Statistics: Informed Decisions Using Data (5th Edition)
5th Edition
ISBN: 9780134133539
Author: Michael Sullivan III
Publisher: PEARSON
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Chapter 6.1, Problem 2AYU
To determine
To identify: The difference between discrete random variable and continuous random variable.
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29% of all college students major in STEM (Science, Technology, Engineering, and Math). If 46 college students are randomly selected, find the probability thata. Exactly 11 of them major in STEM. b. At most 12 of them major in STEM. c. At least 11 of them major in STEM. d. Between 11 and 15 (including 11 and 15) of them major in STEM.
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Problem1
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…
Chapter 6 Solutions
Statistics: Informed Decisions Using Data (5th Edition)
Ch. 6.1 - 1. What is a random variable?
Ch. 6.1 - 2. What is the difference between a discrete...Ch. 6.1 - Prob. 3AYUCh. 6.1 - Prob. 4AYUCh. 6.1 - In Problems 5–8, determine whether the random...Ch. 6.1 - In Problems 5–8, determine whether the random...Ch. 6.1 - In Problems 5–8, determine whether the random...Ch. 6.1 - In Problems 5–8, determine whether the random...Ch. 6.1 - In Problems 9–14, determine whether the...Ch. 6.1 - In Problems 9–14, determine whether the...
Ch. 6.1 - In Problems 9–14, determine whether the...Ch. 6.1 - In Problems 9–14, determine whether the...Ch. 6.1 - In Problems 9–14, determine whether the...Ch. 6.1 - In Problems 9–14, determine whether the...Ch. 6.1 - In Problems 15 and 16, determine the required...Ch. 6.1 - In Problems 15 and 16, determine the required...Ch. 6.1 - NW 17. Televisions In the Sullivan Statistics...Ch. 6.1 - 18. Marriage In the following probability...Ch. 6.1 - 19. Ichiro's Hit Parade In the 2004 baseball...Ch. 6.1 - 20. Waiting in Line A Wendy's manager performed a...Ch. 6.1 - In Problems 21 and 22, (a) construct a discrete...Ch. 6.1 - In Problems 21 and 22, (a) construct a discrete...Ch. 6.1 - 23. Number of Births The graph of the discrete...Ch. 6.1 - 24. Rental Units The graph of the discrete...Ch. 6.1 - 25. Life Insurance A life insurance company sells...Ch. 6.1 - 26. Life Insurance A life insurance company sells...Ch. 6.1 - 27. BlackJack BlackJack is a popular casino game...Ch. 6.1 - 28. Investment An investment counselor calls with...Ch. 6.1 - 29. Roulette In the game of roulette, a player can...Ch. 6.1 - 30. Connecticut Lottery In the Cash Five Lottery...Ch. 6.1 - 31. Powerball Powerball is a multistate lottery....Ch. 6.1 - 32. SAT Test Penalty Some standardized tests, such...Ch. 6.1 - Prob. 33AYUCh. 6.1 - Prob. 34AYUCh. 6.1 - Prob. 35AYUCh. 6.1 - 36. 2014 Senate Election In the 2014 election,...Ch. 6.2 - 1. A binomial experiment is performed a fixed...Ch. 6.2 - 2. For each trial of a binomial experiment, there...Ch. 6.2 - 3. True or False: In the binomial probability...Ch. 6.2 - 4. The phrase “no more than” is represented by the...Ch. 6.2 - 5. The expected number of successes in a binomial...Ch. 6.2 - 6. As a rule of thumb, if ______, the probability...Ch. 6.2 - In Problems 7–16, determine which of the following...Ch. 6.2 - In Problems 7–16, determine which of the following...Ch. 6.2 - In Problems 7–16, determine which of the following...Ch. 6.2 - In Problems 7–16, determine which of the following...Ch. 6.2 - In Problems 7–16, determine which of the following...Ch. 6.2 - In Problems 7–16, determine which of the following...Ch. 6.2 - In Problems 7–16, determine which of the following...Ch. 6.2 - In Problems 7–16, determine which of the following...Ch. 6.2 - In Problems 7–16, determine which of the following...Ch. 6.2 - Prob. 16AYUCh. 