Coin Flips (Example 2) A coin is flipped 30 times and comes up heads 18 times. You want to test the hypothesis that the coin does not come up 50 % heads in the long run. Pick the correct null hypothesis for this test. i . H 0 : p ^ = 0.60 ii . H 0 : p = 0.50 iii . H 0 : p = 0.60 iv . H 0 : p ^ = 0.50
Coin Flips (Example 2) A coin is flipped 30 times and comes up heads 18 times. You want to test the hypothesis that the coin does not come up 50 % heads in the long run. Pick the correct null hypothesis for this test. i . H 0 : p ^ = 0.60 ii . H 0 : p = 0.50 iii . H 0 : p = 0.60 iv . H 0 : p ^ = 0.50
Solution Summary: The author explains that the correct null hypothesis is option (ii), that is, H_0:p=0.50.
Coin Flips (Example 2) A coin is flipped 30 times and comes up heads 18 times. You want to test the hypothesis that the coin does not come up
50
%
heads in the long run.
Pick the correct null hypothesis for this test.
i
.
H
0
:
p
^
=
0.60
ii
.
H
0
:
p
=
0.50
iii
.
H
0
:
p
=
0.60
iv
.
H
0
:
p
^
=
0.50
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…
What is the standard scores associated to the left of z is 0.1446
Note: The purpose of this problem below is to use computational techniques (Excelspreadsheet, Matlab, R, Python, etc.) and code the dynamic programming ideas seen inclass. Please provide the numerical answer to the questions as well as a sample of yourwork (spreadsheet, code file, etc.).We consider an N-period binomial model with the following properties: N = 60, thecurrent stock price is S0 = 1000; on each period, the stock price increases by 0.5% whenit moves up and decreases by 0.3% when it moves down. The annual interest rate on themoney market is 5%. (Notice that this model is a CRR model, which means that thebinomial tree is recombining.)(a) Find the price at time t0 = 0 of a (European) call option with strike price K = 1040and maturity T = 1 year.(b) Find the price at time t0 = 0 of a (European) put option with strike price K = 1040and maturity T = 1 year.(c) We consider now, that you are at time t5 (i.e. after 5 periods, which represents 1month later). Assume that the stock…
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.
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