampling and...Ch. 3.2 - Prob. 30PCh. 3.3 - Statistical Literacy Angela took a general...Ch. 3.3 - Statistical Literacy One standard for admission to...Ch. 3.3 - Critical Thinking The town of Butler, Nebraska,...Ch. 3.3 - Critical Thinking Clayton and Timothy took...Ch. 3.3 - Basic Computation: Five-Number Summary,...Ch. 3.3 - Basic Computation: Five-Number Summary...Ch. 3.3 - Health Care: Nurses At Center Hospital there is...Ch. 3.3 - Health Care: Staff Another survey was done at...Ch. 3.3 - Sociology: College Graduates What percentage of...Ch. 3.3 - Sociology: High School Dropouts What percentage of...Ch. 3.3 - Auto Insurance: Interpret GraphsConsumer Reports...Ch. 3.3 - Expand Your knowledge: Outliers Some data include...Ch. 3 - Terminology Consider the following measures of...Ch. 3 - Terminology Consider the statement: For a 5%...Ch. 3 - Terminology When we compute a sample standard...Ch. 3 - Terminology Consider the following terms: outlier,...Ch. 3 - Terminology Consider the following symbols: s,,x,....Ch. 3 - Terminology How is the standard deviation related...Ch. 3 - Terminology In a box-and-whisker plot. which...Ch. 3 - Terminology Consider the following statement: If...Ch. 3 - Statistical Literacy (a) What measures of...Ch. 3 - Critical Thinking Look at the two histograms on...Ch. 3 - Critical Thinking Consider the following Minitab...Ch. 3 - Consumer: Radon Gas "Radon: The Problem No One...Ch. 3 - Political Science: Georgia Democrats How...Ch. 3 - Grade: Weighted Average Professor Cramer...Ch. 3 - General: Average Weight Wright An elevator it...Ch. 3 - Agriculture: Harvest Weight of Maize The following...Ch. 3 - Focus Problem: Water Solve the focus problem at...Ch. 3 - Agriculture: Bell Peppers The pathogen...Ch. 3 - Performance Rating: Weighted Average A performance...Ch. 3 - The Story of Old Faithful is a short book written...Ch. 3 - Most academic advisors tell students to major in a...Ch. 3 - An average is an attempt to summarize a collection...Ch. 3 - Why do we need to study the variation of a...Ch. 3 - Why is the coefficient of variation important?...Ch. 3 - What is Chebyshevs theorem? 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