Mathematical Statistics with Applications
7th Edition
ISBN: 9780495110811
Author: Dennis Wackerly, William Mendenhall, Richard L. Scheaffer
Publisher: Cengage Learning
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Chapter 3.9, Problem 159E
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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.
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.
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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 3 Solutions
Mathematical Statistics with Applications
Ch. 3.2 - When the health department tested private wells in...Ch. 3.2 - You and a friend play a game where you each toss a...Ch. 3.2 - A group of four components is known to contain two...Ch. 3.2 - Consider a system of water flowing through valves...Ch. 3.2 - A problem in a test given to small children asks...Ch. 3.2 - Five balls, numbered 1, 2, 3, 4, and 5, are placed...Ch. 3.2 - Each of three balls are randomly placed into one...Ch. 3.2 - A single cell can either die, with probability .1,...Ch. 3.2 - In order to verify the accuracy of their financial...Ch. 3.2 - A rental agency, which leases heavy equipment by...
Ch. 3.2 - Persons entering a blood bank are such that 1 in 3...Ch. 3.3 - Let Y be a random variable with p(y) given in the...Ch. 3.3 - Refer to the coin-tossing game in Exercise 3.2....Ch. 3.3 - The maximum patent life for a new drug is 17...Ch. 3.3 - Who is the king of late night TV? An Internet...Ch. 3.3 - Prob. 16ECh. 3.3 - Refer to Exercise 3.7. Find the mean and standard...Ch. 3.3 - Refer to Exercise 3.8. What is the mean number of...Ch. 3.3 - An insurance company issues a one-year 1000...Ch. 3.3 - A manufacturing company ships its product in two...Ch. 3.3 - The number N of residential homes that a fire...Ch. 3.3 - A single fair die is tossed once. Let Y be the...Ch. 3.3 - In a gambling game a person draws a single card...Ch. 3.3 - Approximately 10% of the glass bottles coming off...Ch. 3.3 - Two construction contracts are to be randomly...Ch. 3.3 - A heavy-equipment salesperson can contact either...Ch. 3.3 - A potential customer for an 85,000 fire insurance...Ch. 3.3 - Refer to Exercise 3.3. If the cost of testing a...Ch. 3.3 - If Y is a discrete random variable that assigns...Ch. 3.3 - Suppose that Y is a discrete random variable with...Ch. 3.3 - Suppose that Y is a discrete random variable with...Ch. 3.3 - Suppose that Y is a discrete random variable with...Ch. 3.3 - Let Y be a discrete random variable with mean and...Ch. 3.3 - The manager of a stockroom in a factory has...Ch. 3.4 - Consider the population of voters described in...Ch. 3.4 - a. A meteorologist in Denver recorded Y = the...Ch. 3.4 - In 2003, the average combined SAT score (math and...Ch. 3.4 - The manufacturer of a low-calorie dairy drink...Ch. 3.4 - A complex electronic system is built with a...Ch. 3.4 - The probability that a patient recovers from a...Ch. 3.4 - A multiple-choice examination has 15 questions,...Ch. 3.4 - Refer to Exercise 3.41. What is the probability...Ch. 3.4 - Many utility companies promote energy conservation...Ch. 3.4 - Prob. 44ECh. 3.4 - A fire-detection device utilizes three...Ch. 3.4 - Prob. 46ECh. 3.4 - Use Table 1, Appendix 3, to construct a...Ch. 3.4 - A missile protection system consists of n radar...Ch. 3.4 - A manufacturer of floor wax has developed two new...Ch. 3.4 - In Exercise 2.151, you considered a model for the...Ch. 3.4 - In the 18th century, the Chevalier de Mere asked...Ch. 3.4 - Prob. 52ECh. 3.4 - Tay-Sachs disease is a genetic disorder that is...Ch. 3.4 - Suppose that Y is a binomial random variable based...Ch. 3.4 - Suppose