Statistics: The Art and Science of Learning from Data (4th Edition)
4th Edition
ISBN: 9780321997838
Author: Alan Agresti, Christine A. Franklin, Bernhard Klingenberg
Publisher: PEARSON
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Chapter 3.2, Problem 18PB
To determine
Identify the misleading from the given analysis.
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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…
Negate the following compound statement using De Morgans's laws.
Negate the following compound statement using De Morgans's laws.
Chapter 3 Solutions
Statistics: The Art and Science of Learning from Data (4th Edition)
Ch. 3.1 - Which is the response/explanatory variable? For...Ch. 3.1 - Sales and advertising Each month, the owner of...Ch. 3.1 - Does higher income make you happy? Every General...Ch. 3.1 - Diamonds The clarity and cut of a diamond are two...Ch. 3.1 - Alcohol and college students The Harvard School of...Ch. 3.1 - How to fight terrorism? A survey of 1000 adult...Ch. 3.1 - Heaven and hell Two questions on the General...Ch. 3.1 - Prob. 8PBCh. 3.1 - Gender gap in party ID In recent election years,...Ch. 3.1 - Use the GSS Go to the GSS website...
Ch. 3.2 - Used cars and direction of association For the 100...Ch. 3.2 - Broadband and GDP The Internet Use data file on...Ch. 3.2 - Prob. 13PBCh. 3.2 - Politics and newspaper reading For the FL Student...Ch. 3.2 - Prob. 15PBCh. 3.2 - Match the scatterplot with r Match the following...Ch. 3.2 - Prob. 17PBCh. 3.2 - Prob. 18PBCh. 3.2 - Prob. 19PBCh. 3.2 - Prob. 20PBCh. 3.2 - Prob. 21PBCh. 3.2 - Prob. 22PBCh. 3.2 - Prob. 23PBCh. 3.3 - Sketch plots of lines Identify the values of the...Ch. 3.3 - Prob. 25PBCh. 3.3 - Home selling prices The House Selling Prices FL...Ch. 3.3 - Prob. 27PBCh. 3.3 - Prob. 28PBCh. 3.3 - Prob. 29PBCh. 3.3 - Broadband subscribers and population The Internet...Ch. 3.3 - Prob. 31PBCh. 3.3 - Prob. 32PBCh. 3.3 - Regression between cereal sodium and sugar The...Ch. 3.3 - Prob. 34PBCh. 3.3 - Advertising and sales Each month, the owner of...Ch. 3.3 - Midtermfinal correlation For students who take...Ch. 3.3 - Predict final exam from midterm In an introductory...Ch. 3.3 - NL baseball Example 9 related y = team scoring...Ch. 3.3 - Study time and college GPA A graduate teaching...Ch. 3.3 - Oil and GDP An article in the September 16, 2006,...Ch. 3.3 - Mountain bikes revisited Is there a relationship...Ch. 3.3 - Mountain bike and suspension type Refer to the...Ch. 3.3 - Fuel Consumption Most cars are fuel efficient when...Ch. 3.4 - Extrapolating murder The SPSS figure shows the...Ch. 3.4 - Mens Olympic long jumps The Olympic winning mens...Ch. 3.4 - U.S. average annual temperatures Use the U.S....Ch. 3.4 - Murder and education Example 13 found the...Ch. 3.4 - Murder and poverty For Table 3.6, the regression...Ch. 3.4 - TV watching and the birth rate The figure shows...Ch. 3.4 - Looking for outliers Using software, analyze the...Ch. 3.4 - Regression between cereal sodium and sugar Let x =...Ch. 3.4 - Gestational period and life expectancy Does the...Ch. 3.4 - Antidrug campaigns An Associated Press story (June...Ch. 3.4 - Whats wrong with regression? Explain whats wrong...Ch. 3.4 - Education causes crime? The table shows a small...Ch. 3.4 - Death penalty and race The table shows results of...Ch. 3.4 - NAEP scores Eighth-grade math scores on the...Ch. 3.4 - Age a confounder? A study observes that the...Ch. 3 - Choose explanatory and response For the following...Ch. 3 - Graphing data For each case in the previous...Ch. 3 - Life after death for males and females In a recent...Ch. 3 - God and happiness Go to the GSS website...Ch. 3 - Degrees and income The mean annual salaries earned...Ch. 3 - Bacteria in ground turkey Consumer Reports...Ch. 3 - Women managers in the work force The following...Ch. 3 - RateMyProfessor.com The website RateMyProfessors....Ch. 3 - Women in government and economic life The OECD...Ch. 3 - African droughts and dust Is there a relationship...Ch. 3 - Crime rate and urbanization For the data in...Ch. 3 - Gestational period and life expectancy revisited...Ch. 3 - Height and paycheck The headline of an article in...Ch. 3 - Predicting college GPA An admissions officer...Ch. 3 - College GPA = high school GPA Refer to the...Ch. 3 - Whats a college degree worth? In 2002, a census...Ch. 3 - Care Weight and gas hogs: The table shows a short...Ch. 3 - Predicting Internet use from cell phone use We now...Ch. 3 - Income depends on education? For a study of...Ch. 3 - Fertility and GDP Refer to the Human Development...Ch. 3 - Women working and birth rate Using data from...Ch. 3 - Education and income The regression equation for a...Ch. 3 - Income in euros Refer to the previous exercise....Ch. 3 - Changing units for cereal data Refer to the