6.2 - In Problems 17–28, a binomial probability...Ch. 6.2 - In Problems 17–28, a binomial probability...Ch. 6.2 - In Problems 17–28, a binomial probability...Ch. 6.2 - In Problems 17–28, a binomial probability...Ch. 6.2 - In Problems 17–28, a binomial probability...Ch. 6.2 - Prob. 22AYUCh. 6.2 - In Problems 17–28, a binomial probability...Ch. 6.2 - Prob. 24AYUCh. 6.2 - In Problems 17–28, a binomial probability...Ch. 6.2 - In Problems 17–28, a binomial probability...Ch. 6.2 - In Problems 17–28, a binomial probability...Ch. 6.2 - Prob. 28AYUCh. 6.2 - In Problems 29–34, (a) construct a binomial...Ch. 6.2 - In Problems 29–34, (a) construct a binomial...Ch. 6.2 - In Problems 29–34, (a) construct a binomial...Ch. 6.2 - In Problems 29–34, (a) construct a binomial...Ch. 6.2 - In Problems 29–34, (a) construct a binomial...Ch. 6.2 - In Problems 29–34, (a) construct a binomial...Ch. 6.2 - 35. On-Time Flights According to flightstats.com,...Ch. 6.2 - 36. Morality In a recent poll, the Gallup...Ch. 6.2 - 37. Toilet Flushing In the Healthy Handwashing...Ch. 6.2 - 38. Allergy Sufferers Clarinex-D is a medication...Ch. 6.2 - 39. Sneeze According to a study done by Nick...Ch. 6.2 - 40. Sneeze Revisited According to a study done by...Ch. 6.2 - 41. Jury Selection Twelve jurors are randomly...Ch. 6.2 - 42. Sullivan Survey: Car Color According to paint...Ch. 6.2 - 43. On-Time Flights According to flightstats.com,...Ch. 6.2 - 44. Morality In a recent poll, the Gallup...Ch. 6.2 - 45. Toilet Flushing In the Healthy Handwashing...Ch. 6.2 - Prob. 46AYUCh. 6.2 - Prob. 47AYUCh. 6.2 - Prob. 48AYUCh. 6.2 - Prob. 49AYUCh. 6.2 - Prob. 50AYUCh. 6.2 - 51. Overbooking Flights Historically, the...Ch. 6.2 - Prob. 52AYUCh. 6.2 - Prob. 53AYUCh. 6.2 - Prob. 54AYUCh. 6.2 - Prob. 55AYUCh. 6.2 - Prob. 56AYUCh. 6.2 - Prob. 57AYUCh. 6.2 - Prob. 58AYUCh. 6.2 - Prob. 59AYUCh. 6.2 - 60. When can the Empirical Rule be used to...Ch. 6.3 - Prob. 1AYUCh. 6.3 - 2. Explain the role of λ and t in the Poisson...Ch. 6.3 - In Problems 3–6, state the values of λ and t for...Ch. 6.3 - In Problems 3–6, state the values of λ and t for...Ch. 6.3 - In Problems 3–6, state the values of λ and t for...Ch. 6.3 - In Problems 3–6, state the values of λ and t for...Ch. 6.3 - In Problems 7 and 8, the random variable X follows...Ch. 6.3 - Prob. 8AYUCh. 6.3 - Prob. 9AYUCh. 6.3 - Prob. 10AYUCh. 6.3 - 11. Hits to a Website The number of hits to a...Ch. 6.3 - Prob. 12AYUCh. 6.3 - Prob. 13AYUCh. 6.3 - 14. Potholes The potholes on a major highway in...Ch. 6.3 - Prob. 15AYUCh. 6.3 - 16. Traffic Fatalities According to...Ch. 6.3 - 17. Florida Hurricanes From 1900 to 2014 (115...Ch. 6.3 - Prob. 18AYUCh. 6.3 - Prob. 19AYUCh. 6.3 - Prob. 20AYUCh. 6.3 - Prob. 21AYUCh. 6.3 - Prob. 22AYUCh. 6.3 - 23. Simulation According to the National Center...Ch. 6.3 - Prob. 24AYUCh. 6 - Prob. 1RECh. 6 - Prob. 2RECh. 6 - Prob. 3RECh. 6 - Prob. 4RECh. 6 - Prob. 5RECh. 6 - 6. Emergency Room Visits The probability that a...Ch. 6 - 7. Driving Age According to a Gallup poll, 60% of...Ch. 6 - Prob. 8RECh. 6 - 9. State the condition required to use the...Ch. 6 - Prob. 10RECh. 6 - Prob. 11RECh. 6 - Prob. 12RECh. 6 - Prob. 13RECh. 6 - Prob. 14RECh. 6 - Prob. 15RECh. 6 - Prob. 1CTCh. 6 - Prob. 2CTCh. 6 - Prob. 3CTCh. 6 - Prob. 4CTCh. 6 - Prob. 5CTCh. 6 - Prob. 6CTCh. 6 - Prob. 7CTCh. 6 - Prob. 8CTCh. 6 - Prob. 9CTCh. 6 - Prob. 10CTCh. 6 - Prob. 11CTCh. 6 - Prob. 1CSCh. 6 - 2. Does it appear that, on average, the Neuländers...Ch. 6 - Prob. 3CSCh. 6 - Prob. 4CSCh. 6 - Prob. 5CSCh. 6 - Prob. 6CS
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