The slope of the provided equation line in words and the reason of considering zero.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 4, Problem 4.1AYK

a.

To determine

To explain: The slope of the provided equation line in words and the reason of considering zero.

a.

Expert Solution

Explanation of Solution

Given:

The equation of the regression line is:

BAC=0.023×number of drinks

he general equation of the least squares line is:

y^=a+bx

Here, a represents the y-intercept and b represents the slope of the line.

By comparing the general equation of the least-squares line with the provided equation of a least squares line, it can be said that the slope of the BAC=0.023×number of drinks is 0.023

A positive slope indicates that an average increase (or decrease) in the value of y for each unit increase (or decrease) in the value of x . A negative slope indicates that an average increase (or decrease) in the value of y for each unit decrease (or increase) in the value of x .

The provided least squares line has a slope of 0.023. So, the value of BAC increases by 0.023 for a unit increase in number of drinks.

Here, the provided least square line does not contain the intercept term. Thus, it could be said that the intercept term is BAC=0.023×number of drinks .

b.

To determine

To find: The equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman.

b.

Expert Solution

Explanation of Solution

Using the provided information, the equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman could be written as:

BAC=0.038× number of drinks

c.

To determine

To find: The predicted BAC for a 160-pound male who consumed 4 drinks and for 120-pound women that consumed 2 drinks.

c.

Expert Solution

Explanation of Solution

The predicted BAC for a 160-pound male who consumed 4 drinks can be calculated as:

BAC=0.023× number of drinks=0.023×4=0.092

Now, the predicted BAC for 120-pound women who consumed 2 drinks can be calculated as:

BAC=0.038× number of drinks=0.038(2)=0.076

The obtained values of BAC for male and female do not depict the actual blood alcohol content because there would be other factors that would affect the alcohol content in the body

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

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?

We consider a 4-dimensional stock price model given (under P) by dẴ₁ = µ· Xt dt + йt · ΣdŴt where (W) is an n-dimensional Brownian motion, π = (0.02, 0.01, -0.02, 0.05), 0.2 0 0 0 0.3 0.4 0 0 Σ= -0.1 -4a За 0 0.2 0.4 -0.1 0.2) and a E R. We assume that ☑0 = (1, 1, 1, 1) and that the interest rate on the market is r = 0.02. (a) Give a condition on a that would make stock #3 be the one with largest volatility. (b) Find the diversification coefficient for this portfolio as a function of a. (c) Determine the maximum diversification coefficient d that you could reach by varying the value of a? 2

Answer 2

Question

Chapter 4, Problem 4.1AYK

a.

To determine

To explain: The slope of the provided equation line in words and the reason of considering zero.

a.

Expert Solution

Explanation of Solution

Given:

The equation of the regression line is:

BAC=0.023×number of drinks

he general equation of the least squares line is:

y^=a+bx

Here, a represents the y-intercept and b represents the slope of the line.

By comparing the general equation of the least-squares line with the provided equation of a least squares line, it can be said that the slope of the BAC=0.023×number of drinks is 0.023

A positive slope indicates that an average increase (or decrease) in the value of y for each unit increase (or decrease) in the value of x . A negative slope indicates that an average increase (or decrease) in the value of y for each unit decrease (or increase) in the value of x .

The provided least squares line has a slope of 0.023. So, the value of BAC increases by 0.023 for a unit increase in number of drinks.

Here, the provided least square line does not contain the intercept term. Thus, it could be said that the intercept term is BAC=0.023×number of drinks .

b.

To determine

To find: The equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman.

b.

Expert Solution

Explanation of Solution

Using the provided information, the equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman could be written as:

BAC=0.038× number of drinks

c.

To determine

To find: The predicted BAC for a 160-pound male who consumed 4 drinks and for 120-pound women that consumed 2 drinks.

c.

Expert Solution

Explanation of Solution

The predicted BAC for a 160-pound male who consumed 4 drinks can be calculated as:

BAC=0.023× number of drinks=0.023×4=0.092

Now, the predicted BAC for 120-pound women who consumed 2 drinks can be calculated as:

BAC=0.038× number of drinks=0.038(2)=0.076

The obtained values of BAC for male and female do not depict the actual blood alcohol content because there would be other factors that would affect the alcohol content in the body

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 4, Problem 4.1AYK

a.

To determine

To explain: The slope of the provided equation line in words and the reason of considering zero.

a.

