Introduction To Statistics And Data Analysis
6th Edition
ISBN: 9781337794503
Author: PECK
Publisher: Cengage
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Chapter 5.2, Problem 29E
An article on the cost of housing in Califomia that appeared in the San Luis Obispo Tribune (March 30, 2001) included the following statement: “In Northern California, people from the San Francisco Bay area pushed into the Central Valley, benefiting from home prices that dropped on average $4000 for every mile traveled east of the Bay area.” If this statement is correct, what is the slope of the leastsquares line, ŷ ＝ a ＋ bx， where y = House price (in dollars) and x = Distance east of the Bay (in miles)? Explain.
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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 - For each of the following pairs of variables,...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 - Draw a scatterplot for which r = 1.Ch. 5.1 - Draw a scatterplot for which r = 1.Ch. 5.1 - Each year J.D. Power and Associates surveys new...Ch. 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 - The paper The Relationship Between Cell Phone Use,...Ch. 5.1 - Data from the U.S. Federal Reserve Board (federal...Ch. 5.1 - The article 115K! The 13 Best Paying U.S....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 - The accompanying data are a subset of data from...Ch. 5.2 - The authors of the paper Evaluating Existing...Ch. 5.2 - The authors of the paper referenced in the...Ch. 5.2 - A sample of 548 ethnically diverse students from...Ch. 5.2 - The relationship between hospital patient-to-nurse...Ch. 5.2 - The report Airline Quality Rating 2016...Ch. 5.2 - Acrylamide is a chemical that is sometimes found...Ch. 5.2 - Use the acrylamide data given in the previous...Ch. 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. 34ECh. 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 - The paper referenced in the previous exercise also...Ch. 5.3 - Consider the residual plot from the previous...Ch. 5.3 - The report Airline Quality Rating 2016...Ch. 5.3 - Acrylamide is a chemical that is sometimes found...Ch. 5.3 - Consider the scatterplot of acrylamide...Ch. 5.3 - Some types of algae have the potential to cause...Ch. 5.3 - The relationship between x = Total number of...Ch. 5.3 - The residuals from the least-squares line for the...Ch. 5.3 - The first Batman movie was made over 50 years ago...Ch. 5.3 - The article 115K! The 13 Best Paying U.S....Ch. 5.3 - The article Examined Life: What Stanley H. Kaplan...Ch. 5.3 - The accompanying data are a subset of data from...Ch. 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. 53ECh. 5.4 - The following data on x = Frying time (in seconds)...Ch. 5.4 - Use the information provided in the previous...Ch. 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 - A study, described in the paper Prediction of...Ch. 5.4 - Prob. 59ECh. 5.4 - The following table gives the number of heart...Ch. 5.4 - Refer to the heart transplant data given in the...Ch. 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 - The paper Effects of Canine Parvovirus (CPV) on...Ch. 5 - The paper Depression, Body Mass Index, and Chronic...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 - The following quote is from the paper The Weight...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 - The amount of money spent each year on science,...Ch. 5 - Below are the data used to construct the time...Ch. 5 - In August 2009, Harris Interactive released the...Ch. 5 - Prob. 9CRECh. 5 - Prob. 10CRECh. 5 - Prob. 11CRECh. 5 - Prob. 12CRECh. 5 - Cost-to-charge ratios (the percentage of the...Ch. 5 - In the article Reproductive Biology of the Aquatic...Ch. 5 - Prob. 15CRECh. 5 - Anabolic steroid abuse has been increasing despite...Ch. 5 - Prob. 81ECh. 5 - Prob. 82ECh. 5 - Prob. 83ECh. 5 - Prob. 84ECh. 5 - Suppose the hypothetical data below are from a...Ch. 5 - Prob. 86E
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