Elementary Statistics
12th Edition
ISBN: 9780321837936
Author: Mario F. Triola
Publisher: PEARSON
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Chapter 5.4, Problem 5BSC
Finding μ, σ, and Unusual Values. In Exercises 5–8, assume that a procedure yields a binomial distribution with n trials and the
5. Guessing on ACT Random guesses are made for the 60 multiple-choice questions on the math portion of the ACT test, so n = 60 and p = 1/5 (because each question has possible answers of a, b, c, d. e, and only one of them is correct).
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Question 2. An American option on a stock has payoff given by F = f(St) when it is exercised
at time t. We know that the function f is convex. A person claims that because of convexity,
it is optimal to exercise at expiration T. Do you agree with them?
Question 4. We consider a CRR model with So == 5 and up and down factors u = 1.03 and
d = 0.96. We consider the interest rate r = 4% (over one period). Is this a suitable CRR
model? (Explain your answer.)
Question 3. We want to price a put option with strike price K and expiration T. Two financial
advisors estimate the parameters with two different statistical methods: they obtain the same
return rate μ, the same volatility σ, but the first advisor has interest r₁ and the second advisor
has interest rate r2 (r1>r2). They both use a CRR model with the same number of periods to
price the option. Which advisor will get the larger price? (Explain your answer.)
Chapter 5 Solutions
Elementary Statistics
Ch. 5.2 - Random Variable Table 5-7 lists probabilities for...Ch. 5.2 - Discrete or Continuous? Is the random variable...Ch. 5.2 - Probability Distribution Does Table 5-7 describe a...Ch. 5.2 - Unusual For 200 births, the probability of exactly...Ch. 5.2 - Identifying Discrete and Continuous Random...Ch. 5.2 - Prob. 6BSCCh. 5.2 - Identifying Probability Distributions. In...Ch. 5.2 - Identifying Probability Distributions. In...Ch. 5.2 - Identifying Probability Distributions. In...Ch. 5.2 - Identifying Probability Distributions. In...
Ch. 5.2 - Identifying Probability Distributions. In...Ch. 5.2 - Identifying Probability Distributions. In...Ch. 5.2 - Happiness In a survey sponsored by Coca-Cola,...Ch. 5.2 - Identifying Probability Distributions. In...Ch. 5.2 - Genetics. In Exercises 15-18, refer to the...Ch. 5.2 - Genetics. In Exercises 15-18, refer to the...Ch. 5.2 - Genetics. In Exercises 15-18, refer to the...Ch. 5.2 - Genetics. In Exercises 15-18, refer to the...Ch. 5.2 - Car Failures. In Exercises 19-22, refer to the...Ch. 5.2 - Car Failures. In Exercises 19-22, refer to the...Ch. 5.2 - Car Failures. In Exercises 19-22, refer to the...Ch. 5.2 - Prob. 22BSCCh. 5.2 - Expected Value for the Texas Pick 3 Game In the...Ch. 5.2 - Expected Value in Maines Pick 4 Game In Maines...Ch. 5.2 - Prob. 25BBCh. 5.2 - Expected Value for Deal or No Deal The television...Ch. 5.3 - Calculating Probabilities Based on a Saint Index...Ch. 5.3 - Consistent Notation If we use the binomial...Ch. 5.3 - Prob. 3BSCCh. 5.3 - Notation of 0+ Using the same survey from Exercise...Ch. 5.3 - Identifying Binomial Distributions. In Exercises...Ch. 5.3 - Identifying Binomial Distributions. In Exercises...Ch. 5.3 - Veggie Survey In an Idaho Potato Commission survey...Ch. 5.3 - Veggie Survey In an Idaho Potato Commission survey...Ch. 5.3 - Surveying Senators The current Senate consists of...Ch. 5.3 - Identifying Binomial Distributions. In Exercises...Ch. 5.3 - Prob. 11BSCCh. 5.3 - Prob. 12BSCCh. 5.3 - Binomial Probability Formula. In Exercises 13 and...Ch. 5.3 - Prob. 14BSCCh. 5.3 - Using the Binomial Probability Table. In Exercises...Ch. 5.3 - Prob. 16BSCCh. 5.3 - Using the Binomial Probability Table. In Exercises...Ch. 5.3 - Prob. 18BSCCh. 