Discrete Mathematics and Its Applications
8th Edition
ISBN: 9781260501759
Author: ROSEN
Publisher: MCG
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Chapter 7.4, Problem 37E
To determine
To prove:
Markov’s inequality.
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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 7 Solutions
Discrete Mathematics and Its Applications
Ch. 7.1 - i. What is the probability that a card selected at...Ch. 7.1 - t istheprobability that a fair die comes up six...Ch. 7.1 - t is the probability that a randomly selected...Ch. 7.1 - What is the probability7that a randomly selected...Ch. 7.1 - t is the probability that the sum of the numbers...Ch. 7.1 - t is the probability that a card selected at...Ch. 7.1 - t is the probability that when a coin is flipped...Ch. 7.1 - t is the probability that a five-card poker hand...Ch. 7.1 - t is the probability that a five-card poker hand...Ch. 7.1 - t is the probability that a five-card poker hand...
Ch. 7.1 - Prob. 11ECh. 7.1 - t is the probability that afive-card poker hand...Ch. 7.1 - t is the probability tliat afive-card poker hand...Ch. 7.1 - t istheprobability that a five-card poker hand...Ch. 7.1 - t is theprobabilifrthatafive-cardpoker hand...Ch. 7.1 - t is the probability7that a five-card poker hand...Ch. 7.1 - Prob. 17ECh. 7.1 - Mat is the probability' that a five-card poker...Ch. 7.1 - Prob. 19ECh. 7.1 - probabihh’thatafiM^Ch. 7.1 - Prob. 21ECh. 7.1 - t is the probability that a positive integer not...Ch. 7.1 - t is the probability that a positive integer not...Ch. 7.1 - Prob. 24ECh. 7.1 - - Find the probability of winning a lottery by...Ch. 7.1 - 26.Find the pr obabilitj- of selecting none of the...Ch. 7.1 - Prob. 27ECh. 7.1 - Prob. 28ECh. 7.1 - Prob. 29ECh. 7.1 - Prob. 30ECh. 7.1 - Prob. 31ECh. 7.1 - Prob. 32ECh. 7.1 - i$theprobabilitytiiatAbby,Barry,andSy^...Ch. 7.1 - 34.Mat is the probability' that Bo, Colleen, Jeff,...Ch. 7.1 - roulette, a wheel with 38 numbers is spun. Of...Ch. 7.1 - ch is more likely: rolling a total of 8 when two...Ch. 7.1 - ch is more likely: rolling a total of 9 when hvo...Ch. 7.1 - A player in the Mega Millions lottery picks five...Ch. 7.1 - a player buys a Mega Millions ticket in many...Ch. 7.1 - A player in the Powerball lottery picks five...Ch. 7.1 - Aplayer in the Powerball lottery (see Exercise 40)...Ch. 7.1 - Two events E i and E2are calledindependentifp(Etfl...Ch. 7.1 - Prob. 43ECh. 7.1 - Suppose that instead of three doors, there are...Ch. 7.1 - s problem was posed by the Chevalier de Mere and...Ch. 7.2 - Prob. 1ECh. 7.2 - Prob. 2ECh. 7.2 - Prob. 3ECh. 7.2 - w that conditions (2) and (22) are met under...Ch. 7.2 - A pair of dice is loaded. The probability that a 4...Ch. 7.2 - t is the probability of these events when we...Ch. 7.2 - t is the probability of these events when we...Ch. 7.2 - 8.What is the probability of these events when we...Ch. 7.2 - t is the probability of these events when we...Ch. 7.2 - What is the probability of these events when we...Ch. 7.2 - pose, that £ and F are. events such that d(£)=0.7...Ch. 7.2 - pose that £ and Fare events such thatp(£) = 0.8...Ch. 7.2 - w that if £ and F are events, thenpfEn F) >p(E) +...Ch. 7.2 - Use mathematical induction to prove the following...Ch. 7.2 - w that if £x, £2,Enare events from afinite sample...Ch. 7.2 - Show that iff and f are independent events,...Ch. 7.2 - 17,It £ and F are independent events, prove or...Ch. 