Introductory Statistics
1st Edition
ISBN: 9781938168208
Author: Barbara Illowsky, Susan Dean
Publisher: OpenStax College
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Textbook Question
Chapter 9, Problem 32P
When do you reject the null hypothesis?
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solving problem 1
select bmw stock. you can assume the price of the stock
This problem is based on the fundamental option pricing formula for the continuous-time
model developed in class, namely the value at time 0 of an option with maturity T and
payoff F is given by:
We consider the two options below:
Fo=
-rT
= e
Eq[F].
1
A. An option with which you must buy a share of stock at expiration T = 1 for strike
price K = So.
B. An option with which you must buy a share of stock at expiration T = 1 for strike
price K given by
T
K =
T
St dt.
(Note that both options can have negative payoffs.) We use the continuous-time Black-
Scholes model to price these options. Assume that the interest rate on the money market
is r.
(a) Using the fundamental option pricing formula, find the price of option A. (Hint:
use the martingale properties developed in the lectures for the stock price process
in order to calculate the expectations.)
(b) Using the fundamental option pricing formula, find the price of option B.
(c) Assuming the interest rate is very small (r ~0), use Taylor…
Chapter 9 Solutions
Introductory Statistics
Ch. 9 - A medical trial is conducted to test whether or...Ch. 9 - We want to test whether the mean height of eighth...Ch. 9 - We want to test If It takes fewer than 45 minutes...Ch. 9 - On a state drivers test. about .10% pass the test...Ch. 9 - Suppose the null hypothesis, H0, Is: the blood...Ch. 9 - Suppose the null hypothesis. H0. Is: a patient is...Ch. 9 - “Red tide” is a bloom of poison-producing algae—a...Ch. 9 - Determine both Type I and Type II errors for the...Ch. 9 - A normal distribution has a standard deviation of...Ch. 9 - Its a Boy Genetics Labs claim their procedures...
Ch. 9 - H0:=10, H0:< 10 Assume the p-value is 0.0935. What...Ch. 9 - H0:1,Ha:1 Assume the p-value is 0.1243. What type...Ch. 9 - H0:p=0.5,Ha:p0.5 Assume the p-value is 0.2564....Ch. 9 - The mean throwing distance of a football for...Ch. 9 - It is believed that a stock price for a particular...Ch. 9 - A teacher believes that 85% of students in the...Ch. 9 - Marketers believe that 92% of adults In the United...Ch. 9 - You are testing that the mean speed of your cable...Ch. 9 - You ate testing that the mean speed of your cable...Ch. 9 - The American family has an average of two...Ch. 9 - The mean entry level salary of an employee at a...Ch. 9 - A sociologist claims the probability that a person...Ch. 9 - A sociologist claims the probability that a person...Ch. 9 - In a population of fish approximately 42% are...Ch. 9 - Suppose that a recent article stated that the mean...Ch. 9 - A random survey of 75 death row Inmates revealed...Ch. 9 - The National Institute of Mental Health published...Ch. 9 - The mean price of mid-sized cars In a region is...Ch. 9 - A sleeping bag Is rested to withstand temperatures...Ch. 9 - For Exercise 9.12, what are and in words?Ch. 9 - In words, describe 1— 3For Exercise 9.12.Ch. 9 - A group of doctors is deciding whether or not to...Ch. 9 - A group of doctors is deciding whether or not to...Ch. 9 - The power of a test is 0.981. What is the...Ch. 9 - A group of divers is exploring an old sunken ship....Ch. 9 - A microbiologist is testing a water sample for...Ch. 9 - A microbiologist is testing a water sample for...Ch. 9 - Which two distributions can you use for hypothesis...Ch. 9 - Which distribution do you use when you are testing...Ch. 9 - Which distribution do you use when the standard...Ch. 9 - A population mean Is 13. The sample mean is 12.8....Ch. 9 - A population has a mean is 25 and a standard...Ch. 9 - It Is thought that .12% of respondents in a taste...Ch. 9 - You ate performing a hypothesis test of a single...Ch. 9 - You are performing a hypothesis test of a single...Ch. 9 - You are performing a hypothesis test of a single...Ch. 9 - You are performing a hypothesis test of a single...Ch. 9 - You are peform1ng a hypothesis test of a single...Ch. 9 - When do you reject the null hypothesis?Ch. 9 - The probability of winning the grand prize at a...Ch. 9 - The probability of winning the grand prize at a...Ch. 9 - It is believed that the mean height of high school...Ch. 9 - The mean age of graduate students at a University...Ch. 9 - Does the shaded region represent a low or a high...Ch. 9 - What should you do when a >p-value?Ch. 9 - What should you do if a = p-value?Ch. 9 - If you do not reject the null hypothesis, then it...Ch. 9 - Use the blowing information to answer the next...Ch. 9 - Use the blowing information to answer the next...Ch. 9 - Use the blowing information to answer the next...Ch. 9 - Use the blowing information to answer the next...Ch. 9 - Use the blowing information to answer the next...Ch. 9 - Use the blowing information to answer the next...Ch. 9 - Use the blowing information to answer the next...Ch. 9 - A random survey of 75 death row inmates revealed...Ch. 9 - Assume H0: = 9 and H0:< 9. Is this a left-tailed,...Ch. 9 - Assume H0:6 and H0: > 6. Is this a left-tailed,...Ch. 9 - Assume H0: p = 0.25 and Ha: p 0.25. Is this a...Ch. 9 - Draw the general graph of a left-tailed test.Ch. 9 - Draw the graph of a two-tailed test.Ch. 9 - A bottle of water Is labeled as containing 16...Ch. 9 - Your friend claims that his mean golf score Is 63....Ch. 9 - A bathroom scale claims to be able to dentify...Ch. 9 - You flip a coin and record whether it shows heads...Ch. 9 - If the alternative hypothesis has a not equals ( )...Ch. 9 - Assume the null hypothesis states that the mean is...Ch. 9 - Assume the null hypothesis states that the mean is...Ch. 9 - Assume the null hypothesis states that the mean Is...Ch. 9 - Some of the following statements refer to the null...Ch. 9 - Over the past few decades, public health officials...Ch. 9 - A statistics instructor believes that fewer than...Ch. 9 - Previously, an organization reported that...Ch. 9 - State the Type I and Type II errors in complete...Ch. 9 - For statements a-j in Exercise 9.109. answer the...Ch. 9 - When a new drug is created. the pharmaceutical...Ch. 9 - A statistics instructor believes that fewer than...Ch. 9 - It Is believed that Lake Tahoe Community College...Ch. 9 - Previously, an organization reported that...Ch. 9 - It Is believed that Lake Tahoe Community College...Ch. 9 - The National Institute of Mental Health published...Ch. 9 - A particular brand of tires claims that its deluxe...Ch. 9 - From generation to generation, the mean age when...Ch. 9 - The cost of a daily newspaper varies from city to...Ch. 9 - An article in the San Jose Mercury News stated...Ch. 9 - The mean number of sick days an employee takes per...Ch. 9 - In 1955, Life Magazine reported that the 25...Ch. 9 - Your sta1stIcs Instructor claims that 60 percent...Ch. 9 - A Nissan Motor Corporation advertisement read, The...Ch. 9 - Refer to Exercise 9.19. Conduct a hypothesis test...Ch. 9 - According to an article in Newsweek, the natural...Ch. 9 - A poll done for Newsweek found that 13% of...Ch. 9 - The mean work week for engineers In a start-up...Ch. 9 - Use the Lap time data for Lap .1 (see Appendix C)...Ch. 9 - Use the initial Public Offering’ data (see...Ch. 9 - “Asian Family Reunion,” by Chau Nguyen Every two...Ch. 9 - ‘The Problem with Angels,” by Cyndy Dowling...Ch. 9 - “Blowing Bubbles,” by Sondra Prull Studying stats...Ch. 9 - “Dalmatian Darnation,” by Kathy Sparling A greedy...Ch. 9 - ‘MacaronI and Cheese, please! I” by Nedda...Ch. 9 - “William Shakespeare: The Tragedy of Hamlet....Ch. 9 - “Untitled.” by Stephen Chen lye often wondered how...Ch. 9 - Japanese Glrls Names’ by Kumi Furnichi It used to...Ch. 9 - ‘Phillip’s Wish,” by Suzanne Osorlo My nephew...Ch. 9 - “The Craven,” by Mark Salangsang Once upon a...Ch. 9 - Toastmasters Inteniational cites a repol by Gallop...Ch. 9 - Sixty-eight percent of online courses taught at...Ch. 9 - According to an article In Bloomberg Businessweek,...Ch. 9 - The mean age of De Anza College students in a...Ch. 9 - Registered nurses earned an average annual salary...Ch. 9 - La Leche League International reports that the...Ch. 9 - Over the past few decades, public health officials...Ch. 9 - A statistics instnictor believes that fewer than...Ch. 9 - Previously, an organization reported that...Ch. 9 - According to the Centet for Disease Control...Ch. 9 - A recent survey In the N.Y. limes Almanac...Ch. 9 - Driver error can be listed as the cause of...Ch. 9 - The US Department of Energy reported that 51.7% of...Ch. 9 - For Americans using library services, the American...Ch. 9 - The Weather Underground reported that the mean...Ch. 9 - A survey in the N.Y. limes Almanac finds the mean...Ch. 9 - A report by the Gallup Poll found that a woman...Ch. 9 - According to the N.Y Times Almanac the mean family...Ch. 9 - The student academic group on a college campus...
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