
Elementary Statistics: A Step By Step Approach
10th Edition
ISBN: 9781259755330
Author: Allan G. Bluman
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 8, Problem 22CQ
a.
To determine
To state: The null and alternative hypotheses and identify the claim.
b.
To determine
To find: The critical values.
c.
To determine
To find: The test value.
d.
To determine
To make: The decision.
e.
To determine
To summarize: The result.
Expert Solution & Answer

Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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 8 Solutions
Elementary Statistics: A Step By Step Approach
Ch. 8.1 - Applying the Concepts 81 Eggs and Your Health The...Ch. 8.1 - Define null and alternative hypotheses, and give...Ch. 8.1 - What is meant by a type I error? A type II error?...Ch. 8.1 - What is meant by a statistical test?Ch. 8.1 - Explain the difference between a one-tailed and a...Ch. 8.1 - What is meant by the critical region? The...Ch. 8.1 - What symbols are used to represent the null...Ch. 8.1 - What symbols are used to represent the...Ch. 8.1 - Explain what is meant by a significant difference.Ch. 8.1 - When should a one-tailed test be used? A...
Ch. 8.1 - In hypothesis testing, why cant the hypothesis be...Ch. 8.1 - Using the z table (Table E), find the critical...Ch. 8.1 - Using the z table (Table E), find the critical...Ch. 8.1 - For each conjecture, state the null and...Ch. 8.1 - For each conjecture, state the null and...Ch. 8.2 - Car Thefts You recently received a job with a...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - Reject or Not State whether the null hypothesis...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - For Exercises 1 through 25, perform each of the...Ch. 8.2 - Transmission Service A car dealer recommends that...Ch. 8.2 - Speeding Tickets A motorist claims that the South...Ch. 8.2 - Sick Days A manager states that in his factory,...Ch. 8.2 - Significance Levels Suppose a statistician chose...Ch. 8.2 - Hourly Wage The president of a company states that...Ch. 8.3 - How Much Nicotine Is in Those Cigarettes? A...Ch. 8.3 - In what ways is the t distribution similar to the...Ch. 8.3 - What are the degrees of freedom for the t test?Ch. 8.3 - Find the critical value (or values) for the t test...Ch. 8.3 - Find the critical value (or values) for the t test...Ch. 8.3 - Using Table F, find the P-value interval for each...Ch. 8.3 - Using Table F, find the P-value interval for each...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.3 - For Exercises 7 through 23, perform each of the...Ch. 8.4 - What were the statistical hypotheses? 2. What were...Ch. 8.4 - Give three examples of proportions.Ch. 8.4 - Why is a proportion considered a binomial...Ch. 8.4 - When you are testing hypotheses by using...Ch. 8.4 - What are the mean and the standard deviation of a...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - Youth Smoking Researchers suspect that 18% of all...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - For Exercises 5 through 20, perform each of the...Ch. 8.4 - When np or nq is not 5 or more, the binomial table...Ch. 8.4 - First-Class Airline Passengers In the past, 20% of...Ch. 8.4 - Show that Z=pppqn can be derived from z=Xu by...Ch. 8.5 - Testing Gas Mileage Claims Assume that you are...Ch. 8.5 - Using Table G, find the critical value(s) for...Ch. 8.5 - Using Table G, find the critical value(s) for...Ch. 8.5 - Using Table G, find the P-value interval for each...Ch. 8.5 - Using Table G, find the P-value interval for each...Ch. 8.5 - For Exercises 5 through 20, assume that the...Ch. 8.5 - For Exercises 5 through 20, assume that the...Ch. 8.5 - For Exercises 5 through 20, assume that the...Ch. 8.5 - For Exercises 5 through 20, assume that the...Ch. 8.5 - For Exercises 5 through 20, assume that the...Ch. 8.5 - For Exercises 5 through 20, assume that the...Ch. 8.5 - Tornado Deaths A researcher claims that the...Ch. 8.5 - Interstate Speeds It has been reported that the...Ch. 8.5 - Nicotine