Statistics: The Art and Science of Learning from Data (4th Edition)
4th Edition
ISBN: 9780321997838
Author: Alan Agresti, Christine A. Franklin, Bernhard Klingenberg
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 8, Problem 83CP
To determine
Interpret each item on the given printout.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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.
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…
Does 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…
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.)
Chapter 8 Solutions
Statistics: The Art and Science of Learning from Data (4th Edition)
Ch. 8.1 - Health care A study dealing with health care...Ch. 8.1 - Video on demand A recent study from Nielsen...Ch. 8.1 - Projecting winning candidate News coverage during...Ch. 8.1 - Believe in hell? Using the General Social Survey...Ch. 8.1 - Government spying In 2014, news reports worldwide...Ch. 8.1 - Game apps The Google Play app store for...Ch. 8.1 - Nutrient effect on growth rate Researchers are...Ch. 8.1 - Believe in heaven? When a GSS asked 1326 subjects,...Ch. 8.1 - Feel lonely often? The GSS has asked On how many...Ch. 8.1 - CI for loneliness Refer to the previous exercise....
Ch. 8.2 - Putin A Gallup poll of 2000 Russians taken between...Ch. 8.2 - Flu shot In a clinical study (the same as...Ch. 8.2 - How green are you? When the 2000 GSS asked...Ch. 8.2 - Make industry help environment? When the 2006 GSS...Ch. 8.2 - Favor death penalty In the 2012 General Social...Ch. 8.2 - Oppose death penalty Refer to the previous...Ch. 8.2 - Stem cell research A Harris poll of a random...Ch. 8.2 - z-score and confidence level Which z-score is used...Ch. 8.2 - Believe in ghosts A Harris poll of a random sample...Ch. 8.2 - Stem cell research and religion In Exercise 8.18,...Ch. 8.2 - Fear of breast cancer A recent survey of 1000...Ch. 8.2 - Chicken breast In a 2014 Consumer Reports article...Ch. 8.2 - Same-sex marriage A national survey by the Pew...Ch. 8.2 - Exit poll predictions A national television...Ch. 8.2 - Exit poll with smaller sample In the previous...Ch. 8.2 - Simulating confidence intervals Repeat the...Ch. 8.2 - Simulating confidence intervals with poor coverage...Ch. 8.3 - Females ideal number of children The 2012 General...Ch. 8.3 - Males ideal number of children Refer to the...Ch. 8.3 - Using t-table Using Table B, the web app, software...Ch. 8.3 - Anorexia in teenage girls A study6 compared...Ch. 8.3 - Talk time on smartphones One feature smartphone...Ch. 8.3 - Heights of seedlings Exercise 8.7 reported heights...Ch. 8.3 - Buy it now Example 6 mentioned closing prices for...Ch. 8.3 - Time spent on e-mail When the GSS asked n = 1050...Ch. 8.3 - Grandmas using e-mail For the question about...Ch. 8.3 - Prob. 38PBCh. 8.3 - Prob. 39PBCh. 8.3 - Political views The General Social Survey asks...Ch. 8.3 - Prob. 41PBCh. 8.3 - Prob. 42PBCh. 8.3 - Effect of confidence level Find the margin of...Ch. 8.3 - Prob. 44PBCh. 8.3 - Number of children For the question, How many...Ch. 8.3 - Prob. 46PBCh. 8.4 - South Africa study The researcher planning the...Ch. 8.4 - Binge drinkers A study at the Harvard School of...Ch. 8.4 - Prob. 49PBCh. 8.4 - Prob. 50PBCh. 8.4 - Prob. 51PBCh. 8.4 - Farm size An estimate is needed of the mean...Ch. 8.4 - Prob. 53PBCh. 8.4 - Prob. 54PBCh. 8.4 - Prob. 55PBCh. 8.4 - Prob. 56PBCh. 8.4 - Prob. 57PBCh. 8.4 - Prob. 58PBCh. 8.5 - Why bootstrap? Explain the purpose of using the...Ch. 8.5 - Estimating variability Refer to Example 11 about...Ch. 8.5 - Bootstrap interval for the mean In 2014, the...Ch. 8.5 - Prob. 62PBCh. 8 - Unemployed college grads The U.S Bureau of the...Ch. 8 - Prob. 64CPCh. 8 - Prob. 65CPCh. 8 - Born again A poll of a random sample of n = 2000...Ch. 8 - Life after death The variable POSTLIFE in the 2012...Ch. 8 - Prob. 68CPCh. 8 - Prob. 69CPCh. 8 - Prob. 70CPCh. 8 - Prob. 71CPCh. 8 - Wife supporting husband Consider the statement...Ch. 8 - Legalize marijuana? The General Social Survey has...Ch. 8 - Prob. 74CPCh. 