Elementary Statistics: A Step By Step Approach
9th Edition
ISBN: 9780073534985
Author: Allan Bluman
Publisher: McGraw-Hill Science/Engineering/Math
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Question
Chapter 5.1, Problem 13E
To determine
Whether the random variable, “ number of cheese burgers in a fast-food restaurant serves each day” is a discrete or a continuous type of random variable.
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Students have asked these similar questions
Question 1. Your manager asks you to explain why the Black-Scholes model may be inappro-
priate for pricing options in practice. Give one reason that would substantiate this claim?
Question 2. We consider stock #1 and stock #2 in the model of Problem 2. Your manager
asks you to pick only one of them to invest in based on the model provided. Which one do you
choose and why ?
Question 3. Let (St) to be an asset modeled by the Black-Scholes SDE. Let Ft be the price
at time t of a European put with maturity T and strike price K. Then, the discounted option
price process (ert Ft) t20 is a martingale. True or False? (Explain your answer.)
Question 4. You are considering pricing an American put option using a Black-Scholes model
for the underlying stock. An explicit formula for the price doesn't exist. In just a few words (no
more than 2 sentences), explain how you would proceed to price it.
Question 5. We model a short rate with a Ho-Lee model drt = ln(1+t) dt +2dWt. Then the
interest rate…
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.)
The managing director of a consulting group has the accompanying monthly data on total overhead costs and professional labor hours to bill to clients. Complete parts a through c.
Question content area bottom
Part 1
a. Develop a simple linear regression model between billable hours and overhead costs.
Overhead
Costsequals=212495.2212495.2plus+left parenthesis 42.4857 right parenthesis42.485742.4857times×Billable
Hours
(Round the constant to one decimal place as needed. Round the coefficient to four decimal places as needed. Do not include the $ symbol in your answers.)
Part 2
b. Interpret the coefficients of your regression model. Specifically, what does the fixed component of the model mean to the consulting firm?
Interpret the fixed term,
b 0b0,
if appropriate. Choose the correct answer below.
A.
The value of
b 0b0
is the predicted billable hours for an overhead cost of 0 dollars.
B.
It is not appropriate to interpret
b 0b0,
because its value…
Chapter 5 Solutions
Elementary Statistics: A Step By Step Approach
Ch. 5.1 - Dropping College Courses Use the following table...Ch. 5.1 - Define and give three examples of a random...Ch. 5.1 - Explain the difference between a discrete and a...Ch. 5.1 - Give three examples of a discrete random variable.Ch. 5.1 - Give three examples of a continuous random...Ch. 5.1 - List three continuous random variables and three...Ch. 5.1 - What is a probability distribution? Give an...Ch. 5.1 - Prob. 7ECh. 5.1 - For Exercises 7 through 12, determine whether the...Ch. 5.1 - Prob. 9E
Ch. 5.1 - For Exercises 7 through 12, determine whether the...Ch. 5.1 - Prob. 11ECh. 5.1 - For Exercises 7 through 12, determine whether the...Ch. 5.1 - Prob. 13ECh. 5.1 - For Exercises 13 through 18, state whether the...Ch. 5.1 - Prob. 15ECh. 5.1 - For Exercises 13 through 18, state whether the...Ch. 5.1 - Prob. 17ECh. 5.1 - For Exercises 13 through 18, state whether the...Ch. 5.1 - Prob. 19ECh. 5.1 - For Exercises 19 through 26, construct a...Ch. 5.1 - Prob. 21ECh. 5.1 - For Exercises 19 through 26, construct a...Ch. 5.1 - For Exercises 19 through 26, construct a...Ch. 5.1 - For Exercises 19 through 26, construct a...Ch. 5.1 - For Exercises 19 through 26, construct a...Ch. 5.1 - For Exercises 19 through 26, construct a...Ch. 5.1 - Triangular Numbers The first six triangular...Ch. 5.1 - Prob. 28ECh. 5.1 - Goals in Hockey The probability that a hockey team...Ch. 5.1 - Mathematics Tutoring Center At a