The Essentials of Statistics: A Tool for Social Research
4th Edition
ISBN: 9781305802698
Author: Joseph F. Healey
Publisher: Cengage Learning US
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Textbook Question
Chapter 6, Problem 6.18P
You are the automotive specialist for the monthly magazine Consumer Beware. Part of your job is to investigate the claims made by automakers in their TV commercials. You are particularly suspicious of a new economy car that the automaker claims will get 78 miles per gallon. After checking the mileage figures for a random sample of 125 owners of this car, you find an average miles per gallon of 75.5, with a standard deviation of 3.7. At the 99% level, do your results tend to confirm or refute the manufacturer’s claims?
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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 6 Solutions
The Essentials of Statistics: A Tool for Social Research
Ch. 6 - For each set of sample outcomes below, use Formula...Ch. 6 - For each of the following sets of sample outcomes,...Ch. 6 - For each of the following confidence levels,...Ch. 6 - You have developed a series of questions to...Ch. 6 - SOC A researcher has gathered information from a...Ch. 6 - SOC A random sample of 100 cable TV movies...Ch. 6 - SOC A random sample of 429 college students was...Ch. 6 - PA A random sample of 100 inmates at a maximum...Ch. 6 - SOC The survey mentioned in problem 6.5 found that...Ch. 6 - PA A random sample of 260 workers in a high-rise...
Ch. 6 - A random sample of 1496 respondents of a major...Ch. 6 - A random sample of 100 patients treated in a...Ch. 6 - For the following sample data, construct five...Ch. 6 - For each of the following three sample sizes,...Ch. 6 - Two individuals are running for mayor of your...Ch. 6 - SOC The World Values Survey is administered...Ch. 6 - SOC The fraternities and sororities at St. Algebra...Ch. 6 - You are the automotive specialist for the monthly...
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