Content of Cigarettes A manufacturer of...Ch. 8.5 - For Exercises 5 through 20, assume that the...Ch. 8.5 - For Exercises 5 through 20, assume that the...Ch. 8.5 - For Exercises 5 through 20, assume that the...Ch. 8.5 - For Exercises 5 through 20, assume that the...Ch. 8.5 - For Exercises 5 through 20, assume that the...Ch. 8.5 - For Exercises 5 through 20, assume that the...Ch. 8.5 - For Exercises 5 through 20, assume that the...Ch. 8.6 - First-Time Births According to the almanac, the...Ch. 8.6 - One-Way Airfares The average one-way airfare from...Ch. 8.6 - Prob. 3ECh. 8.6 - Prison Time According to a public service website,...Ch. 8.6 - Working at Home Workers with a formal arrangement...Ch. 8.6 - Newspaper Reading Times A survey taken several...Ch. 8.6 - Prob. 7ECh. 8.6 - How is the power of a test related to the type II...Ch. 8.6 - Prob. 9ECh. 8 - For Exercises 1 through 20, perform each of the...Ch. 8 - For Exercises 1 through 20, perform each of the...Ch. 8 - For Exercises 1 through 20, perform each of the...Ch. 8 - For Exercises 1 through 20, perform each of the...Ch. 8 - For Exercises 1 through 20, perform each of the...Ch. 8 - For Exercises 1 through 20, perform each of the...Ch. 8 - For Exercises 1 through 20, perform each of the...Ch. 8 - For Exercises 1 through 20, perform each of the...Ch. 8 - For Exercises 1 through 20, perform each of the...Ch. 8 - For Exercises 1 through 20, perform each of the...Ch. 8 - For Exercises 1 through 20, perform each of the...Ch. 8 - Prob. 8.4.12RECh. 8 - For Exercises 1 through 20, perform each of the...Ch. 8 - For Exercises 1 through 20, perform each of the...Ch. 8 - For Exercises 5 through 20, assume that the...Ch. 8 - For Exercises 5 through 20, assume that the...Ch. 8 - For Exercises 5 through 20, assume that the...Ch. 8 - For Exercises 5 through 20, assume that the...Ch. 8 - Plant Leaf Lengths A biologist knows that the...Ch. 8 - Tire Inflation To see whether people are keeping...Ch. 8 - The Data Bank is found in Appendix B, or on the...Ch. 8 - Select a random sample of 15 individuals and test...Ch. 8 - Select a random sample of at least 30 individuals,...Ch. 8 - Select a sample of 20 individuals and test the...Ch. 8 - Using the data from Data Set XIII, select a sample...Ch. 8 - Using the data obtained in Exercise 5, test the...Ch. 8 - Determine whether each statement is true or false....Ch. 8 - Determine whether each statement is true or false....Ch. 8 - Determine whether each statement is true or false....Ch. 8 - Determine whether each statement is true or false....Ch. 8 - Determine whether each statement is true or false....Ch. 8 - When the value of is increased, the probability...Ch. 8 - If you wish to test the claim that the mean of the...Ch. 8 - The degrees of freedom for the chi-square test for...Ch. 8 - For the t test, one uses _______ instead of . a. n...Ch. 8 - Complete the following statements with the best...Ch. 8 - Complete the following statements with the best...Ch. 8 - A conjecture about a population parameter is...Ch. 8 - Complete the following statements with the best...Ch. 8 - Complete the following statements with the best...Ch. 8 - For the following exercises where applicable: a....Ch. 8 - For Exercises 1 through 25, perform each of the...Ch. 8 - For Exercises 1 through 25, perform each of the...Ch. 8 - Prob. 18CQCh. 8 - Prob. 19CQCh. 8 - For Exercises 1 through 25, perform each of the...Ch. 8 - Prob. 21CQCh. 8 - Prob. 22CQCh. 8 - For the following exercises where applicable: a....Ch. 8 - For the following exercises where applicable: a....Ch. 8 - For the following exercises where applicable: a....Ch. 8 - Prob. 26CQCh. 8 - Prob. 27CQCh. 8 - Find the P-value for the z test in Exercise 16....Ch. 8 - Prob. 29CQCh. 8 - Prob. 30CQCh. 8 - For the following exercises where applicable: a....Ch. 8 - Strength of Wrapping Cord A manufacturer claims...Ch. 8 - Prob. 33CQCh. 8 - Find the 95% confidence interval for the mean in...Ch. 8 - Critical Thinking Challenges The power of a test...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, statistics and related others by exploring similar questions and additional content below.Similar questions