that Y is a binomial random variable with...Ch. 3.4 - An oil exploration firm is formed with enough...Ch. 3.4 - Refer to Exercise 3.56. Suppose the firm has a...Ch. 3.4 - A particular sale involves four items randomly...Ch. 3.4 - Ten motors are packaged for sale in a certain...Ch. 3.4 - A particular concentration of a chemical found in...Ch. 3.4 - Of the volunteers donating blood in a clinic, 80%...Ch. 3.4 - Prob. 62ECh. 3.4 - Consider the binomial distribution with n trials...Ch. 3.4 - Prob. 64ECh. 3.4 - Prob. 65ECh. 3.5 - Suppose that Y is a random variable with a...Ch. 3.5 - Suppose that 30% of the applicants for a certain...Ch. 3.5 - Refer to Exercise 3.67. What is the expected...Ch. 3.5 - About six months into George W. Bushs second term...Ch. 3.5 - An oil prospector will drill a succession of holes...Ch. 3.5 - Prob. 71ECh. 3.5 - Prob. 72ECh. 3.5 - A certified public accountant (CPA) has found that...Ch. 3.5 - Refer to Exercise 3.73. What are the mean and...Ch. 3.5 - The probability of a customer arrival at a grocery...Ch. 3.5 - Prob. 76ECh. 3.5 - If Y has a geometric distribution with success...Ch. 3.5 - Of a population of consumers, 60% are reputed to...Ch. 3.5 - In responding to a survey question on a sensitive...Ch. 3.5 - Two people took turns tossing a fair die until one...Ch. 3.5 - How many times would you expect to toss a balanced...Ch. 3.5 - Refer to Exercise 3.70. The prospector drills...Ch. 3.5 - The secretary in Exercises 2.121 and 3.16 was...Ch. 3.5 - Refer to Exercise 3.83. Find the mean and the...Ch. 3.5 - Find E[Y(Y 1)] for a geometric random variable Y...Ch. 3.5 - Prob. 86ECh. 3.5 - Prob. 87ECh. 3.5 - If Y is a geometric random variable, define Y = Y ...Ch. 3.5 - Prob. 89ECh. 3.6 - The employees of a firm that manufactures...Ch. 3.6 - Refer to Exercise 3.90. If each test costs 20,...Ch. 3.6 - Ten percent of the engines manufactured on an...Ch. 3.6 - Refer to Exercise 3.92. What is the probability...Ch. 3.6 - Refer to Exercise 3.92. Find the mean and variance...Ch. 3.6 - Refer to Exercise 3.92. Given that the first two...Ch. 3.6 - The telephone lines serving an airline reservation...Ch. 3.6 - A geological study indicates that an exploratory...Ch. 3.6 - Prob. 98ECh. 3.6 - In a sequence of independent identical trials with...Ch. 3.6 - If Y is a negative binomial random variable,...Ch. 3.6 - Prob. 101ECh. 3.7 - An urn contains ten marbles, of which five are...Ch. 3.7 - A warehouse contains ten printing machines, four...Ch. 3.7 - Twenty identical looking packets of white power...Ch. 3.7 - In southern California, a growing number of...Ch. 3.7 - Refer to Exercise 3.103. The company repairs the...Ch. 3.7 - A group of six software packages available to...Ch. 3.7 - A shipment of 20 cameras includes 3 that are...Ch. 3.7 - Seed are often treated with fungicides to protect...Ch. 3.7 - A corporation is sampling without replacement for...Ch. 3.7 - Prob. 111ECh. 3.7 - Used photocopy machines are returned to the...Ch. 3.7 - A jury of 6 persons was selected from a group of...Ch. 3.7 - Refer to Exercise 3.113. If the selection process...Ch. 3.7 - Suppose that a radio contains six transistors, two...Ch. 3.7 - In an assembly-line production of industrial...Ch. 3.7 - Five cards are dealt at random and without...Ch. 3.7 - Cards are dealt at random and without replacement...Ch. 3.8 - Let Y denote a random variable that has a Poisson...Ch. 3.8 - Customers arrive at a checkout counter in a...Ch. 3.8 - The random variable Y has a Poisson distribution...Ch. 3.8 - Approximately 4% of silicon wafers produced by a...Ch. 3.8 - Refer to Exercise 3.122. If it takes approximately...Ch. 3.8 - Refer to Exercise 3.122. Assume that