
Concept explainers
Uniform Distribution: Measurement Errors Measurement errors from instruments are often modeled using the uniform distribution (see Problem 16). To determine the
- (a) less than +0.03 microsecond (i.e., −0.05 ≤ x < 0.03)?
- (b) more than −0.02 microsecond?
- (c) between −0.04 and +0.01 microsecond?
- (d) Find the
mean and standard deviation of measurement errors. Measurements from an instrument are called unbiased if the mean of the measurement errors is zero. Would you say the measurements for these acoustical sensors are unbiased? Explain.
16. Expand Your Knowledge: Continuous Uniform Probability Distribution Let α and β be any two constants such that α < β. Suppose we choose a point x at random in the interval from α to β. In this context the phrase at random is taken to mean that the point x is as likely to be chosen from one particular part of the interval as any other part. Consider the rectangle.
The base of the rectangle has length β − α and the height of the rectangle is 1/(β − α), so the area of the rectangle is 1. As such, this rectangle’s top can be thought of as part of a probability density curve. Since we specify that x must lie between α and β, the probability of a point occurring outside the interval [α, β] is, by definition, 0. From a geometric point of view, x chosen at random from α to β means we are equally likely to land anywhere in the interval from α to β. For this reason, the top of the (rectangle’s) density curve is flat or uniform.
Now suppose that a and b are numbers such that α ≤ a < b ≤ β. What is the probability that a number x chosen at random from α to β will fall in the interval [a, b]? Consider the graph
Because x is chosen at random from [α, β], the area of the rectangle that lies above [a, b] is the probability that x lies in [a, b]. This area is
In this way we can assign a probability to any interval inside [α, β]. This probability distribution is called the continuous uniform distribution (also called the rectangular distribution). Using some extra mathematics, it can be shown that if x is a random variable with this distribution, then the mean and standard deviation of x are
Sedimentation experiments are very important in the study of biology, medicine, hydrodynamics, petroleum engineering, civil engineering, and so on. The size (diameter) of approximately spherical particles is important since larger particles hinder and sometimes block the movement of smaller particles. Usually the size of sediment particles follows a uniform distribution (Reference: Y. Zimmels, “Theory of Kindred Sedimentation of Polydisperse Mixtures,” AIChE Journal, Vol. 29, No. 4, pp. 669–676).
Suppose a veterinary science experiment injects very small, spherical pellets of low-level radiation directly into an animal’s bloodstream. The purpose is to attempt to cure a form of recurring cancer. The pellets eventually dissolve and pass through the animal’s system. Diameters of the pellets are uniformly distributed from 0.015 mm to 0.065 mm. If a pellet enters an artery, what is the probability that it will be the following sizes?
- (a) 0.050 mm or larger. Hint: All particles are between 0.015 mm and 0.065 mm, so larger than 0.050 means 0.050 ≤ x ≤ 0.065.
- (b) 0.040 mm or smaller
- (c) between 0.035 mm and 0.055 mm
- (d) Compute the mean size of the particles.
- (e) Compute the standard deviation of particle size.

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Chapter 6 Solutions
Understandable Statistics: Concepts and Methods
- You have been hired as an intern to run analyses on the data and report the results back to Sarah; the five questions that Sarah needs you to address are given below. please do it step by step on excel Does there appear to be a positive or negative relationship between price and screen size? Use a scatter plot to examine the relationship. Determine and interpret the correlation coefficient between the two variables. In your interpretation, discuss the direction of the relationship (positive, negative, or zero relationship). Also discuss the strength of the relationship. Estimate the relationship between screen size and price using a simple linear regression model and interpret the estimated coefficients. (In your interpretation, tell the dollar amount by which price will change for each unit of increase in screen size). Include the manufacturer dummy variable (Samsung=1, 0 otherwise) and estimate the relationship between screen size, price and manufacturer dummy as a multiple…arrow_forwardHere is data with as the response variable. x y54.4 19.124.9 99.334.5 9.476.6 0.359.4 4.554.4 0.139.2 56.354 15.773.8 9-156.1 319.2Make a scatter plot of this data. Which point is an outlier? Enter as an ordered pair, e.g., (x,y). (x,y)= Find the regression equation for the data set without the outlier. Enter the equation of the form mx+b rounded to three decimal places. y_wo= Find the regression equation for the data set with the outlier. Enter the equation of the form mx+b rounded to three decimal places. y_w=arrow_forwardYou have been hired as an intern to run analyses on the data and report the results back to Sarah; the five questions that Sarah needs you to address are given below. please do it step by step Does there appear to be a positive or negative relationship between price and screen size? Use a scatter plot to examine the relationship. Determine and interpret the correlation coefficient between the two variables. In your interpretation, discuss the direction of the relationship (positive, negative, or zero relationship). Also discuss the strength of the relationship. Estimate the relationship between screen size and price using a simple linear regression model and interpret the estimated coefficients. (In your interpretation, tell the dollar amount by which price will change for each unit of increase in screen size). Include the manufacturer dummy variable (Samsung=1, 0 otherwise) and estimate the relationship between screen size, price and manufacturer dummy as a multiple linear…arrow_forward