- Question 5. We consider a put option with strike price K and expiration T. This option is priced using a 1-period CRR model. We consider r > 0, and σ > 0 very large. What is the approximate price of the option? In other words, what is the limit of the price of the option as σ∞. (Briefly justify your answer.)arrow_forwardQuestion 6. You collect daily data for the stock of a company Z over the past 4 months (i.e. 80 days) and calculate the log-returns (yk)/(-1. You want to build a CRR model for the evolution of the stock. The expected value and standard deviation of the log-returns are y = 0.06 and Sy 0.1. The money market interest rate is r = 0.04. Determine the risk-neutral probability of the model.arrow_forwardSeveral markets (Japan, Switzerland) introduced negative interest rates on their money market. In this problem, we will consider an annual interest rate r < 0. We consider a stock modeled by an N-period CRR model where each period is 1 year (At = 1) and the up and down factors are u and d. (a) We consider an American put option with strike price K and expiration T. Prove that if <0, the optimal strategy is to wait until expiration T to exercise.arrow_forward
- We consider an N-period CRR model where each period is 1 year (At = 1), the up factor is u = 0.1, the down factor is d = e−0.3 and r = 0. We remind you that in the CRR model, the stock price at time tn is modeled (under P) by Sta = So exp (μtn + σ√AtZn), where (Zn) is a simple symmetric random walk. (a) Find the parameters μ and σ for the CRR model described above. (b) Find P Ste So 55/50 € > 1). StN (c) Find lim P 804-N (d) Determine q. (You can use e- 1 x.) Ste (e) Find Q So (f) Find lim Q 004-N StN Soarrow_forwardIn this problem, we consider a 3-period stock market model with evolution given in Fig. 1 below. Each period corresponds to one year. The interest rate is r = 0%. 16 22 28 12 16 12 8 4 2 time Figure 1: Stock evolution for Problem 1. (a) A colleague notices that in the model above, a movement up-down leads to the same value as a movement down-up. He concludes that the model is a CRR model. Is your colleague correct? (Explain your answer.) (b) We consider a European put with strike price K = 10 and expiration T = 3 years. Find the price of this option at time 0. Provide the replicating portfolio for the first period. (c) In addition to the call above, we also consider a European call with strike price K = 10 and expiration T = 3 years. Which one has the highest price? (It is not necessary to provide the price of the call.) (d) We now assume a yearly interest rate r = 25%. We consider a Bermudan put option with strike price K = 10. It works like a standard put, but you can exercise it…arrow_forwardIn this problem, we consider a 2-period stock market model with evolution given in Fig. 1 below. Each period corresponds to one year (At = 1). The yearly interest rate is r = 1/3 = 33%. This model is a CRR model. 25 15 9 10 6 4 time Figure 1: Stock evolution for Problem 1. (a) Find the values of up and down factors u and d, and the risk-neutral probability q. (b) We consider a European put with strike price K the price of this option at time 0. == 16 and expiration T = 2 years. Find (c) Provide the number of shares of stock that the replicating portfolio contains at each pos- sible position. (d) You find this option available on the market for $2. What do you do? (Short answer.) (e) We consider an American put with strike price K = 16 and expiration T = 2 years. Find the price of this option at time 0 and describe the optimal exercising strategy. (f) We consider an American call with strike price K ○ = 16 and expiration T = 2 years. Find the price of this option at time 0 and describe…arrow_forward
