Statistics (13th Edition)
13th Edition
ISBN: 9780134080215
Author: James T. McClave, Terry T Sincich
Publisher: PEARSON
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Chapter 5.4, Problem 55UP
To determine
Explain why it is important to check whether the sample data come from a normal population or not.
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select bmw stock. you can assume the price of the stock
This problem is based on the fundamental option pricing formula for the continuous-time
model developed in class, namely the value at time 0 of an option with maturity T and
payoff F is given by:
We consider the two options below:
Fo=
-rT
= e
Eq[F].
1
A. An option with which you must buy a share of stock at expiration T = 1 for strike
price K = So.
B. An option with which you must buy a share of stock at expiration T = 1 for strike
price K given by
T
K =
T
St dt.
(Note that both options can have negative payoffs.) We use the continuous-time Black-
Scholes model to price these options. Assume that the interest rate on the money market
is r.
(a) Using the fundamental option pricing formula, find the price of option A. (Hint:
use the martingale properties developed in the lectures for the stock price process
in order to calculate the expectations.)
(b) Using the fundamental option pricing formula, find the price of option B.
(c) Assuming the interest rate is very small (r ~0), use Taylor…
Discuss and explain in the picture
Chapter 5 Solutions
Statistics (13th Edition)
Ch. 5.2 - Give a characteristic of a uniform random...Ch. 5.2 - The uniform distribution is sometimes referred to...Ch. 5.2 - Suppose x is a random variable best described by a...Ch. 5.2 - Refer to Exercise 5.3. Find the following...Ch. 5.2 - Suppose x is a random variable best described by a...Ch. 5.2 - Refer to Exercise 5.5. Find the value of a that...Ch. 5.2 - 4.137 The random variable x is best described by a...Ch. 5.2 - The random variable x is best described by a...Ch. 5.2 - Prob. 5.1AECh. 5.2 - Prob. 5.2AE
Ch. 5.2 - Prob. 9ACBCh. 5.2 - 4.175 Requests to a Web server. According to...Ch. 5.2 - 4.142 Detecting anthrax. Researchers at the...Ch. 5.2 - Prob. 12ACBCh. 5.2 - Prob. 13ACBCh. 5.2 - Social network densities. Social networks involve...Ch. 5.2 - Prob. 15ACICh. 5.2 - Prob. 16ACICh. 5.2 - 4.147 Soft-drink dispenser. The manager of a local...Ch. 5.2 - Time delays at a bus stop. A bus is scheduled to...Ch. 5.2 - Prob. 19ACACh. 5.2 - Reliability of a robotic device. The reliability...Ch. 5.3 - Describe the shape of a normal probability...Ch. 5.3 - If x has a normal distribution with mean μ and...Ch. 5.3 - What is the name given to a normal distribution...Ch. 5.3 - Find the area under the standard normal...Ch. 5.3 - Find each of the following probabilities for a...Ch. 5.3 - Find the following probabilities for the standard...Ch. 5.3 - 4.90 Give the z-score for a measurement from a...Ch. 5.3 - Find a value z0 of the standard normal random...Ch. 5.3 - 4.88 Find a value of the standard normal random...Ch. 5.3 - Suppose the random variable x is best described by...Ch. 5.3 - 4.93 Suppose x is a normally distributed random...Ch. 5.3 - Suppose x is a normally distributed random...Ch. 5.3 - Refer to Exercise 5.32. Find x0 such that
10% of...Ch. 5.3 - Suppose x is a normally distributed random...Ch. 5.3 - The random variable x has a normal distribution...Ch. 5.3 - The random variable x has a normal distribution...Ch. 5.3 - Applet Exercise 4.6
Open the applet Sample from a...Ch. 5.3 - Dental anxiety study. To gauge their fear of going...Ch. 5.3 - 4.99 Tomato as a taste modifier. Miraculin—a...Ch. 5.3 - Deep mixing of soil. Deep mixing is a ground...Ch. 5.3 - Prob. 40ACBCh. 5.3 - Shopping vehicle and judgment. Refer to the...Ch. 5.3 - Shell lengths of sea turtles. Refer to the Aquatic...Ch. 5.3 - Prob. 43ACBCh. 5.3 - 4.191 Optimal goal target in soccer. When...Ch. 5.3 - 4.106 Voltage sags and swells. Refer to the...Ch. 5.3 - Prob. 46ACICh. 5.3 - Prob. 47ACICh. 5.3 - 4.199 Rating employee performance. Almost all...Ch. 5.3 - 4.112 California’s electoral college votes. During...Ch. 5.3 - Alcohol, threats, and electric shocks. A group of...Ch. 5.3 - 4.116 Box plots and the standard normal...Ch. 5.3 - Load on frame structures. In the Journal of the...Ch. 5.3 - Executive coaching and meeting effectiveness. Poor...Ch. 5.4 - Why is it important to check whether the sample...Ch. 5.4 - Give four methods for determining whether the...Ch. 5.4 - 4.117 If a population data set is normally...Ch. 5.4 - What is a normal probability plot and how is it...Ch. 5.4 - Prob. 59LMCh. 5.4 - 4.118 Consider a sample data set with the...Ch. 5.4 - Examine the following sample data.
