Introduction to Statistics and Data Analysis
5th Edition
ISBN: 9781305445963
Author: PECK
Publisher: Cengage
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Chapter 5.2, Problem 17E
A sample of 548 ethnically diverse students from Massachusetts were followed over a 19-month period from 1995 and 1997 in a study of the relationship between TV viewing and eating habits (Pediatrics [2003]: 1321–326). For each additional hour of television viewed per day, the number of fruit and vegetable servings per day was found to decrease on average by 0.14 serving.
- a. For this study, what is the dependent variable? What is the independent variable?
- b. Would the least-squares line for predicting number of servings of fruits and vegetables using number of hours spent watching TV as a predictor have a positive or negative slope? Explain.
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Problem1
We consider a two-period binomial model with the following properties: each period lastsone (1) year and the current stock price is S0 = 4. On each period, the stock price doubleswhen it moves up and is reduced by half when it moves down. The annual interest rateon the money market is 25%. (This model is the same as in Prob. 1 of HW#2).We consider four options on this market: A European call option with maturity T = 2 years and strike price K = 5; A European put option with maturity T = 2 years and strike price K = 5; An American call option with maturity T = 2 years and strike price K = 5; An American put option with maturity T = 2 years and strike price K = 5.(a) Find the price at time 0 of both European options.(b) Find the price at time 0 of both American options. Compare your results with (a)and comment.(c) For each of the American options, describe the optimal exercising strategy.
Problem 1.We consider a two-period binomial model with the following properties: each period lastsone (1) year and the current stock price is S0 = 4. On each period, the stock price doubleswhen it moves up and is reduced by half when it moves down. The annual interest rateon the money market is 25%.
We consider four options on this market: A European call option with maturity T = 2 years and strike price K = 5; A European put option with maturity T = 2 years and strike price K = 5; An American call option with maturity T = 2 years and strike price K = 5; An American put option with maturity T = 2 years and strike price K = 5.(a) Find the price at time 0 of both European options.(b) Find the price at time 0 of both American options. Compare your results with (a)and comment.(c) For each of the American options, describe the optimal exercising strategy.(d) We assume that you sell the American put to a market participant A for the pricefound in (b). Explain how you act on the market…
What is the standard scores associated to the left of z is 0.1446
Chapter 5 Solutions
Introduction to Statistics and Data Analysis
Ch. 5.1 - For each of the scatterplots shown, answer the...Ch. 5.1 - For each of the following pairs of variables,...Ch. 5.1 - Is the following statement correct? Explain why or...Ch. 5.1 - Prob. 4ECh. 5.1 - Prob. 5ECh. 5.1 - The accompanying data are x = Cost (cents per...Ch. 5.1 - The authors of the paper Flat-footedness Is Not a...Ch. 5.1 - Prob. 8ECh. 5.1 - Prob. 9ECh. 5.1 - The accompanying data were read from graphs that...
