Essential Statistics
2nd Edition
ISBN: 9781259570643
Author: Navidi
Publisher: MCG
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Chapter 4.4, Problem 24E
In Exercises 23–28, evaluate the combination.
24. 7C1
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You have been hired as an intern to run analyses on the data and report the results back to Sarah; the five questions that Sarah needs you to address are given below.
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 4 Solutions
Essential Statistics
Ch. 4.1 - 1. In Example 4.4, what is the probability that...Ch. 4.1 - Prob. 2CYUCh. 4.1 - Prob. 3CYUCh. 4.1 - Prob. 4CYUCh. 4.1 - Prob. 5ECh. 4.1 - In Exercises 5–8, fill in each blank with the...Ch. 4.1 - Prob. 7ECh. 4.1 - In Exercises 5–8, fill in each blank with the...Ch. 4.1 - Prob. 9ECh. 4.1 - Prob. 10E
Ch. 4.1 - Prob. 11ECh. 4.1 - Prob. 12ECh. 4.1 - Prob. 13ECh. 4.1 - Prob. 14ECh. 4.1 - Prob. 15ECh. 4.1 - Prob. 16ECh. 4.1 - Prob. 17ECh. 4.1 - Prob. 18ECh. 4.1 - Prob. 19ECh. 4.1 - Prob. 20ECh. 4.1 - Prob. 21ECh. 4.1 - In Exercises 21–24, assume that a coin is tossed...Ch. 4.1 - Prob. 23ECh. 4.1 - In Exercises 21–24, assume that a coin is tossed...Ch. 4.1 - How probable is it? Someone computes the...Ch. 4.1 - Prob. 26ECh. 4.1 - Prob. 27ECh. 4.1 - Prob. 28ECh. 4.1 - Prob. 29ECh. 4.1 - 30. A coin flip: A fair coin is tossed three...Ch. 4.1 - 31. Empirical Method: A coin is tossed 400 times...Ch. 4.1 - Prob. 32ECh. 4.1 - Prob. 33ECh. 4.1 - Prob. 34ECh. 4.1 - Prob. 35ECh. 4.1 - Prob. 36ECh. 4.1 - Prob. 37ECh. 4.1 - Prob. 38ECh. 4.1 - 39. Get an education: The General Social Survey...Ch. 4.1 - Prob. 40ECh. 4.1 - 41. Hospital visits: According to the Agency for...Ch. 4.1 - Prob. 42ECh. 4.1 - Prob. 43ECh. 4.1 - Prob. 44ECh. 4.1 - Prob. 45ECh. 4.1 - Prob. 46ECh. 4.1 - Prob. 47ECh. 4.1 - Prob. 48ECh. 4.1 - Prob. 49ECh. 4.2 - Prob. 1CYUCh. 4.2 - Prob. 2CYUCh. 4.2 - Prob. 3CYUCh. 4.2 - Prob. 4CYUCh. 4.2 - Prob. 5ECh. 4.2 - In Exercises 5–8, fill in each blank with the...Ch. 4.2 - In Exercises 5–8, fill in each blank with the...Ch. 4.2 - In Exercises 5–8, fill in each blank with the...Ch. 4.2 - Prob. 9ECh. 4.2 - Prob. 10ECh. 4.2 - Prob. 11ECh. 4.2 - Prob. 12ECh. 4.2 - Prob. 13ECh. 4.2 - Prob. 14ECh. 4.2 - Prob. 15ECh. 4.2 - 16. If P (A) = 0.7, P (B) = 0.1, and A and B are...Ch. 4.2 - Prob. 17ECh. 4.2 - Prob. 18ECh. 4.2 - Prob. 19ECh. 4.2 - 20. If P(B) = 0.6, find P(Bc).