Construct a...Ch. 5.4 - Examine the sample data in the next...Ch. 5.4 - Irrelevant speech effects. Refer to the analysis...Ch. 5.4 - Prob. 64ACBCh. 5.4 - Prob. 65ACBCh. 5.4 - 4.122 Shear strength of rock fractures....Ch. 5.4 - Estimating glacier elevations. Digital elevation...Ch. 5.4 - Prob. 68ACBCh. 5.4 - Prob. 69ACICh. 5.4 - Prob. 71ACICh. 5.4 - Prob. 72ACICh. 5.4 - 4.130 Permeability of sandstone during weathering....Ch. 5.4 - Prob. 74ACICh. 5.4 - Blond hair types in the Southwest Pacific. Refer...Ch. 5.4 - Prob. 76ACACh. 5.5 - For large n (say, n = 100), why is it advantageous...Ch. 5.5 - Prob. 78UPCh. 5.5 - Suppose x is a binomial random variable with p =...Ch. 5.5 - Assume that x is a binomial random variable with n...Ch. 5.5 - Prob. 81LMCh. 5.5 - Prob. 82LMCh. 5.5 - Assume that x is a binomial random variable with n...Ch. 5.5 - 4.103 Blood diamonds. According to Global Research...Ch. 5.5 - Prob. 85ACBCh. 5.5 - Where will you get your next pet? Refer to...Ch. 5.5 - Analysis of bottled water. Refer to the report on...Ch. 5.5 - LASIK surgery complications. According to studies,...Ch. 5.5 - Cesarean birth study. In Exercise 4.73 (p. 212),...Ch. 5.5 - Chemical signals of mice. Refer to the Cell (May...Ch. 5.5 - Prob. 91ACICh. 5.5 - Prob. 92ACICh. 5.5 - Prob. 93ACICh. 5.5 - Body fat in men. The percentage of fat in the...Ch. 5.5 - Prob. 95ACACh. 5.5 - Prob. 96ACACh. 5.6 - What are the characteristics of an exponential...Ch. 5.6 - The exponential distribution is often called the...Ch. 5.6 - Determine the value of e−a/θ for each of the...Ch. 5.6 - 4.135 Suppose x has an exponential distribution...Ch. 5.6 - 4.136 Suppose x has an exponential distribution...Ch. 5.6 - 4.138 The random variable x can be adequately...Ch. 5.6 - Prob. 103LMCh. 5.6 - Prob. 104ACBCh. 5.6 - Prob. 105ACBCh. 5.6 - 4.144 Critical-part failures in NASCAR vehicles....Ch. 5.6 - Prob. 107ACBCh. 5.6 - 4.140 Preventative maintenance tests. The optimal...Ch. 5.6 - Prob. 109ACICh. 5.6 - Prob. 110ACICh. 5.6 - Prob. 111ACICh. 5.6 - Prob. 112ACICh. 5.6 - Prob. 113ACACh. 5.6 - Prob. 114ACACh. 5 - Prob. 115UPCh. 5 - Prob. 116UPCh. 5 - 4.165 Find the following probabilities for the...Ch. 5 - Prob. 118LMCh. 5 - The random variable x has a normal distribution...Ch. 5 - The random variable x has a normal distribution...Ch. 5 - Prob. 121LMCh. 5 - Prob. 122LMCh. 5 - Prob. 123LMCh. 5 - Prob. 124ACBCh. 5 - Prob. 125ACBCh. 5 - Prob. 126ACBCh. 5 - Prob. 127ACBCh. 5 - Prob. 128ACBCh. 5 - Prob. 129ACBCh. 5 - Prob. 130ACBCh. 5 - Prob. 131ACBCh. 5 - Where will you get your next pet? Refer to...Ch. 5 - Prob. 133ACBCh. 5 - Prob. 134ACBCh. 5 - Prob. 135ACBCh. 5 - Prob. 136ACICh. 5 - Visually impaired students. The Journal of Visual...Ch. 5 - Prob. 138ACICh. 5 - Prob. 139ACICh. 5 - Prob. 140ACICh. 5 - Galaxy velocity study. Recall The Astronomical...Ch. 5 - Prob. 142ACICh. 5 - Prob. 143ACICh. 5 - Prob. 144ACICh. 5 - 4.126 Wear-out of used display panels. Wear-out...Ch. 5 - Prob. 146ACICh. 5 - Forest development following wildfires. Ecological...Ch. 5 - Prob. 148ACICh. 5 - Prob. 149ACICh. 5 - Prob. 150ACICh. 5 - Prob. 151ACICh. 5 - 4.152 Reliability of CO-ROMs. In Reliability Ques...Ch. 5 - Prob. 153ACACh. 5 - Prob. 154ACACh. 5 - Prob. 155ACACh. 5 - Prob. 156CTCCh. 5 - Prob. 157CTC