8 - Streaming A Harris Poll of 2300 U.S. adults...Ch. 8 - Prob. 76CPCh. 8 - Prob. 77CPCh. 8 - Grandpas using e-mail When the GSS asked in 2012,...Ch. 8 - Prob. 79CPCh. 8 - Prob. 80CPCh. 8 - Fuel efficiency The government website...Ch. 8 - Prob. 82CPCh. 8 - Prob. 83CPCh. 8 - Prob. 84CPCh. 8 - Prob. 85CPCh. 8 - Prob. 86CPCh. 8 - Prob. 87CPCh. 8 - Revisiting mountain bikes Use the Mountain Bike...Ch. 8 - Prob. 89CPCh. 8 - Prob. 90CPCh. 8 - Prob. 91CPCh. 8 - Prob. 92CPCh. 8 - Working mother In response to the statement on a...Ch. 8 - Miami spring break For a trip to Miami, Florida,...Ch. 8 - Prob. 95CPCh. 8 - Prob. 96CPCh. 8 - Prob. 97CPCh. 8 - Prob. 98CPCh. 8 - Prob. 99CPCh. 8 - Prob. 100CPCh. 8 - Kicking accuracy A football coach decides to...Ch. 8 - Prob. 103CPCh. 8 - Prob. 104CPCh. 8 - Prob. 106CPCh. 8 - Width of a confidence interval Why are confidence...Ch. 8 - Prob. 108CPCh. 8 - Prob. 109CPCh. 8 - Prob. 110CPCh. 8 - Prob. 111CPCh. 8 - Prob. 112CPCh. 8 - Prob. 113CPCh. 8 - Prob. 114CPCh. 8 - Prob. 115CPCh. 8 - Prob. 116CPCh. 8 - Prob. 117CPCh. 8 - Prob. 118CPCh. 8 - Prob. 119CPCh. 8 - Prob. 120CPCh. 8 - Prob. 121CPCh. 8 - Prob. 122CPCh. 8 - Prob. 123CPCh. 8 - Why called degrees of freedom? You know the sample...Ch. 8 - Prob. 125CPCh. 8 - Prob. 126CPCh. 8 - Median as point estimate When the population...
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
- Problem 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_forwardQuestion 1. Your manager asks you to explain why the Black-Scholes model may be inappro- priate for pricing options in practice. Give one reason that would substantiate this claim? Question 2. We consider stock #1 and stock #2 in the model of Problem 2. Your manager asks you to pick only one of them to invest in based on the model provided. Which one do you choose and why ? Question 3. Let (St) to be an asset modeled by the Black-Scholes SDE. Let Ft be the price at time t of a European put with maturity T and strike price K. Then, the discounted option price process (ert Ft) t20 is a martingale. True or False? (Explain your answer.) Question 4. You are considering pricing an American put option using a Black-Scholes model for the underlying stock. An explicit formula for the price doesn't exist. In just a few words (no more than 2 sentences), explain how you would proceed to price it. Question 5. We model a short rate with a Ho-Lee model drt = ln(1+t) dt +2dWt. Then the interest rate…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_forwardThe managing director of a consulting group has the accompanying monthly data on total overhead costs and professional labor hours to bill to clients. Complete parts a through c. Question content area bottom Part 1 a. Develop a simple linear regression model between billable hours and overhead costs. Overhead Costsequals=212495.2212495.2plus+left parenthesis 42.4857 right parenthesis42.485742.4857times×Billable Hours (Round the constant to one decimal place as needed. Round the coefficient to four decimal places as needed. Do not include the $ symbol in your answers.) Part 2 b. Interpret the coefficients of your regression model. Specifically, what does the fixed component of the model mean to the consulting firm? Interpret the fixed term, b 0b0, if appropriate. Choose the correct answer below. A. The value of b 0b0 is the predicted billable hours for an overhead cost of 0 dollars. B. It is not appropriate to interpret b 0b0, because its value…arrow_forwardUsing the accompanying Home Market Value data and associated regression line, Market ValueMarket Valueequals=$28,416+$37.066×Square Feet, compute the errors associated with each observation using the formula e Subscript ieiequals=Upper Y Subscript iYiminus−ModifyingAbove Upper Y with caret Subscript iYi and construct a frequency distribution and histogram. LOADING... Click the icon to view the Home Market Value data. Question content area bottom Part 1 Construct a frequency distribution of the errors, e Subscript iei. (Type whole numbers.) Error Frequency minus−15 comma 00015,000less than< e Subscript iei less than or equals≤minus−10 comma 00010,000 0 minus−10 comma 00010,000less than< e Subscript iei less than or equals≤minus−50005000 5 minus−50005000less than< e Subscript iei less than or equals≤0 21 0less than< e Subscript iei less than or equals≤50005000 9…arrow_forward