7.2 - What is the probability that hvo people chosen at...Ch. 7.2 - Mat is the probability that two people chosen at...Ch. 7.2 - Prob. 20ECh. 7.2 - Prob. 21ECh. 7.2 - February 29 occurs only inleap years, Years...Ch. 7.2 - ^Tiat is the conditional probabilitv that exactly...Ch. 7.2 - What is the. conditional probabilih' that exactly...Ch. 7.2 - Prob. 25ECh. 7.2 - Let Ebe the event that aranmly generated bit...Ch. 7.2 - Prob. 27ECh. 7.2 - a8. Assume that the probability a child is a boy...Ch. 7.2 - A group of six people play the game of “ odd...Ch. 7.2 - Find the probability that a randomly generated bit...Ch. 7.2 - Find the probability that a family with five...Ch. 7.2 - Prob. 32ECh. 7.2 - Prob. 33ECh. 7.2 - Find each of the following probabilities...Ch. 7.2 - d each of the following probabilities...Ch. 7.2 - Prob. 36ECh. 7.2 - Prob. 37ECh. 7.2 - 38.A pair of dice is rolled in a remote location...Ch. 7.2 - This exercise employs the probabilistic method to...Ch. 7.2 - Dense a Monte Carlo algorithm that determines...Ch. 7.2 - pseudocode to write out the probabilistic...Ch. 7.3 - i.Suppose that £ andFare events in a sample space...Ch. 7.3 - Suppose that Land Fare events in a sample space...Ch. 7.3 - 3.Suppose that Frida selects a ball by first...Ch. 7.3 - 4.Suppo s e that Ann selects a ball by first...Ch. 7.3 - Prob. 5ECh. 7.3 - Prob. 6ECh. 7.3 - Prob. 7ECh. 7.3 - 8,Suppose that one person in 10,000 people has a...Ch. 7.3 - Suppose that 8% of the patients tested in a clinic...Ch. 7.3 - io,Suppose that 4% of the patients tested in a...Ch. 7.3 - ...Ch. 7.3 - ...Ch. 7.3 - Prob. 13ECh. 7.3 - Prob. 14ECh. 7.3 - In this exercise we will use Bayes' theorem to...Ch. 7.3 - Prob. 16ECh. 7.3 - Prob. 17ECh. 7.3 - 18.Suppose that a Bayesian spam filter is trained...Ch. 7.3 - 19,Suppose that a Bayesian spam filter is trained...Ch. 7.3 - Prob. 20ECh. 7.3 - ,Suppose that a Bayesian spam filter is trained on...Ch. 7.3 - Suppose that we have prior information concerning...Ch. 7.3 - Prob. 23ECh. 7.4 - t is the expected number of heads that come up...Ch. 7.4 - t is the expected number of heads that come up...Ch. 7.4 - t is the expected number of times a 6 appears when...Ch. 7.4 - A coin is biased so that the probability a head...Ch. 7.4 - ^Tiat is the expected sum of the numbers that...Ch. 7.4 - Prob. 6ECh. 7.4 - final exam of a discrete mathematics course...Ch. 7.4 - t is the expected sum of the numbers that appear...Ch. 7.4 - Prob. 9ECh. 7.4 - Suppose that we flip a fair coin until either it...Ch. 7.4 - Suppose that we roll a fair die until a 6 conies...Ch. 7.4 - pose that we roll a fair die until a 6 comes up....Ch. 7.4 - pose thatwerollapairoffair dice...Ch. 7.4 - Show that the sum of the probabilities of a random...Ch. 7.4 - Show that if the random variable A'has the...Ch. 7.4 - Prob. 16ECh. 7.4 - Prob. 17ECh. 7.4 - Prob. 18ECh. 7.4 - Prob. 19ECh. 7.4 - Show that if J2,...,Xnare mutually independent...Ch. 7.4 - What is the expected value of the sum of the...Ch. 7.4 - as.Provethelaw of total expectations.Ch. 7.4 - Prob. 23ECh. 7.4 - Prob. 24ECh. 7.4 - A run is a maximal sequence of successes in a...Ch. 7.4 - a6.Let J(s) be a random variable, where I(s) is a...Ch. 7.4 - What is the variance of the number of heads that...Ch. 7.4 - t is the variance ot the number of times a 6...Ch. 7.4 - LetXnbe the random variable that equals the number...Ch. 7.4 - w that ifXand Fare independent random variables,...Ch. 7.4 - Prob. 31ECh. 7.4 - Pronde an example that shows that the variance of...Ch. 7.4 - pose that A\ andX2are independent Bernoulli trials...Ch. 7.4 - Prove the general caseofTheoremy. That is, show...Ch. 7.4 - Prob. 35ECh. 7.4 - Prob. 36ECh. 7.4 - Prob. 37ECh. 7.4 - pose that the number of cans of soda pop filled in...Ch. 7.4 - 39.Suppose that the number of aluminum cans...Ch. 7.4 - pose the probabilitvthatxis the...Ch. 7.4 - In this exercise we derive an estimate of the...Ch. 7.4 - Prob. 42ECh. 7.4 - to is the variance of the number of fixed...Ch. 7.4 - Prob. 44ECh. 7.4 - Prob. 45ECh. 7.4 - Prob. 46ECh. 7.4 - Prob. 47ECh. 7.4 - Prob. 48ECh. 7.4 - Prob. 49ECh. 7 - Define the probability of an event when all...Ch. 7 - WTiat conditions should be met by the...Ch. 7 - Define, the conditional probability’ of an event £...Ch. 7 - Prob. 4RQCh. 7 - tois a random variable? toare the possible values...Ch. 7 - Prob. 6RQCh. 7 - Explain how the average-case computational...Ch. 7 - Prob. 8RQCh. 7 - What does the linearity of expectations of random...Ch. 7 - Prob. 10RQCh. 7 - Prob. 11RQCh. 7 - Prob. 12RQCh. 7 - Prob. 13RQCh. 7 - What is the variance of the sum of n independent...Ch. 7 - Prob. 15RQCh. 7 - Prob. 1SECh. 7 - 2012, a player in the Mega Millions lottery picks...Ch. 7 - 2012, a player in the Powerball lottery picks five...Ch. 7 - t is the probability that a hand of 13 cards...Ch. 7 - t is the probability that a 13-card bridge hand...Ch. 7 - t is the probability that a seven-card poker hand...Ch. 7 - What is the expected value of the number that...Ch. 7 - What is the expected value of the number that...Ch. 7 - Suppose that a pair of fair octahedral dice is...Ch. 7 - io.Suppose that a pair offaiir dodecahedral diceis...Ch. 7 - ii.Supp o s e that a fair standard (cubic) die and...Ch. 7 - Prob. 12SECh. 7 - (mpeople!n>3!play“oddp™ut’todeadeMo^...Ch. 7 - Prob. 14SECh. 7 - posethatmandnarepositiYeintegers.Bat is...Ch. 7 - pose thatEt, E2,Enarenevents with p(£j) >o fori...Ch. 7 - Prob. 17SECh. 7 - t is the probability that when a fair coin is...Ch. 7 - t is the probability that a randomly selected bit...Ch. 7 - t is the probability that a randomly selected bit...Ch. 7 - sider the following game. A per son flips a coin...Ch. 7 - pose that n halls are tossed intobbins so that...Ch. 7 - posethatAandBareeventswthprobabilitiesp(A) =...Ch. 7 - posethat/l andB are events...Ch. 7 - all fromDefinition jinSection 7,2that the events...Ch. 7 - ...Ch. 7 - Prob. 27SECh. 7 - Prob. 28SECh. 7 - Prob. 29SECh. 7 - Prob. 30SECh. 7 - Prob. 31SECh. 7 - Prob. 32SECh. 7 - Prob. 33SECh. 7 - maximum satisfiability problemasks for an...Ch. 7 - Prob. 35SECh. 7 - The following method can be used to generate a...Ch. 7 - Prob. 1CPCh. 7 - Prob. 2CPCh. 7 - Prob. 3CPCh. 7 - Prob. 4CPCh. 7 - Prob. 5CPCh. 7 - ...Ch. 7 - Prob. 7CPCh. 7 - Prob. 8CPCh. 7 - Prob. 9CPCh. 7 - ulaterepeated trials oftheMoufr Hall Three-Door...Ch. 7 - Prob. 11CPCh. 7 - Prob. 1CAECh. 7 - Prob. 2CAECh. 7 - Prob. 3CAECh. 7 - Prob. 4CAECh. 7 - Prob. 5CAECh. 7 - Prob. 6CAECh. 7 - Prob. 7CAECh. 7 - Prob. 8CAECh. 7 - cribe the origins of probability theory and the...Ch. 7 - Prob. 2WPCh. 7 - 3.Discuss the probability' of winning when you...Ch. 7 - estigate the game of craps and discuss the...Ch. 7 - Prob. 5WPCh. 7 - Prob. 6WPCh. 7 - lain how Erdos and Renvi first used the...Ch. 7 - cuss the different types of probabilistic...
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