- 2.2, 13.2-13.3) question: 5 point(s) possible ubmit test The accompanying table contains the data for the amounts (in oz) in cans of a certain soda. The cans are labeled to indicate that the contents are 20 oz of soda. Use the sign test and 0.05 significance level to test the claim that cans of this soda are filled so that the median amount is 20 oz. If the median is not 20 oz, are consumers being cheated? Click the icon to view the data. What are the null and alternative hypotheses? OA. Ho: Medi More Info H₁: Medi OC. Ho: Medi H₁: Medi Volume (in ounces) 20.3 20.1 20.4 Find the test stat 20.1 20.5 20.1 20.1 19.9 20.1 Test statistic = 20.2 20.3 20.3 20.1 20.4 20.5 Find the P-value 19.7 20.2 20.4 20.1 20.2 20.2 P-value= (R 19.9 20.1 20.5 20.4 20.1 20.4 Determine the p 20.1 20.3 20.4 20.2 20.3 20.4 Since the P-valu 19.9 20.2 19.9 Print Done 20 oz 20 oz 20 oz 20 oz ce that the consumers are being cheated.arrow_forwardT Teenage obesity (O), and weekly fast-food meals (F), among some selected Mississippi teenagers are: Name Obesity (lbs) # of Fast-foods per week Josh 185 10 Karl 172 8 Terry 168 9 Kamie Andy 204 154 12 6 (a) Compute the variance of Obesity, s²o, and the variance of fast-food meals, s², of this data. [Must show full work]. (b) Compute the Correlation Coefficient between O and F. [Must show full work]. (c) Find the Coefficient of Determination between O and F. [Must show full work]. (d) Obtain the Regression equation of this data. [Must show full work]. (e) Interpret your answers in (b), (c), and (d). (Full explanations required). Edit View Insert Format Tools Tablearrow_forwardThe average miles per gallon for a sample of 40 cars of model SX last year was 32.1, with a population standard deviation of 3.8. A sample of 40 cars from this year’s model SX has an average of 35.2 mpg, with a population standard deviation of 5.4. Find a 99 percent confidence interval for the difference in average mpg for this car brand (this year’s model minus last year’s).Find a 99 percent confidence interval for the difference in average mpg for last year’s model minus this year’s. What does the negative difference mean?arrow_forward
- A special interest group reports a tiny margin of error (plus or minus 0.04 percent) for its online survey based on 50,000 responses. Is the margin of error legitimate? (Assume that the group’s math is correct.)arrow_forwardSuppose that 73 percent of a sample of 1,000 U.S. college students drive a used car as opposed to a new car or no car at all. Find an 80 percent confidence interval for the percentage of all U.S. college students who drive a used car.What sample size would cut this margin of error in half?arrow_forwardYou want to compare the average number of tines on the antlers of male deer in two nearby metro parks. A sample of 30 deer from the first park shows an average of 5 tines with a population standard deviation of 3. A sample of 35 deer from the second park shows an average of 6 tines with a population standard deviation of 3.2. Find a 95 percent confidence interval for the difference in average number of tines for all male deer in the two metro parks (second park minus first park).Do the parks’ deer populations differ in average size of deer antlers?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Glencoe Algebra 1, Student Edition, 9780079039897...AlgebraISBN:9780079039897Author:CarterPublisher:McGraw HillCollege Algebra (MindTap Course List)AlgebraISBN:9781305652231Author:R. David Gustafson, Jeff HughesPublisher:Cengage Learning

Glencoe Algebra 1, Student Edition, 9780079039897...
Algebra
ISBN:9780079039897
Author:Carter
Publisher:McGraw Hill

College Algebra (MindTap Course List)
Algebra
ISBN:9781305652231
Author:R. David Gustafson, Jeff Hughes
Publisher:Cengage Learning


Hypothesis Testing - Solving Problems With Proportions; Author: The Organic Chemistry Tutor;https://www.youtube.com/watch?v=76VruarGn2Q;License: Standard YouTube License, CC-BY
Hypothesis Testing and Confidence Intervals (FRM Part 1 – Book 2 – Chapter 5); Author: Analystprep;https://www.youtube.com/watch?v=vth3yZIUlGQ;License: Standard YouTube License, CC-BY