Ch. 4.2 - Prob. 21ECh. 4.2 - Prob. 22ECh. 4.2 - Prob. 23ECh. 4.2 - Prob. 24ECh. 4.2 - Prob. 25ECh. 4.2 - In Exercises 25–30, determine whether events A and...Ch. 4.2 - Prob. 27ECh. 4.2 - Prob. 28ECh. 4.2 - In Exercises 25–30, determine whether events A and...Ch. 4.2 - In Exercises 25–30, determine whether events A and...Ch. 4.2 - In Exercises 31 and 32, find the complements of...Ch. 4.2 - In Exercises 31 and 32, find the complements of...Ch. 4.2 - Prob. 33ECh. 4.2 - Prob. 34ECh. 4.2 - Prob. 35ECh. 4.2 - 36. Sick computers: Let V be the event that a...Ch. 4.2 - Prob. 37ECh. 4.2 - Prob. 38ECh. 4.2 - Prob. 39ECh. 4.2 - 40. Statistics grades: In a statistics class of 30...Ch. 4.2 - Prob. 41ECh. 4.2 - Prob. 42ECh. 4.2 - Prob. 43ECh. 4.2 - Prob. 44ECh. 4.2 - Prob. 45ECh. 4.2 - Prob. 46ECh. 4.2 - 47. Mutual exclusivity is not transitive: Give an...Ch. 4.2 - 48. Complements: Let A and B be events. Express (A...Ch. 4.3 - 1. A person is selected at random from the...Ch. 4.3 - Prob. 2CYUCh. 4.3 - Prob. 3CYUCh. 4.3 - Prob. 4CYUCh. 4.3 - Prob. 5CYUCh. 4.3 - Prob. 6CYUCh. 4.3 - Prob. 7ECh. 4.3 - Prob. 8ECh. 4.3 - In Exercises 7–10, fill in each blank with the...Ch. 4.3 - In Exercises 7–10, fill in each blank with the...Ch. 4.3 - Prob. 11ECh. 4.3 - In Exercises 11–14, determine whether the...Ch. 4.3 - Prob. 13ECh. 4.3 - Prob. 14ECh. 4.3 - Prob. 15ECh. 4.3 - Prob. 16ECh. 4.3 - Prob. 17ECh. 4.3 - 18. Let A and B be events with P(A) = 0.5 and P(B)...Ch. 4.3 - 19. Let A and B be events with P (A) = 0.8, P(B) =...Ch. 4.3 - 20. Let A and B be events with P(A) = 0.3, P(B) =...Ch. 4.3 - Prob. 21ECh. 4.3 - Prob. 22ECh. 4.3 - Prob. 23ECh. 4.3 - Prob. 24ECh. 4.3 - Prob. 25ECh. 4.3 - Prob. 26ECh. 4.3 - Prob. 27ECh. 4.3 - In Exercises 27–30, assume that a student is...Ch. 4.3 - Prob. 29ECh. 4.3 - Prob. 30ECh. 4.3 - Prob. 31ECh. 4.3 - 32. Let A and B be events with P(A) = 0.6, P(B) =...Ch. 4.3 - Prob. 33ECh. 4.3 - Prob. 34ECh. 4.3 - Prob. 35ECh. 4.3 - Prob. 36ECh. 4.3 - Job interview: Seven people, named Anna, Bob,...Ch. 4.3 - Prob. 38ECh. 4.3 - Prob. 39ECh. 4.3 - 40. U.S. senators: The following table displays...Ch. 4.3 - Prob. 41ECh. 4.3 - Prob. 42ECh. 4.3 - Prob. 43ECh. 4.3 - Prob. 44ECh. 4.3 - Prob. 45ECh. 4.3 - Prob. 46ECh. 4.3 - Prob. 47ECh. 4.3 - Prob. 48ECh. 4.3 - Prob. 49ECh. 4.3 - Prob. 50ECh. 4.3 - Prob. 51ECh. 4.3 - Prob. 52ECh. 4.3 - Prob. 53ECh. 4.3 - Prob. 54ECh. 4.3 - Prob. 55ECh. 4.3 - Prob. 56ECh. 4.3 - Prob. 57ECh. 4.3 - Prob. 58ECh. 4.3 - Prob. 59ECh. 4.3 - Prob. 60ECh. 4.3 - Prob. 61ECh. 4.3 - Prob. 62ECh. 4.3 - Prob. 63ECh. 4.3 - Prob. 64ECh. 4.3 - Prob. 65ECh. 4.4 - When ordering a certain type of computer, there...Ch. 4.4 - Prob. 2CYUCh. 4.4 - Prob. 3CYUCh. 4.4 - Refer to Exercise 3. Two of the committee members...Ch. 4.4 - Prob. 5CYUCh. 