drop-in...Ch. 5.1 - For Exercises 31 through 36, write the...Ch. 5.1 - For Exercises 31 through 36, write the...Ch. 5.1 - For Exercises 31 through 36, write the...Ch. 5.1 - For Exercises 31 through 36, write the...Ch. 5.1 - For Exercises 31 through 36, write the...Ch. 5.1 - For Exercises 31 through 36, write the...Ch. 5.1 - Computer Games The probability that a child plays...Ch. 5.2 - Radiation Exposure On March 28, 1979, the nuclear...Ch. 5.2 - Prob. 1ECh. 5.2 - Suit Sales The number of suits sold per day at a...Ch. 5.2 - Prob. 3ECh. 5.2 - Trivia Quiz The probabilities that a player will...Ch. 5.2 - Prob. 5ECh. 5.2 - Traffic Accidents The county highway department...Ch. 5.2 - Prob. 7ECh. 5.2 - Benfords Law The leading digits in actual data,...Ch. 5.2 - Prob. 9ECh. 5.2 - Pizza Deliveries A pizza shop owner determines the...Ch. 5.2 - Prob. 11ECh. 5.2 - Job Bids A landscape contractor bids on jobs where...Ch. 5.2 - Rolling Dice If a person rolls doubles when she...Ch. 5.2 - Dice Game A person pays 2 to play a certain game...Ch. 5.2 - Lottery Prizes A lottery offers one 1000 prize,...Ch. 5.2 - Winning the Lottery For a daily lottery, a person...Ch. 5.2 - Life Insurance A 35-year-old woman purchases a...Ch. 5.2 - Roulette A roulette wheel has 38 numbers, 1...Ch. 5.2 - Rolling Dice Construct a probability distribution...Ch. 5.2 - Rolling a Die When one die is rolled, the expected...Ch. 5.2 - The formula for finding the variance for a...Ch. 5.2 - Complete the following probability distribution if...Ch. 5.2 - Probability Distribution A bag contains five balls...Ch. 5.3 - Unsanitary Restaurants Health officials routinely...Ch. 5.3 - Which of the following are binomial experiments or...Ch. 5.3 - Which of the following are binomial experiments or...Ch. 5.3 - Compute the probability of X successes, using...Ch. 5.3 - Compute the probability of X successes, using...Ch. 5.3 - Compute the probability of X successes, using the...Ch. 5.3 - Compute the probability of X successes, using the...Ch. 5.3 - Prob. 7ECh. 5.3 - Multiple-Choice Exam A student takes a...Ch. 5.3 - Prob. 9ECh. 5.3 - High School Dropouts Approximately 10.3% of...Ch. 5.3 - Prob. 11ECh. 5.3 - Prob. 12ECh. 5.3 - Prob. 13ECh. 5.3 - Destination Weddings Twenty-six percent of couples...Ch. 5.3 - People Who Have Some College Education Fifty-three...Ch. 5.3 - Guidance Missile System A missile guidance system...Ch. 5.3 - Find the mean, variance, and standard deviation...Ch. 5.3 - Find the mean, variance, and standard deviation...Ch. 5.3 - Prob. 19ECh. 5.3 - Tossing Coins Find the mean, variance, and...Ch. 5.3 - Prob. 21ECh. 5.3 - Federal Government Employee E-mail Use It has been...Ch. 5.3 - Watching Fireworks A survey found that 21% of...Ch. 5.3 - Alternate Sources of Fuel Eighty-five percent of...Ch. 5.3 - Survey on Bathing Pets A survey found that 25% of...Ch. 5.3 - Survey on Answering Machine Ownership In a survey,...Ch. 5.3 - Poverty and the Federal Government One out of...Ch. 5.3 - Internet Purchases Thirty-two percent of adult...Ch. 5.3 - Prob. 29ECh. 5.3 - Job Elimination In a recent year, 13% of...Ch. 5.3 - Survey of High School Seniors Of graduating high...Ch. 5.3 - Is this a binomial distribution? Explain.Ch. 5.3 - Children in a Family The graph shown here...Ch. 5.3 - Construct a binomial distribution graph for the...Ch. 5.3 - Show that the mean for a binomial random variable...Ch. 5.4 - Prob. 1ACCh. 5.4 - Use the multinomial formula and find the...Ch. 5.4 - Use the multinomial formula and find the...Ch. 5.4 - MMs Color Distribution According to the...Ch. 5.4 - Truck Inspection Violations The probabilities are...Ch. 5.4 - Prob. 5ECh. 5.4 - Mendels Theory According to Mendels theory, if...Ch. 5.4 - Prob. 7ECh. 5.4 - Find each probability P(X; ) using Table C in...Ch. 5.4 - Study of Robberies A recent study of robberies for...Ch. 5.4 - Misprints on Manuscript Pages In a 400-page...Ch. 5.4 - Colors of Flowers A nursery provides red impatiens...Ch. 5.4 - Mail Ordering A mail-order company