
Ten Lessons in Introductory Sociology
2nd Edition
ISBN: 9780190663872
Author: Kenneth A. Gould; Tammy L. Lewis
Publisher: Oxford University Press Academic US
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Question
Chapter 4, Problem 83CRE
a.
To determine
Make a graph and determine whether there is a trend between the target price and wholesale price.
b.
To determine
Determine the equation of the best-fit line and insert it into the graph.
c.
To determine
Interpret the slope.
d.
To determine
Interpret the intercept of the regression line and determine whether is appropriate to do so or not.
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Problem 3. Pricing a multi-stock option the Margrabe formula
The purpose of this problem is to price a swap option in a 2-stock model, similarly as
what we did in the example in the lectures. We consider a two-dimensional Brownian
motion given by W₁ = (W(¹), W(2)) on a probability space (Q, F,P). Two stock prices
are modeled by the following equations:
dX
=
dY₁ =
X₁ (rdt+
rdt+0₁dW!)
(²)),
Y₁ (rdt+dW+0zdW!"),
with Xo
xo and Yo =yo. This corresponds to the multi-stock model studied in class,
but with notation (X+, Y₁) instead of (S(1), S(2)). Given the model above, the measure
P is already the risk-neutral measure (Both stocks have rate of return r). We write
σ = 0₁+0%. We consider a swap option, which gives you the right, at time T, to
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F=(Yr-XT).
(a) We first assume that r = 0 (for questions (a)-(f)). Write an explicit expression for
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Reminder before proceeding to question (b): Girsanov's theorem…
Problem 1. Multi-stock model
We consider a 2-stock model similar to the one studied in class. Namely, we consider
=
S(1)
S(2)
=
S(¹) exp (σ1B(1) + (M1 - 0/1 )
S(²) exp (02B(2) + (H₂-
M2
where (B(¹) ) +20 and (B(2) ) +≥o are two Brownian motions, with
t≥0
Cov (B(¹), B(2)) = p min{t, s}.
"
The purpose of this problem is to prove that there indeed exists a 2-dimensional Brownian
motion (W+)+20 (W(1), W(2))+20 such that
=
S(1)
S(2)
=
=
S(¹) exp (011W(¹) + (μ₁ - 01/1) t)
롱)
S(²) exp (021W (1) + 022W(2) + (112 - 03/01/12) t).
where σ11, 21, 22 are constants to be determined (as functions of σ1, σ2, p).
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(a) To show existence of (Ŵ+), first write the expression for both W. (¹) and W (2)
functions of (B(1), B(²)).
as
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with mean 0, variance t, and that their…
The scores of 8 students on the midterm exam and final exam were as follows.
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Anderson
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DeSana
85
79
Erickson
85
94
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Harris
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91
Find the value of the (Spearman's) rank correlation coefficient test statistic that would be used to test the claim of no correlation between midterm score and final exam score. Round your answer to 3 places after the decimal point, if necessary.
Test statistic: rs =
Chapter 4 Solutions
Ten Lessons in Introductory Sociology
Ch. 4 - Predicting Land Value Both scatterplots concern...Ch. 4 - Predicting Total Value of Property Both...Ch. 4 - Car Value and Age of Student The scatterplot shows...Ch. 4 - Shoe Size and GPA The figure shows a scatterplot...Ch. 4 - Weight Loss (Example 1) The scatterplot shows the...Ch. 4 - Comparing Salaries The scatterplot shows the...Ch. 4 - Sisters and Brothers The scatterplot shows the...Ch. 4 - BAs and Median Income The scatterplot shows data...Ch. 4 - Work and TV The scatterplot shows the number of...Ch. 4 - Work and Sleep The scatterplot shows the number of...