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- Bob and Teresa each collect their own samples to test the same hypothesis. Bob’s p-value turns out to be 0.05, and Teresa’s turns out to be 0.01. Why don’t Bob and Teresa get the same p-values? Who has stronger evidence against the null hypothesis: Bob or Teresa?arrow_forwardReview a classmate's Main Post. 1. State if you agree or disagree with the choices made for additional analysis that can be done beyond the frequency table. 2. Choose a measure of central tendency (mean, median, mode) that you would like to compute with the data beyond the frequency table. Complete either a or b below. a. Explain how that analysis can help you understand the data better. b. If you are currently unable to do that analysis, what do you think you could do to make it possible? If you do not think you can do anything, explain why it is not possible.arrow_forward0|0|0|0 - Consider the time series X₁ and Y₁ = (I – B)² (I – B³)Xt. What transformations were performed on Xt to obtain Yt? seasonal difference of order 2 simple difference of order 5 seasonal difference of order 1 seasonal difference of order 5 simple difference of order 2arrow_forward
- Calculate the 90% confidence interval for the population mean difference using the data in the attached image. I need to see where I went wrong.arrow_forwardMicrosoft Excel snapshot for random sampling: Also note the formula used for the last column 02 x✓ fx =INDEX(5852:58551, RANK(C2, $C$2:$C$51)) A B 1 No. States 2 1 ALABAMA Rand No. 0.925957526 3 2 ALASKA 0.372999976 4 3 ARIZONA 0.941323044 5 4 ARKANSAS 0.071266381 Random Sample CALIFORNIA NORTH CAROLINA ARKANSAS WASHINGTON G7 Microsoft Excel snapshot for systematic sampling: xfx INDEX(SD52:50551, F7) A B E F G 1 No. States Rand No. Random Sample population 50 2 1 ALABAMA 0.5296685 NEW HAMPSHIRE sample 10 3 2 ALASKA 0.4493186 OKLAHOMA k 5 4 3 ARIZONA 0.707914 KANSAS 5 4 ARKANSAS 0.4831379 NORTH DAKOTA 6 5 CALIFORNIA 0.7277162 INDIANA Random Sample Sample Name 7 6 COLORADO 0.5865002 MISSISSIPPI 8 7:ONNECTICU 0.7640596 ILLINOIS 9 8 DELAWARE 0.5783029 MISSOURI 525 10 15 INDIANA MARYLAND COLORADOarrow_forwardSuppose the Internal Revenue Service reported that the mean tax refund for the year 2022 was $3401. Assume the standard deviation is $82.5 and that the amounts refunded follow a normal probability distribution. Solve the following three parts? (For the answer to question 14, 15, and 16, start with making a bell curve. Identify on the bell curve where is mean, X, and area(s) to be determined. 1.What percent of the refunds are more than $3,500? 2. What percent of the refunds are more than $3500 but less than $3579? 3. What percent of the refunds are more than $3325 but less than $3579?arrow_forward
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