receives an...Ch. 5.4 - Company Mailing Of a companys mailings 1.5% are...Ch. 5.4 - Emission Inspection Failures If 3% of all cars...Ch. 5.4 - Phone Inquiries The average number of phone...Ch. 5.4 - Defective Calculators In a batch of 2000...Ch. 5.4 - School Newspaper Staff A school newspaper staff is...Ch. 5.4 - Job Applicants Twelve people apply for a teaching...Ch. 5.4 - Prob. 19ECh. 5.4 - Defective Computer Keyboards A shipment of 24...Ch. 5.4 - Defective Electronics A shipment of 24 smartphones...Ch. 5.4 - Job Applications Ten people apply for a job at...Ch. 5.4 - Prob. 23ECh. 5.4 - Prob. 24ECh. 5.4 - Shooting an Arrow Mark shoots arrows at a target...Ch. 5.4 - Amusement Park Game At an amusement park...Ch. 5.4 - Prob. 27ECCh. 5.4 - Prob. 28ECCh. 5.4 - Drawing Cards Cards are drawn at random from a...Ch. 5.4 - Prob. 30ECCh. 5.4 - Prob. 31ECCh. 5.4 - Lessons Outside of School About 2 out of every 3...Ch. 5.4 - Prob. 33ECCh. 5.4 - Work versus Conscience One worker in four in...Ch. 5 - For Exercises 1 through 3, determine whether the...Ch. 5 - For Exercises 1 through 3, determine whether the...Ch. 5 - Prob. 5.1.3RECh. 5 - Prob. 5.1.4RECh. 5 - Credit Cards A large retail company encourages its...Ch. 5 - Prob. 5.1.6RECh. 5 - Prob. 5.1.7RECh. 5 - Prob. 5.2.8RECh. 5 - Arrivals at an Airport At a small rural airport,...Ch. 5 - Cans of Paint Purchased During a recent paint sale...Ch. 5 - Prob. 5.2.11RECh. 5 - Outdoor Regatta A producer plans an outdoor...Ch. 5 - Card Game A game is set up as follows: All the...Ch. 5 - Card Game Using Exercise 13, how much should be...Ch. 5 - Let x be a binomial random variable with n = 12...Ch. 5 - Internet Access via Cell Phone In a retirement...Ch. 5 - Prob. 5.3.17RECh. 5 - Prob. 5.3.18RECh. 5 - U.S. Police Chiefs and the Death Penalty The...Ch. 5 - Prob. 5.3.20RECh. 5 - Pizza for Breakfast Three out of four American...Ch. 5 - Prob. 5.3.22RECh. 5 - Prob. 5.4.23RECh. 5 - Prob. 5.4.24RECh. 5 - Prob. 5.4.25RECh. 5 - Prob. 5.4.26RECh. 5 - Prob. 5.4.27RECh. 5 - Boating Accidents The number of boating accidents...Ch. 5 - Prob. 5.4.29RECh. 5 - Prob. 5.4.30RECh. 5 - Items Donated to a Food Bank At a food bank a case...Ch. 5 - Prob. 5.4.32RECh. 5 - Prob. 5.4.33RECh. 5 - Determine whether each statement is true or false....Ch. 5 - Determine whether each statement is true or false....Ch. 5 - Determine whether each statement is true or false....Ch. 5 - Determine whether each statement is true or false....Ch. 5 - Complete these statements with the best answer. 5....Ch. 5 - Complete these statements with the best answer. 6....Ch. 5 - Complete these statements with the best answer. 7....Ch. 5 - Select the best answer. 8. What is the sum of the...Ch. 5 - Select the best answer. 9. How many outcomes are...Ch. 5 - Select the best answer. 10. The number of trials...Ch. 5 - Prob. 11CQCh. 5 - Prob. 12CQCh. 5 - For exercises 11 through 14, determine if the...Ch. 5 - For exercises 11 through 14, determine if the...Ch. 5 - Prob. 15CQCh. 5 - Prob. 16CQCh. 5 - Prob. 17CQCh. 5 - Calls for a Crisis Hot Line The number of calls...Ch. 5 - Selecting a Card There are 6 playing cards placed...Ch. 5 - Prob. 20CQCh. 5 - Carpooling If 40% of all commuters ride to work in...Ch. 5 - Employed Women If 60% of all women are employed...Ch. 5 - Prob. 23CQCh. 5 - Meeting Attendance A history class has 75 members....Ch. 5 - Prob. 25CQCh. 5 - Quality Control Check Before a television set...Ch. 5 - Bowling Team Uniforms Among the teams in a bowling...Ch. 5 - Elm Trees If 8% of the population of trees are elm...Ch. 5 - Sports Score Hot Line Calls Sports Scores Hot Line...Ch. 5 - Color of Raincoats There are 48 raincoats for sale...Ch. 5 - Youth Group Officers A youth group has 8 boys and...Ch. 5 - Blood Types About 4% of the citizens of the United...Ch. 5 - Alcohol Abstainers About 35% of Americans abstain...Ch. 5 - Prob. 1CTCCh. 5 - Prob. 2CTCCh. 5 - Prob. 3CTCCh. 5 - Prob. 4CTCCh. 5 - Prob. 5CTC
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