Ch. 4 - Age and Sleep The scatterplot shows the age and...Ch. 4 - Height and Weight for Women The figure shows a...Ch. 4 - College Tuition and ACT a. The first scatterplot...Ch. 4 - Ages of Women Who Give Birth The figure shows a...Ch. 4 - Do Older Students Have Higher GPAs? On the basis...Ch. 4 - Handspans Refer to the figure. a. Would it make...Ch. 4 - Matching Pick the letter of the graph that goes...Ch. 4 - Matching Pick the letter of the graph that goes...Ch. 4 - Matching Match each of the following correlations...Ch. 4 - Matching Match each of the following correlations...Ch. 4 - Trash (Example 2) The table shows the number of...Ch. 4 - Cost of Flights The table for part a shows...Ch. 4 - Work Hour and TV Hours In Exercise 4.9 there was a...Ch. 4 - House Price The correlation between house price...Ch. 4 - Rate My Professor Seth Wagerman, a former...Ch. 4 - Cousins Five people were asked how many female...Ch. 4 - + Video Games and BMI The table gives some...Ch. 4 - See-Saw The table gives data on the heights (above...Ch. 4 - Salaries of College Graduates (Example 3) The...Ch. 4 - Mother and Daughter Heights The graph shows the...Ch. 4 - Are Men Paid More Than Women? The scatterplot...Ch. 4 - Home Prices and Areas of Four Bedroom Homes a....Ch. 4 - Height and Arm Span for Women (Example 4) TI-84...Ch. 4 - Hand and Foot Length for Women The computer output...Ch. 4 - Height and Arm Span for Men (Example 5)...Ch. 4 - Hand Length and Foot Length for Men Measurements...Ch. 4 - Comparing Correlation for Arm Span and Height The...Ch. 4 - Age and Weight for Men and Women The scatterplot...Ch. 4 - Social Security Number and Age The figure shows a...Ch. 4 - Seesaw The figure shows a scatterplot of the...Ch. 4 - Choosing the Predictor and Response (Example 6)...Ch. 4 - Choosing the Predictor and Response Indicate which...Ch. 4 - Percentage of Smoke-Free Homes and Percentage of...Ch. 4 - Effect of Adult Smoking on High School Student...Ch. 4 - Driver’s Deaths and Ages The figure shows a graph...Ch. 4 - Do Women Tend to Live Longer Than Men? The figure...Ch. 4 - How Is the Time of a Flight Related to the...Ch. 4 - English in California Schools This problem...Ch. 4 - Do States with Higher Populations Have More...Ch. 4 - Semesters and Units The table shows the...Ch. 4 - Pitchers The table shows the number of wins and...Ch. 4 - Text Messages The following table shows the number...Ch. 4 - Answer the question using complete sentence. a....Ch. 4 - Answer the question, using complete sentences. a....Ch. 4 - If there is a positive correlation between number...Ch. 4 - Suppose that the growth rate of children looks...Ch. 4 - Coefficient of Determination If the correlation...Ch. 4 - Coefficient of Determination Does a correlation of...Ch. 4 - Investing Some investors use a technique called...Ch. 4 - Blood Pressure Suppose a doctor telephones those...Ch. 4 - Salary and Year of Employment (Example 8) The...Ch. 4 - MPG: Highway and City The following figure shows...Ch. 4 - Cost of Turkeys The table shows the weights and...Ch. 4 - Iraq Casualties and Population of Hometowns The...Ch. 4 - Teachers’ Pay and Costs of Education (Example 9)...Ch. 4 - Teachers’ Pay the figure shows a scatterplot with...Ch. 4 - Does Having a Job Affect Students’ Grades?...Ch. 4 - Weight of Trash and Household Size Data were...Ch. 4 - Age and Text Messages The scatterplot shows the...Ch. 4 - Life Expectancy and TVs The scatterplot shows the...Ch. 4 - Education of Fathers and Mothers The data shown in...Ch. 4 - Heights of Fathers and Sons The table shows some...Ch. 4 - Test Scores Assume that in a political science...Ch. 4 - Test Scores Assume that in a sociology class, the...Ch. 4 - Heights and Weights of People The following table...Ch. 4 - Heights and Weights of Men The table shows the...Ch. 4 - Homes The table shows the asking price (in...Ch. 4 - Alcohol and Calories in Beer At the text’s website...Ch. 4 - Shoe Size and Height The scatterplot shows the...Ch. 4 - Age and Sleep The following scatterplot shows the...Ch. 4 - Age and Weight The following scatterplot shows the...Ch. 4 - Heights and Test Scores a. 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