- The managing director of a consulting group has the accompanying monthly data on total overhead costs and professional labor hours to bill to clients. Complete parts a through c Overhead Costs Billable Hours345000 3000385000 4000410000 5000462000 6000530000 7000545000 8000arrow_forwardUsing the accompanying Home Market Value data and associated regression line, Market ValueMarket Valueequals=$28,416plus+$37.066×Square Feet, compute the errors associated with each observation using the formula e Subscript ieiequals=Upper Y Subscript iYiminus−ModifyingAbove Upper Y with caret Subscript iYi and construct a frequency distribution and histogram. Square Feet Market Value1813 911001916 1043001842 934001814 909001836 1020002030 1085001731 877001852 960001793 893001665 884001852 1009001619 967001690 876002370 1139002373 1131001666 875002122 1161001619 946001729 863001667 871001522 833001484 798001589 814001600 871001484 825001483 787001522 877001703 942001485 820001468 881001519 882001518 885001483 765001522 844001668 909001587 810001782 912001483 812001519 1007001522 872001684 966001581 86200arrow_forwarda. Find the value of A.b. Find pX(x) and py(y).c. Find pX|y(x|y) and py|X(y|x)d. Are x and y independent? Why or why not?arrow_forward
- The PDF of an amplitude X of a Gaussian signal x(t) is given by:arrow_forwardThe PDF of a random variable X is given by the equation in the picture.arrow_forwardFor a binary asymmetric channel with Py|X(0|1) = 0.1 and Py|X(1|0) = 0.2; PX(0) = 0.4 isthe probability of a bit of “0” being transmitted. X is the transmitted digit, and Y is the received digit.a. Find the values of Py(0) and Py(1).b. What is the probability that only 0s will be received for a sequence of 10 digits transmitted?c. What is the probability that 8 1s and 2 0s will be received for the same sequence of 10 digits?d. What is the probability that at least 5 0s will be received for the same sequence of 10 digits?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Mathematics For Machine TechnologyAdvanced MathISBN:9781337798310Author:Peterson, John.Publisher:Cengage Learning,
Elementary Geometry For College Students, 7eGeometryISBN:9781337614085Author:Alexander, Daniel C.; Koeberlein, Geralyn M.Publisher:Cengage,
Algebra: Structure And Method, Book 1AlgebraISBN:9780395977224Author:Richard G. Brown, Mary P. Dolciani, Robert H. Sorgenfrey, William L. ColePublisher:McDougal Littell
Glencoe Algebra 1, Student Edition, 9780079039897...AlgebraISBN:9780079039897Author:CarterPublisher:McGraw Hill
Elementary Geometry for College StudentsGeometryISBN:9781285195698Author:Daniel C. Alexander, Geralyn M. KoeberleinPublisher:Cengage Learning
Algebra & Trigonometry with Analytic GeometryAlgebraISBN:9781133382119Author:SwokowskiPublisher:Cengage
Mathematics For Machine Technology
Advanced Math
ISBN:9781337798310
Author:Peterson, John.
Publisher:Cengage Learning,
Elementary Geometry For College Students, 7e
Geometry
ISBN:9781337614085
Author:Alexander, Daniel C.; Koeberlein, Geralyn M.
Publisher:Cengage,
Algebra: Structure And Method, Book 1
Algebra
ISBN:9780395977224
Author:Richard G. Brown, Mary P. Dolciani, Robert H. Sorgenfrey, William L. Cole
Publisher:McDougal Littell
Glencoe Algebra 1, Student Edition, 9780079039897...
Algebra
ISBN:9780079039897
Author:Carter
Publisher:McGraw Hill
Elementary Geometry for College Students
Geometry
ISBN:9781285195698
Author:Daniel C. Alexander, Geralyn M. Koeberlein
Publisher:Cengage Learning
Algebra & Trigonometry with Analytic Geometry
Algebra
ISBN:9781133382119
Author:Swokowski
Publisher:Cengage
Which is the best chart: Selecting among 14 types of charts Part II; Author: 365 Data Science;https://www.youtube.com/watch?v=qGaIB-bRn-A;License: Standard YouTube License, CC-BY