5.3 - Prob. 19BSCCh. 5.3 - Using the Binomial Probability Table. In Exercises...Ch. 5.3 - Prob. 21BSCCh. 5.3 - Prob. 22BSCCh. 5.3 - Prob. 23BSCCh. 5.3 - Prob. 24BSCCh. 5.3 - Using Computer Results. In Exercises 2528, refer...Ch. 5.3 - Prob. 26BSCCh. 5.3 - Prob. 27BSCCh. 5.3 - Using Computer Results. In Exercises 2528, refer...Ch. 5.3 - See You Later Based on a Harris Interactive poll,...Ch. 5.3 - Live TV Based on a Comcast survey, there is a 0.8...Ch. 5.3 - Too Young to Tat Based on a Harris poll, among...Ch. 5.3 - Tainted Currency Based on the American Chemical...Ch. 5.3 - Prob. 33BSCCh. 5.3 - Prob. 34BSCCh. 5.3 - On-Time Flights The U.S. Department of...Ch. 5.3 - Prob. 36BSCCh. 5.3 - Nielsen Rating CBS televised a recent Super Bowl...Ch. 5.3 - Overbooking Flights When someone buys a ticket for...Ch. 5.3 - XSORT Method of Gender Selection When testing a...Ch. 5.3 - Prob. 40BSCCh. 5.3 - Prob. 41BSCCh. 5.3 - Prob. 42BSCCh. 5.3 - Acceptance Sampling. Exercises 35 and 36 involve...Ch. 5.3 - Prob. 44BSCCh. 5.3 - Prob. 46BBCh. 5.3 - Prob. 47BBCh. 5.4 - Prob. 1BSCCh. 5.4 - Prob. 2BSCCh. 5.4 - Prob. 3BSCCh. 5.4 - Prob. 4BSCCh. 5.4 - Finding , , and Unusual Values. In Exercises 58,...Ch. 5.4 - Prob. 6BSCCh. 5.4 - Prob. 7BSCCh. 5.4 - Prob. 8BSCCh. 5.4 - Prob. 9BSCCh. 5.4 - Prob. 10BSCCh. 5.4 - Are 20% of MM Candies Orange? Mars, Inc. claims...Ch. 5.4 - Are 14% of MM Candies Yellow? Mars, Inc. claims...Ch. 5.4 - Cell Phones and Brain Cancer In a study of 420,095...Ch. 5.4 - Prob. 14BSCCh. 5.4 - Prob. 15BSCCh. 5.4 - Prob. 16BSCCh. 5.4 - Prob. 17BSCCh. 5.4 - Prob. 18BSCCh. 5.4 - Born on the 4th of July For the following...Ch. 5.4 - Prob. 20BSCCh. 5.4 - Prob. 21BBCh. 5.4 - Prob. 23BBCh. 5.5 - Prob. 1BSCCh. 5.5 - Prob. 2BSCCh. 5.5 - Poission Approximation to Binomial Assume that we...Ch. 5.5 - Prob. 4BSCCh. 5.5 - Aircraft Accidents. In Exercises 58, assume that...Ch. 5.5 - Aircraft Accidents. In Exercises 58, assume that...Ch. 5.5 - Aircraft Accidents. In Exercises 58, assume that...Ch. 5.5 - Aircraft Accidents. In Exercises 58, assume that...Ch. 5.5 - In Exercises 916, use the Poisson distribution to...Ch. 5.5 - Prob. 10BSCCh. 5.5 - Prob. 11BSCCh. 5.5 - Deaths from Horse Kicks A classical example of the...Ch. 5.5 - World War II Bombs In Exercise 1 Notation we noted...Ch. 5.5 - Prob. 14BSCCh. 5.5 - Chocolate Chip Cookies In the production of...Ch. 5.5 - Chocolate Chip Cookies Consider an individual...Ch. 5.5 - Poisson Approximation to Binomial Distribution An...Ch. 5 - Is a probability distribution defined if the only...Ch. 5 - There are 100 questions from an SAT test, and they...Ch. 5 - Using the same SAT questions described in Exercise...Ch. 5 - Prob. 4CQQCh. 5 - If boys and girls are equally likely, groups of400...Ch. 5 - In Exercises 610, use the following: Five American...Ch. 5 - x p(x) 0 0+ 1 0.006 2 0.051 3 0.205 4 0.409 5...Ch. 5 - In Exercises 610, use the following: Five American...Ch. 5 - In Exercises 610, use the following: Five American...Ch. 5 - In Exercises 610, use the following: Five American...Ch. 5 - In Exercises 14, assume that 40% of the population...Ch. 5 - Prob. 2RECh. 5 - Prob. 3RECh. 5 - Brown Eyes When randomly selecting 600 people, the...Ch. 5 - In Exercises 5 and 6, refer to the table in die...Ch. 5 - In Exercises 5 and 6, refer to the table in die...Ch. 5 - Prob. 7RECh. 5 - Prob. 8RECh. 5 - Expected Value for a Magazine Sweepstakes Readers...Ch. 5 - Prob. 10RECh. 5 - Please be aware that some of the following...Ch. 5 - Ohio Pick 4 In Ohios Pick 4 game, you pay 1 to...Ch. 5 - Tennis Challenge In the last U.S. Open tennis...Ch. 5 - Prob. 4CRECh. 5 - Random Digits The digits 0, 1, 2,3,4, 5,6,7, 8,...Ch. 5 - Prob. 6CRECh. 5 - FROM DATA TO DECISION Critical Thinking: Did...
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