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- Business discussarrow_forwardYou have been hired as an intern to run analyses on the data and report the results back to Sarah; the five questions that Sarah needs you to address are given below. Does there appear to be a positive or negative relationship between price and screen size? Use a scatter plot to examine the relationship. Determine and interpret the correlation coefficient between the two variables. In your interpretation, discuss the direction of the relationship (positive, negative, or zero relationship). Also discuss the strength of the relationship. Estimate the relationship between screen size and price using a simple linear regression model and interpret the estimated coefficients. (In your interpretation, tell the dollar amount by which price will change for each unit of increase in screen size). Include the manufacturer dummy variable (Samsung=1, 0 otherwise) and estimate the relationship between screen size, price and manufacturer dummy as a multiple linear regression model. Interpret the…arrow_forwardDoes there appear to be a positive or negative relationship between price and screen size? Use a scatter plot to examine the relationship. How to take snapshots: if you use a MacBook, press Command+ Shift+4 to take snapshots. If you are using Windows, use the Snipping Tool to take snapshots. Question 1: Determine and interpret the correlation coefficient between the two variables. In your interpretation, discuss the direction of the relationship (positive, negative, or zero relationship). Also discuss the strength of the relationship. Value of correlation coefficient: Direction of the relationship (positive, negative, or zero relationship): Strength of the relationship (strong/moderate/weak): Question 2: Estimate the relationship between screen size and price using a simple linear regression model and interpret the estimated coefficients. In your interpretation, tell the dollar amount by which price will change for each unit of increase in screen size. (The answer for the…arrow_forward
- In this problem, we consider a Brownian motion (W+) t≥0. We consider a stock model (St)t>0 given (under the measure P) by d.St 0.03 St dt + 0.2 St dwt, with So 2. We assume that the interest rate is r = 0.06. The purpose of this problem is to price an option on this stock (which we name cubic put). This option is European-type, with maturity 3 months (i.e. T = 0.25 years), and payoff given by F = (8-5)+ (a) Write the Stochastic Differential Equation satisfied by (St) under the risk-neutral measure Q. (You don't need to prove it, simply give the answer.) (b) Give the price of a regular European put on (St) with maturity 3 months and strike K = 2. (c) Let X = S. Find the Stochastic Differential Equation satisfied by the process (Xt) under the measure Q. (d) Find an explicit expression for X₁ = S3 under measure Q. (e) Using the results above, find the price of the cubic put option mentioned above. (f) Is the price in (e) the same as in question (b)? (Explain why.)arrow_forwardProblem 4. Margrabe formula and the Greeks (20 pts) In the homework, we determined the Margrabe formula for the price of an option allowing you to swap an x-stock for a y-stock at time T. For stocks with initial values xo, yo, common volatility σ and correlation p, the formula was given by Fo=yo (d+)-x0Þ(d_), where In (±² Ꭲ d+ õ√T and σ = σ√√√2(1 - p). дго (a) We want to determine a "Greek" for ỡ on the option: find a formula for θα (b) Is дго θα positive or negative? (c) We consider a situation in which the correlation p between the two stocks increases: what can you say about the price Fo? (d) Assume that yo< xo and p = 1. What is the price of the option?arrow_forwardWe consider a 4-dimensional stock price model given (under P) by dẴ₁ = µ· Xt dt + йt · ΣdŴt where (W) is an n-dimensional Brownian motion, π = (0.02, 0.01, -0.02, 0.05), 0.2 0 0 0 0.3 0.4 0 0 Σ= -0.1 -4a За 0 0.2 0.4 -0.1 0.2) and a E R. We assume that ☑0 = (1, 1, 1, 1) and that the interest rate on the market is r = 0.02. (a) Give a condition on a that would make stock #3 be the one with largest volatility. (b) Find the diversification coefficient for this portfolio as a function of a. (c) Determine the maximum diversification coefficient d that you could reach by varying the value of a? 2arrow_forward
- Mathematics For Machine TechnologyAdvanced MathISBN:9781337798310Author:Peterson, John.Publisher:Cengage Learning,