Expert Solution

Explanation of Solution

Given:

The equation of the regression line is:

BAC=0.023×number of drinks

he general equation of the least squares line is:

y^=a+bx

Here, a represents the y-intercept and b represents the slope of the line.

By comparing the general equation of the least-squares line with the provided equation of a least squares line, it can be said that the slope of the BAC=0.023×number of drinks is 0.023

A positive slope indicates that an average increase (or decrease) in the value of y for each unit increase (or decrease) in the value of x . A negative slope indicates that an average increase (or decrease) in the value of y for each unit decrease (or increase) in the value of x .

The provided least squares line has a slope of 0.023. So, the value of BAC increases by 0.023 for a unit increase in number of drinks.

Here, the provided least square line does not contain the intercept term. Thus, it could be said that the intercept term is BAC=0.023×number of drinks .

b.

To determine

To find: The equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman.

b.

Expert Solution

Explanation of Solution

Using the provided information, the equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman could be written as:

BAC=0.038× number of drinks

c.

To determine

To find: The predicted BAC for a 160-pound male who consumed 4 drinks and for 120-pound women that consumed 2 drinks.

c.

Expert Solution

Explanation of Solution

The predicted BAC for a 160-pound male who consumed 4 drinks can be calculated as:

BAC=0.023× number of drinks=0.023×4=0.092

Now, the predicted BAC for 120-pound women who consumed 2 drinks can be calculated as:

BAC=0.038× number of drinks=0.038(2)=0.076

The obtained values of BAC for male and female do not depict the actual blood alcohol content because there would be other factors that would affect the alcohol content in the body

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 4, Problem 4.1AYK

a.

To determine

To explain: The slope of the provided equation line in words and the reason of considering zero.

a.

Expert Solution

Explanation of Solution

Given:

The equation of the regression line is:

BAC=0.023×number of drinks

he general equation of the least squares line is:

y^=a+bx

Here, a represents the y-intercept and b represents the slope of the line.

By comparing the general equation of the least-squares line with the provided equation of a least squares line, it can be said that the slope of the BAC=0.023×number of drinks is 0.023

A positive slope indicates that an average increase (or decrease) in the value of y for each unit increase (or decrease) in the value of x . A negative slope indicates that an average increase (or decrease) in the value of y for each unit decrease (or increase) in the value of x .

The provided least squares line has a slope of 0.023. So, the value of BAC increases by 0.023 for a unit increase in number of drinks.

Here, the provided least square line does not contain the intercept term. Thus, it could be said that the intercept term is BAC=0.023×number of drinks .

b.

To determine

To find: The equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman.

b.

Expert Solution

Explanation of Solution

Using the provided information, the equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman could be written as:

BAC=0.038× number of drinks

c.

To determine

To find: The predicted BAC for a 160-pound male who consumed 4 drinks and for 120-pound women that consumed 2 drinks.

c.

Expert Solution

Explanation of Solution

The predicted BAC for a 160-pound male who consumed 4 drinks can be calculated as:

BAC=0.023× number of drinks=0.023×4=0.092

Now, the predicted BAC for 120-pound women who consumed 2 drinks can be calculated as:

BAC=0.038× number of drinks=0.038(2)=0.076

The obtained values of BAC for male and female do not depict the actual blood alcohol content because there would be other factors that would affect the alcohol content in the body

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 4, Problem 4.1AYK

a.

To determine

To explain: The slope of the provided equation line in words and the reason of considering zero.

a.

Expert Solution

Explanation of Solution

Given:

The equation of the regression line is:

BAC=0.023×number of drinks

he general equation of the least squares line is:

y^=a+bx

Here, a represents the y-intercept and b represents the slope of the line.

By comparing the general equation of the least-squares line with the provided equation of a least squares line, it can be said that the slope of the BAC=0.023×number of drinks is 0.023

A positive slope indicates that an average increase (or decrease) in the value of y for each unit increase (or decrease) in the value of x . A negative slope indicates that an average increase (or decrease) in the value of y for each unit decrease (or increase) in the value of x .

The provided least squares line has a slope of 0.023. So, the value of BAC increases by 0.023 for a unit increase in number of drinks.

Here, the provided least square line does not contain the intercept term. Thus, it could be said that the intercept term is BAC=0.023×number of drinks .

b.

To determine

To find: The equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman.

b.

Expert Solution

Explanation of Solution

Using the provided information, the equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman could be written as:

BAC=0.038× number of drinks

c.