Cereal...Ch. 3 - Murder and single-parent families For Table 3.6 on...Ch. 3 - Violent crime and college education For the U.S....Ch. 3 - Violent crime and high school education Repeat the...Ch. 3 - Crime and urbanization For the U.S. Statewide...Ch. 3 - High school graduation rates and health insurance...Ch. 3 - Womens Olympic high jumps Example 11 discussed how...Ch. 3 - Income and height A survey of adults revealed a...Ch. 3 - More TV watching goes with fewer babies? For...Ch. 3 - More sleep causes death? An Associated Press story...Ch. 3 - Ask Marilyn Marilyn vos Savant writes a column for...Ch. 3 - Time studying and GPA Is there a relationship...Ch. 3 - Warming in Newnan, Georgia Access the Newnan GA...Ch. 3 - Fluoride and AIDS An Associated Press story...Ch. 3 - Fish fights Alzheimers An AP story (July 22, 2003)...Ch. 3 - Dogs make you healthier A study published in the...Ch. 3 - Multiple choice: Correlate GPA and GRE In a study...Ch. 3 - Multiple choice: Properties of r Which of the...Ch. 3 - Multiple choice: Interpreting r One can interpret...Ch. 3 - Multiple choice: Correct statement about r Which...Ch. 3 - Multiple choice: Describing association between...Ch. 3 - Multiple choice: Slope and correlation The slope...Ch. 3 - Multiple choice: Interpretation of r2 An r2...Ch. 3 - True or false The variables y = annual income...Ch. 3 - Correlation doesnt depend on units Suppose you...Ch. 3 - When correlation = slope Consider the formula...Ch. 3 - Center of the data Consider the formula a=ybx for...Ch. 3 - Final exam regresses toward mean of midterm Let y...Ch. 3 - Activity: Guess the correlation The Guess the...
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- Question 6: Negate the following compound statements, using De Morgan's laws. A) If Alberta was under water entirely then there should be no fossil of mammals.arrow_forwardNegate the following compound statement using De Morgans's laws.arrow_forwardCharacterize (with proof) all connected graphs that contain no even cycles in terms oftheir blocks.arrow_forward
- Let G be a connected graph that does not have P4 or C3 as an induced subgraph (i.e.,G is P4, C3 free). Prove that G is a complete bipartite grapharrow_forwardProve sufficiency of the condition for a graph to be bipartite that is, prove that if G hasno odd cycles then G is bipartite as follows:Assume that the statement is false and that G is an edge minimal counterexample. That is, Gsatisfies the conditions and is not bipartite but G − e is bipartite for any edge e. (Note thatthis is essentially induction, just using different terminology.) What does minimality say aboutconnectivity of G? Can G − e be disconnected? Explain why if there is an edge between twovertices in the same part of a bipartition of G − e then there is an odd cyclearrow_forwardLet G be a connected graph that does not have P4 or C4 as an induced subgraph (i.e.,G is P4, C4 free). Prove that G has a vertex adjacent to all othersarrow_forward
- We consider a one-period market with the following properties: the current stock priceis S0 = 4. At time T = 1 year, the stock has either moved up to S1 = 8 (with probability0.7) or down towards S1 = 2 (with probability 0.3). We consider a call option on thisstock with maturity T = 1 and strike price K = 5. The interest rate on the money marketis 25% yearly.(a) Find the replicating portfolio (φ, ψ) corresponding to this call option.(b) Find the risk-neutral (no-arbitrage) price of this call option.(c) We now consider a put option with maturity T = 1 and strike price K = 3 onthe same market. Find the risk-neutral price of this put option. Reminder: A putoption gives you the right to sell the stock for the strike price K.1(d) An investor with initial capital X0 = 0 wants to invest on this market. He buysα shares of the stock (or sells them if α is negative) and buys β call options (orsells them is β is negative). He invests the cash balance on the money market (orborrows if the amount is…arrow_forwardDetermine if the two statements are equivalent using a truth tablearrow_forwardQuestion 4: Determine if pair of statements A and B are equivalent or not, using truth table. A. (~qp)^~q в. р л~9arrow_forward
- Determine if the two statements are equalivalent using a truth tablearrow_forwardQuestion 3: p and q represent the following simple statements. p: Calgary is the capital of Alberta. A) Determine the value of each simple statement p and q. B) Then, without truth table, determine the va q: Alberta is a province of Canada. for each following compound statement below. pvq р^~q ~рл~q ~q→ p ~P~q Pq b~ (d~ ← b~) d~ (b~ v d) 0 4arrow_forward2. Let X be a random variable. (a) Show that, if E X2 = 1 and E X4arrow_forwardarrow_back_iosSEE MORE QUESTIONSarrow_forward_ios
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