arrivals...Ch. 3.8 - The number of typing errors made by a typist has a...Ch. 3.8 - Cars arrive at a toll both according to a Poisson...Ch. 3.8 - Refer to Exercise 3.128. How long can the...Ch. 3.8 - A parking lot has two entrances. Cars arrive at...Ch. 3.8 - The number of knots in a particular type of wood...Ch. 3.8 - The mean number of automobiles entering a mountain...Ch. 3.8 - Assume that the tunnel in Exercise 3.132 is...Ch. 3.8 - Consider a binomial experiment for n = 20, p =...Ch. 3.8 - A salesperson has found that the probability of a...Ch. 3.8 - Increased research and discussion have focused on...Ch. 3.8 - The probability that a mouse inoculated with a...Ch. 3.8 - Let Y have a Poisson distribution with mean . Find...Ch. 3.8 - In the daily production of a certain kind of rope,...Ch. 3.8 - Prob. 140ECh. 3.8 - A food manufacturer uses an extruder (a machine...Ch. 3.8 - Prob. 142ECh. 3.8 - Refer to Exercise 3.142 (c). If the number of...Ch. 3.8 - Prob. 144ECh. 3.9 - Prob. 145ECh. 3.9 - Differentiate the moment-generating function in...Ch. 3.9 - Prob. 147ECh. 3.9 - Prob. 148ECh. 3.9 - Refer to Exercise 3.145. Use the uniqueness of...Ch. 3.9 - Refer to Exercise 3.147. Use the uniqueness of...Ch. 3.9 - Refer to Exercise 3.145. If Y has...Ch. 3.9 - Prob. 152ECh. 3.9 - Find the distributions of the random variables...Ch. 3.9 - Refer to Exercise 3.153. By inspection, give the...Ch. 3.9 - Let m(t)=(1/6)et+(2/6)e2t+(3/6)e3t. Find the...Ch. 3.9 - Suppose that Y is a random variable with...Ch. 3.9 - Refer to Exercise 3.156. a If W = 3Y, use the...Ch. 3.9 - Prob. 158ECh. 3.9 - Prob. 159ECh. 3.9 - Suppose that Y is a binomial random variable based...Ch. 3.9 - Prob. 161ECh. 3.9 - Prob. 162ECh. 3.9 - Prob. 163ECh. 3.10 - Prob. 164ECh. 3.10 - Prob. 165ECh. 3.10 - Prob. 166ECh. 3.11 - Let Y be a random variable with mean 11 and...Ch. 3.11 - Would you rather take a multiple-choice test or a...Ch. 3.11 - This exercise demonstrates that, in general, the...Ch. 3.11 - Prob. 170ECh. 3.11 - Prob. 171ECh. 3.11 - Prob. 172ECh. 3.11 - A balanced coin is tossed three times. Let Y equal...Ch. 3.11 - Prob. 174ECh. 3.11 - Prob. 175ECh. 3.11 - Prob. 176ECh. 3.11 - For a certain section of a pine forest, the number...Ch. 3.11 - Prob. 178ECh. 3.11 - Refer to Exercise 3.91. In this exercise, we...Ch. 3 - Prob. 180SECh. 3 - Prob. 181SECh. 3 - Prob. 182SECh. 3 - Prob. 183SECh. 3 - A city commissioner claims that 80% of the people...Ch. 3 - Prob. 185SECh. 3 - Refer to Exercises 3.67 and 3.68. Let Y denote the...Ch. 3 - Consider the following game: A player throws a...Ch. 3 - Prob. 188SECh. 3 - Prob. 189SECh. 3 - Toss a balanced die and let Y be the number of...Ch. 3 - Two assembly lines I and II have the same rate of...Ch. 3 - Prob. 194SECh. 3 - The number of imperfections in the weave of a...Ch. 3 - Refer to Exercise 3.195. The cost of repairing the...Ch. 3 - The number of bacteria colonies of a certain type...Ch. 3 - Prob. 198SECh. 3 - Insulin-dependent diabetes (IDD) is a common...Ch. 3 - Prob. 200SECh. 3 - Prob. 201SECh. 3 - The number of cars driving past a parking area in...Ch. 3 - Prob. 203SECh. 3 - The probability that any single driver will turn...Ch. 3 - An experiment consists of tossing a fair die until...Ch. 3 - Accident records collected by an automobile...Ch. 3 - Prob. 207SECh. 3 - Prob. 208SECh. 3 - Prob. 209SECh. 3 - Prob. 210SECh. 3 - A merchant stocks a certain perishable item. She...Ch. 3 - Prob. 212SECh. 3 - A lot of N = 100 industrial products contains...Ch. 3 - For simplicity, let us assume that there are two...Ch. 3 - Prob. 216SECh. 3 - Prob. 217SECh. 3 - Prob. 218SE
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