To determine

To find: The predicted BAC for a 160-pound male who consumed 4 drinks and for 120-pound women that consumed 2 drinks.

c.

Expert Solution

Explanation of Solution

The predicted BAC for a 160-pound male who consumed 4 drinks can be calculated as:

BAC=0.023× number of drinks=0.023×4=0.092

Now, the predicted BAC for 120-pound women who consumed 2 drinks can be calculated as:

BAC=0.038× number of drinks=0.038(2)=0.076

The obtained values of BAC for male and female do not depict the actual blood alcohol content because there would be other factors that would affect the alcohol content in the body

Answer 6

Chapter 4, Problem 4.1AYK

a.

To determine

To explain: The slope of the provided equation line in words and the reason of considering zero.

a.

Expert Solution

Explanation of Solution

Given:

The equation of the regression line is:

BAC=0.023×number of drinks

he general equation of the least squares line is:

y^=a+bx

Here, a represents the y-intercept and b represents the slope of the line.

By comparing the general equation of the least-squares line with the provided equation of a least squares line, it can be said that the slope of the BAC=0.023×number of drinks is 0.023

A positive slope indicates that an average increase (or decrease) in the value of y for each unit increase (or decrease) in the value of x . A negative slope indicates that an average increase (or decrease) in the value of y for each unit decrease (or increase) in the value of x .

The provided least squares line has a slope of 0.023. So, the value of BAC increases by 0.023 for a unit increase in number of drinks.

Here, the provided least square line does not contain the intercept term. Thus, it could be said that the intercept term is BAC=0.023×number of drinks .

Answer 7

Chapter 4, Problem 4.1AYK

a.

To determine

To explain: The slope of the provided equation line in words and the reason of considering zero.

Answer 8

a.

Expert Solution

Explanation of Solution

Given:

The equation of the regression line is:

BAC=0.023×number of drinks

he general equation of the least squares line is:

y^=a+bx

Here, a represents the y-intercept and b represents the slope of the line.

By comparing the general equation of the least-squares line with the provided equation of a least squares line, it can be said that the slope of the BAC=0.023×number of drinks is 0.023

A positive slope indicates that an average increase (or decrease) in the value of y for each unit increase (or decrease) in the value of x . A negative slope indicates that an average increase (or decrease) in the value of y for each unit decrease (or increase) in the value of x .

The provided least squares line has a slope of 0.023. So, the value of BAC increases by 0.023 for a unit increase in number of drinks.

Here, the provided least square line does not contain the intercept term. Thus, it could be said that the intercept term is BAC=0.023×number of drinks .

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

b.

To determine

To find: The equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman.

b.

Expert Solution

Explanation of Solution

Using the provided information, the equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman could be written as:

BAC=0.038× number of drinks

Answer 13

b.

To determine

To find: The equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman.

Answer 14

b.

Expert Solution

Explanation of Solution

Using the provided information, the equation of the regression line that could be used to predict BAC from number of drinks for a 120-pound woman could be written as:

BAC=0.038× number of drinks

Answer 15

b.

Expert Solution

Answer 16

b.

Expert Solution

Answer 17

Expert Solution

Answer 18

c.

To determine

To find: The predicted BAC for a 160-pound male who consumed 4 drinks and for 120-pound women that consumed 2 drinks.

c.

Expert Solution

Explanation of Solution

The predicted BAC for a 160-pound male who consumed 4 drinks can be calculated as:

BAC=0.023× number of drinks=0.023×4=0.092

Now, the predicted BAC for 120-pound women who consumed 2 drinks can be calculated as:

BAC=0.038× number of drinks=0.038(2)=0.076

The obtained values of BAC for male and female do not depict the actual blood alcohol content because there would be other factors that would affect the alcohol content in the body

Answer 19

c.

To determine

To find: The predicted BAC for a 160-pound male who consumed 4 drinks and for 120-pound women that consumed 2 drinks.

Answer 20

c.

Expert Solution

Explanation of Solution

The predicted BAC for a 160-pound male who consumed 4 drinks can be calculated as:

BAC=0.023× number of drinks=0.023×4=0.092

Now, the predicted BAC for 120-pound women who consumed 2 drinks can be calculated as:

BAC=0.038× number of drinks=0.038(2)=0.076

The obtained values of BAC for male and female do not depict the actual blood alcohol content because there would be other factors that would affect the alcohol content in the body