Ch. 5.1 - It may seem odd, but one of the ways biologists...Ch. 5.1 - An auction house released a list of 25 recently...Ch. 5.1 - A sample of automobiles traversing a certain...Ch. 5.2 - Two scatterplots are shown below. Explain why it...Ch. 5.2 - The authors of the paper Statistical Methods for...Ch. 5.2 - Prob. 16ECh. 5.2 - A sample of 548 ethnically diverse students from...Ch. 5.2 - The relationship between hospital patient-to-nurse...Ch. 5.2 - Prob. 19ECh. 5.2 - Prob. 20ECh. 5.2 - Studies have shown that people who suffer sudden...Ch. 5.2 - The data given in the previous exercise on x =...Ch. 5.2 - An article on the cost of housing in Califomia...Ch. 5.2 - The following data on sale price, size, and...Ch. 5.2 - Explain why it can be dangerous to use the...Ch. 5.2 - The sales manager of a large company selected a...Ch. 5.2 - Explain why the slope b of the least-squares line...Ch. 5.2 - Prob. 28ECh. 5.3 - Does it pay to stay in school? The report Trends...Ch. 5.3 - The data in the accompanying table is from the...Ch. 5.3 - Prob. 31ECh. 5.3 - Prob. 32ECh. 5.3 - Some types of algae have the potential to cause...Ch. 5.3 - Prob. 34ECh. 5.3 - Prob. 35ECh. 5.3 - Prob. 36ECh. 5.3 - The article Examined Life: What Stanley H. Kaplan...Ch. 5.3 - Prob. 38ECh. 5.3 - The article California State Parks Closure List...Ch. 5.3 - The article referenced in the previous exercise...Ch. 5.3 - A study was carried out to investigate the...Ch. 5.3 - Both r2 and se are used to assess the fit of a...Ch. 5.3 - Prob. 43ECh. 5.4 - Prob. 44ECh. 5.4 - The paper Aspects of Food Finding by Wintering...Ch. 5.4 - Food intake of grazing animals is limited by the...Ch. 5.4 - Prob. 47ECh. 5.4 - Prob. 48ECh. 5.4 - The paper Population Pressure and Agricultural...Ch. 5.4 - Determining the age of an animal can sometimes be...Ch. 5.5 - The paper How Lead Exposure Relates to Temporal...Ch. 5.5 - The following quote is from the paper Evaluation...Ch. 5 - The accompanying data represent x = Amount of...Ch. 5 - The paper A Cross-National Relationship Between...Ch. 5 - The following data on x = Score on a measure of...Ch. 5 - Prob. 58CRCh. 5 - Prob. 59CRCh. 5 - Prob. 60CRCh. 5 - The paper Effects of Canine Parvovirus (CPV) on...Ch. 5 - The paper Aspects of Food Finding by Wintering...Ch. 5 - Data on salmon availability (x) and the percentage...Ch. 5 - No tortilla chip lover likes soggy chips, so it is...Ch. 5 - The article Reduction is Soluble Protein and...Ch. 5 - An accurate assessment of oxygen consumption...Ch. 5 - Consider the four (x, y) pairs (0, 0), (1, 1), 1,...Ch. 5 - Prob. 1CRECh. 5 - Data from a survey of 1046 adults age 50 and older...Ch. 5 - Prob. 3CRECh. 5 - Prob. 4CRECh. 5 - Prob. 5CRECh. 5 - In August 2009, Harris Interactive released the...Ch. 5 - Prob. 7CRECh. 5 - Prob. 8CRECh. 5 - Prob. 9CRECh. 5 - Prob. 10CRECh. 5 - Prob. 11CRECh. 5 - Prob. 12CRECh. 5 - Prob. 13CRECh. 5 - Cost-to-charge ratios (the percentage of the...Ch. 5 - Prob. 15CRECh. 5 - In the article Reproductive Biology of the Aquatic...Ch. 5 - Prob. 17CRECh. 5 - Prob. 18CRECh. 5 - The paper “Population Pressure and Agricultural...Ch. 5 - Anabolic steroid abuse has been increasing despite...Ch. 5 - Prob. 69ECh. 5 - Prob. 70ECh. 5 - Prob. 71ECh. 5 - Prob. 72ECh. 5 - Suppose the hypothetical data below are from a...Ch. 5 - Prob. 74E
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- Note: The purpose of this problem below is to use computational techniques (Excelspreadsheet, Matlab, R, Python, etc.) and code the dynamic programming ideas seen inclass. Please provide the numerical answer to the questions as well as a sample of yourwork (spreadsheet, code file, etc.).We consider an N-period binomial model with the following properties: N = 60, thecurrent stock price is S0 = 1000; on each period, the stock price increases by 0.5% whenit moves up and decreases by 0.3% when it moves down. The annual interest rate on themoney market is 5%. (Notice that this model is a CRR model, which means that thebinomial tree is recombining.)(a) Find the price at time t0 = 0 of a (European) call option with strike price K = 1040and maturity T = 1 year.(b) Find the price at time t0 = 0 of a (European) put option with strike price K = 1040and maturity T = 1 year.(c) We consider now, that you are at time t5 (i.e. after 5 periods, which represents 1month later). Assume that the stock…arrow_forwardshow work in paperarrow_forwardshow all work (...or what you entered into your calculator...)arrow_forward
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