4.4 - Refer to Exercise 5. Four of the eight students...Ch. 4.4 - Prob. 7ECh. 4.4 - In Exercises 7 and 8, fill in the blank with the...Ch. 4.4 - Prob. 9ECh. 4.4 - In Exercises 9 and 10, determine whether the...Ch. 4.4 - Prob. 11ECh. 4.4 - In Exercises 11–16, evaluate the factorial. 12. 5!Ch. 4.4 - Prob. 13ECh. 4.4 - Prob. 14ECh. 4.4 - Prob. 15ECh. 4.4 - In Exercises 11–16, evaluate the factorial. 16. 3!Ch. 4.4 - Prob. 17ECh. 4.4 - Prob. 18ECh. 4.4 - Prob. 19ECh. 4.4 - Prob. 20ECh. 4.4 - Prob. 21ECh. 4.4 - Prob. 22ECh. 4.4 - Prob. 23ECh. 4.4 - In Exercises 23–28, evaluate the combination. 24....Ch. 4.4 - Prob. 25ECh. 4.4 - In Exercises 23–28, evaluate the combination. 26....Ch. 4.4 - Prob. 27ECh. 4.4 - In Exercises 23–28, evaluate the combination. 28....Ch. 4.4 - Prob. 29ECh. 4.4 - Books: Josephine has six chemistry books, three...Ch. 4.4 - Prob. 31ECh. 4.4 - 32. Ice cream: A certain ice cream parlor offers...Ch. 4.4 - License plates: In a certain state, license plates...Ch. 4.4 - Committee: The Student Council at a certain school...Ch. 4.4 - Day and night shifts: A company has hired 12 new...Ch. 4.4 - Keep your password safe: A computer password...Ch. 4.4 - It’s in your genes: Human genetic material (DNA)...Ch. 4.4 - Choosing officers: A committee consists of ten...Ch. 4.4 - Prob. 39ECh. 4.4 - Blackjack: In single-deck casino blackjack, the...Ch. 4.4 - Prob. 41ECh. 4.4 - Prob. 42ECh. 4.4 - Prob. 43ECh. 4 - Fill in the blank: The probability that a fair...Ch. 4 - Prob. 2CQCh. 4 - Prob. 3CQCh. 4 - Prob. 4CQCh. 4 - Prob. 5CQCh. 4 - Prob. 6CQCh. 4 - Prob. 7CQCh. 4 - Prob. 8CQCh. 4 - Prob. 9CQCh. 4 - Prob. 10CQCh. 4 - Prob. 11CQCh. 4 - Prob. 12CQCh. 4 - Prob. 13CQCh. 4 - Prob. 14CQCh. 4 - Prob. 15CQCh. 4 - Prob. 1RECh. 4 - Prob. 2RECh. 4 - Prob. 3RECh. 4 - Blood types: Human blood may contain either or...Ch. 4 - Prob. 5RECh. 4 - Stop that car: A drag racer has two parachutes, a...Ch. 4 - Prob. 7RECh. 4 - Music to my ears: Jeri is listening to the songs...Ch. 4 - Prob. 9RECh. 4 - Prob. 10RECh. 4 - Rainy weekend: Sally is planning to go away for...Ch. 4 - Prob. 12RECh. 4 - Required courses: Refer to Exercise 12. Assume the...Ch. 4 - Bookshelf: Bart has six books: a novel, a...Ch. 4 - Bookshelf: Refer to Exercise 14. Bart chooses...Ch. 4 - Prob. 1WAICh. 4 - Prob. 2WAICh. 4 - Prob. 3WAICh. 4 - Prob. 4WAICh. 4 - Prob. 5WAICh. 4 - Prob. 6WAICh. 4 - Describe circumstances under which you would use a...Ch. 4 - Describe circumstances under which you would use a...Ch. 4 - The following table is a life table, reproduced...Ch. 4 - Prob. 2CSCh. 4 - Prob. 3CSCh. 4 - Prob. 4CSCh. 4 - Prob. 5CSCh. 4 - Prob. 6CSCh. 4 - Prob. 7CSCh. 4 - Prob. 8CSCh. 4 - Prob. 9CS
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